These reports, excerpted and edited by Barron’s, were issued recently by investment and research firms. The reports are a sampling of analysts’ thinking; they should not be considered the views or recommendations of Barron’s. Some of the reports’ issuers have provided, or hope to provide, investment-banking or other services to the companies being analyzed.
Overweight Price $49.84 on Sept. 8
by Piper Sandler
Ally, like other consumer lenders, has underperformed most benchmark indexes in the past couple of months, after being a significant outperformer over the past year. We believe the near-term underperformance is driven by market concerns that we are hitting peak earnings and/or peak valuations. In our view, Ally is structurally more profitable than it was prepandemic, due to more pricing power in its deposit franchise. The consensus earnings estimates appear too low, given that a normalization of credit likely won’t occur until 2023 and that net interest margin estimates seem conservative. We raise our price target to $68 from $67 and recommend buying the stock on recent weakness.
ChargePoint Holdings CHPT-Nasdaq
Buy Price $21.23 on Sept. 1
ChargePoint is a market leader in networked level 2 [electric vehicle] charging hardware in the U.S., with over a 70% market share and over 5,000 [corporate] customers globally. The company achieved this dominance through superior software, excellent customer service, a head start over its peers, quality hardware, and consistent innovation. Its focus on customer experience, rather than monetization, has allowed it to operate a low-risk, capital-light business model, while deploying excess capital in R&D. The company should be able to grow revenue at a 49% compound annual rate over the next five years. ChargePoint is debt-free and has substantial cash. Our price target is $35.
Outperform Price 136.25 euros on Sept. 8
by RBC Capital Markets
We have lowered our 2021 global auto production forecast to 78.5 million units from 79.6 million, largely as a result of the semiconductor shortage. But we raise our 2022/23 global estimate to 89.6 million/92 million from 89.2 million/91.5 million. Headwinds could continue well into 2022’s first half. But we maintain our €143 price target on Michelin due to the tire maker’s low (13.5%) exposure to original equipment manufacturers, the auto segment most impacted by our reduced forecast. If Michelin [which has American depositary shares that trade over the counter under the symbol MGDDY] is successful in growing its non-tire specialty businesses, the stock could rerate beyond our valuation methodology.
Neutral Price $20.21 on Sept. 7
by MKM Partners
Hawaiian Holdings [the parent of Hawaiian Airlines] lowered its third-quarter revenue forecast as a result of weakened booking trends and an increase in close-in cancellations, due to the current Covid-19 wave. The incremental headwind is not all that surprising, given that government officials in Hawaii are recommending against traveling to the state, while [airline] capacity to the state from the mainland is currently elevated. Hawaii is an interesting case, as the state has been incredibly restrictive during the pandemic; we are not saying that’s a bad thing, it is just the reality. We are incrementally concerned about the fourth quarter. Our fair value estimate for the stock is $22.
Dell Technologies DELL-NYSE
Outperform Price $94.74 on Sept. 8
by Evercore ISI
Ahead of Dell’s coming spinoff of its about 81% stake in
[VMW] in early November, investors have been focused on trying to understand the core Dell operating model, given its multiple moving parts. While Dell will no longer consolidate VMW results post-spin, it will recognize VMW reseller revenue. As a result, fiscal 2021 recast revenue will be around $87 billion versus $81 billion. Interest expense will be lower due to deleveraging [with the help of proceeds from a large VMW dividend]. We estimate that fiscal 2022 pro forma EPS will be close to $6.50, versus $4.80-$5.05 in fiscal 2021. We expect Dell to provide more details at its Sept. 23 analyst day. Price target: $114.
Neutral Price $59.38 on Sept. 8
by BofA Securities
At an investor conference, management [raised] fiscal 2022 guidance for both sales and earnings, driven by stronger-than-expected first-quarter consumption and closing the acquisition of Tyson’s pet-treat business. This could be partially offset by upward cost pressures from raw-material inflation and labor shortages. GIS now expects adjusted EPS at the high end of a $3.71-$3.79 range. The outlook includes the pet-treats acquisition, but not the European Yoplait divestiture. We raise our fiscal 2022 through 2024 estimates by two cents a share, to $3.76, $3.92, and $4.10, respectively. We also reiterate our $66 price objective, which is based on 17 times our calendar year 2022 estimate. This is slightly below peers’ average of 18 times. Our Neutral rating is based on our cautious view on fiscal 2022. While General Mills is investing to maintain growth, it faces tough comps and increased costs.
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