These reports, excerpted and edited by Barron’s, were recently released by investment and research firms. The report is a sample of analysts’ thinking; They should not be considered the views or recommendations of the Baron. Some report issuers provide or anticipate providing investment banking or other services to the companies being analyzed.
Purchase Price $3,421.37 Dec 23
Monness by Crespi Hardto
After a strong stock performance in 2020, Amazon has trailed off a healthy 2021 market rally. However, we believe that the fortunes of the company are set to turn in 2022. Amazon is uniquely positioned as one of the biggest beneficiaries of the accelerated digital transformation to get out of this crisis. Our stock-price target of $4,500 based on enterprise value-to-revenue ratio is 4.3 times our calendar 2022 estimate. While this is above average over the past six years, we believe the company’s e-commerce growth path is very attractive, spanning Amazon Web Services, digital media, advertising, Alexa and more. In addition, the company has started giving more attractive profit trends over the years. However, as Amazon continues to invest aggressively in its business to grow rapidly, its profitability is well below its long-term potential. Therefore, we believe that traditional price/earnings metrics do not apply, and neither do other profit metrics. Thus, we value the stock at the enterprise price-to-revenue ratio.
Winnebago Industries WGO-NYSE
overweight Price on December 27th $71.85
We’re excited about the entertainment-vehicle space, and highlight Winnebago as the focus idea. Even though the pandemic created more lifetime RVers and wiped out dealer inventory, Winnebago barely trades above prependemic levels. Meanwhile, the Winnebago brands have gained stake, and management has significantly increased earnings power through margin improvements, smart acquisitions, and share buybacks. With stocks trading under 10 times our cycle-neutral scenario, we will be aggressive in the small-cap value portfolio. [Another RV maker,]
[ticker: THO] Also stands out as oversold, although the recent buyback authority may be the necessary antidote to the deep pessimism surrounding the name.
Peloton Interactive Pton-Nasdaq
market performance Price $36.71 Dec 27
by Raymond James
We believe the December-quarter and fiscal-2022 guidance is likely to prove aggressive. While Peloton has done several things to spur demand, including reducing the original bike price to $1,495 (via a $400 reduction in late August), relaunching the Peloton Tread, and significantly increasing advertising Our analysis of the search data continues to show a meaningful Year-over-year slowdown and less than the sequential growth we’ve seen in the past few years. We believe that critical demand was pushed forward during the pandemic. As such, sales are not seeing the typical seasonality that we would expect. We maintain our market performance rating on the basis of signs of softening demand, rising costs (eg, supply chain), and we believe risk/reward is balanced at current levels. Using our updated sum-of-parts analysis, we estimate a fair value of $38 for the stock (with a bear case of $27 and a bull case of 51).
Costco Wholesale Costing – Nasdaq
neutral Price $550.37 Dec 23
Costco has several near-intermediate-term potential catalysts, though it’s unclear how much it’s worth, a 50% appreciation of the shares over the past year (versus the S&P 500 index’s 26.5%), and 18% in the past. three months (versus 6% of SPY). In particular, we believe December core comps should return to double-digit territory, driven by broad-based strength across most categories. Second quarter sales and EBITDA [earnings before interest, taxes, depreciation, and amortization] Maybe, once again, top consensus hopes. However, with stocks trading at 23 times Calendar-2022 Ebitda, we remain neutral.
Applied Materials AMAT-NASDAQ
Strong Buy (5 stars) Price by CFRA December 23rd $155.49
Our strong buying reflects our approach to improving fundamentals, as well as rated in line with peers, when a premium is guaranteed. We believe demand is being driven by the foundry/logic technology transition as well as memory-capacity growth, benefiting equipment purchases across regions. [that command] more dollar stuff in it [semiconductor-equipment] business. We see that Applied Materials’ services business benefits from a growing installed base and higher demand for trailing node geometry, and we like its exposure to recurring-based revenue. We also see above projections, driven by apparent foundry/logic capability expansion at Intel‘s
[INTC] capex guidance ($25 billion to $28 billion in 2022, versus $18 billion to $19 billion in 2021), and Samsung Electronics’ [005930.Korea] It plans to triple its foundry capacity by 2026.
We see Applied Materials sales growth of 14% in FY2022 (October) and 34% in FY2023 followed by growth of 34% in 2023. In Semiconductor Systems (which declined 3% in Q4 2021), we see demand led by foundry/logic customers and higher investments in trailing technology nodes. We continue to expect revenue from Applied Global Services (6.5% in the fourth quarter) to increase further, with the ongoing shift toward subscriptions, which represent approximately 60% of segment revenue. Applied Materials’ display business is seeing more modest growth (3.2% in Q4), aided by growing mobile adoption for OLED in 5G/foldable displays.
Purchase Price on December 23rd $76.65
by edward jones
Sysco is one of the leaders in the food-service industry in North America, and has exposure in international markets. Sysco has weathered the turmoil caused by COVID-19 over the past two years by restructuring its sales operations, investing more in digital tools, enhancing its services for customers, and even making recent acquisitions. seen as an opportunity. Because of these efforts, with restaurants reopening on a large scale, Sysco is emerging as a company stronger than the pandemic. We believe it can take significant market share from smaller competitors that haven’t improved operations, like Cisco. Restaurant demand for its products may remain volatile, due to the economy in various stages of reopening and rising input costs. However, Sysco is often partially immune to short-term cost inflation effects. This may pass on its high food costs to customers, but it may also cause them to choose lower-cost, less-profitable items. Finding and hiring qualified workers probably doesn’t help in a lack of supply and a tight labor market. But, ultimately, cost and labor concerns should resolve themselves, allowing Sysco’s business to improve.
Chart Industries GTLS-NASDAQ
Purchase Price on December 29th $166.42
Chart Industries has placed orders for over $120 million for four liquefaction projects (hydrogen and small-scale liquefied natural gas). We estimate this means that orders for the fourth quarter of 2021 will be at least $400 million compared to our $352 million estimate and the $350 million FactSet consensus. The chart also announced the release on engineering work (limited notice to proceed) on two major LNG export terminal projects expected to proceed for a final investment decision in 2022. Engineering work is generally preceded by a decision to proceed with complete construction. We expect Chart to soon receive a full notice or NTP to proceed to Venture Global Plaquemines Phase 1. Our full year 2022 order outlook also includes a $350 million order for Tellurian
[TELL] $375 million order for Driftwood Phase 1 and Cheniere
[LNG] Corpus Christi Stage 3.
However, the chart is facing adverse conditions in the near future from rising material costs and supply-chain disruptions. Accordingly, we see some downside risks to projected fourth-quarter 2021 earnings (FactSet consensus: 73 cents per share) and our 2022 estimate, which is 7% lower than consensus. However, our 2023 diluted EPS estimate is 15% higher than the consensus, driven by expected larger LNG awards and the development of specialty products. We believe that Venture Global’s December 2 announcement that it will invest more than $10 billion to develop a fourth LNG export facility increases the likelihood that it will move forward with Plaquemines Phase 2 as well. This will be incremental to our and Street expectations. Price target: $206.
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