Why Patient Investors Should Take a Fresh Look at Battered Peloton

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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.

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Peloton PTON-NASDAQ

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Overweight Price $33.82 Jan 4

by JP Morgan

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We are cutting our projections to reflect a decline in December traffic and higher-than-normal promotional activity, the combination of which reflects soft near-term demand and uncertainty in the back half of Peloton’s fiscal 2022. PTON faces several near-term headwinds. Works to distance itself from the pandemic, re-establish traffic and leads, and right-shape its cost structure. Shares fell 76% in 2021 and are now at early February 2020 levels. We believe that there remains a lot of headroom in the long-term connected-fitness market. We remain overweight, but reduce our December 2022 price target from $70 to $50, based on three times projected revenue for calendar 2023.

Intel INTC-NASDAQ

Buy it on $53.14 Jan 4

by Tigress Financial Partners

We reiterate our buy rating and increase our 12-month target stock price to $72. Intel continues to invest significant capital in new processor development and production capabilities, allowing it to regain industry leadership. In addition, Mobileye’s recently announced IPO will create a significant opportunity to unlock shareholder value and benefit from tremendous growth opportunities in autonomous-vehicle technology. INTC plans to take Mobileye, its advanced driver-assistance systems division, public this summer. This will potentially unlock tremendous shareholder value, provide additional capital for investment in key growth initiatives, and further enhance the companies partnership. In addition, INTC is benefiting from strength in its client computing group and leadership in data-center processors. This will enable it to address near-term weakness as it benefits from ongoing global demand and migration to cloud-hosted data centers and hybrid cloud infrastructure.

Sector Financial RF-NYSE

Buy (4 out of 5 stars) Price $21.80 Dec 31

by CFRA

Given its comprehensive hedging program, the sector’s earnings would benefit from lower net interest margin volatility versus peers, and [from] Started judiciously reshaping its balance sheet to account for potential rising rates in 2022/2023. RF also plans to continue to seek non-bank acquisitions to maintain its fee-hike momentum. Credit growth is likely to remain sluggish in the near term. Net charge-offs are improving, and the sector expects continued efficiency progress by reducing its real estate footprint and optimizing its spending on vendors. Our stock price target of $27 is 12.4 times our 2022 EPS estimate, which is a 20% discount to our peer average of 15.9. Given RF’s healthy dividend (2.8%) and an expected pickup in credit growth in 2022, we are optimistic.

KB Home KBH-NYSE

Outperform price on Jan 4th $43.81

by Wedbush

We reiterate our outperform rating for KB Home ahead of the fourth quarter (November).

The EPS release is scheduled after the market close on January 12. in our November call

Management, we discussed pricing (KB was raising home prices in line with local trends), supply-chain issues (no better and no worse at the time), and gross-margin headwinds from lumber-price inflation (which That should have peaked in the fourth quarter). We will look for an update on those items [on the earnings call], 12-month price target: $60.

Kearny Financial

Neutral price as of Jan 5th $13.59

by Piper Sandler

We are downgrading our rating from overweight. The stock has moved up nicely and is now trading within 3% of our 12-month price target of $14. On value/earnings basis, KRNY is trading at a premium (14.5x vs 11.6x) over its peers. Although it has a bit more capital, it is no longer wildly over-capitalised. However, we don’t expect much compression for this streamlined bank.

Emerson Electric EMR-NYSE

Outperform price as of January 3rd at $95.83

by RBC Capital Markets

Seeing the confluence of positives, we are upgrading Immersion with sector performance. Shares are trading below their three-year relative P/E support levels, and our sum-of-parts (SOP) valuation means a 25% upside in a potential value-unlocking breakup. We consider F2022 guidance to be reasonably conservative. The rebound in oil capital expenditure remains the key unknown. Emerson ranks as a hybrid [company] in our investment framework. [The U.S. economy] has recently begun Phase 2 of its cyclical recovery, in which medium-income-quality hybrids have historically outperformed the S&P 500. Emerson is reportedly undergoing a strategic review, led by new CEO Lal Karsanbhai. And we wouldn’t be surprised to see an active surface, given the renewed urge to demerge the multi-industry sector, after General Electric. [ticker:
GE
] Breakup announcement. Our SOP valuation indicates a $116 price target above $104.

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