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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.
Peloton PTON-Nasdaq
Overweight Price $33.82 on Jan. 4
by J.P. Morgan
We’re cutting our estimates to reflect December traffic declines and higher-than-normal promotional activity, the combination of which suggests soft near-term demand and uncertainty into the back half of Peloton’s fiscal 2022. PTON faces multiple near-term headwinds as it works to distance itself from pandemic pull-forward, re-establish traffic and leads, and right-size its cost structure. The shares declined 76% in 2021 and are now at early-February 2020 levels. We continue to believe considerable headroom remains in the long-term connected-fitness market. We remain Overweight, but lower our December 2022 price target from $70 to $50, based on three times estimated revenue for calendar 2023.
Intel INTC-Nasdaq
Buy $53.14 on Jan. 4
by Tigress Financial Partners
We reiterate our Buy rating and increase our 12-month target stock price to $72. Intel continues to make significant capital investments in new processor development and production capabilities, enabling it to regain industry leadership. In addition, the recently announced IPO of Mobileye will create a significant opportunity to unlock shareholder value and the benefits from tremendous growth opportunities in autonomous-vehicle technology. INTC plans to take Mobileye, its advanced driver-assistance systems division, public this summer. That potentially will unlock tremendous shareholder value, provide additional capital for investment in key growth initiatives, and further 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 overcome near-term weakness as it benefits from ongoing global demand and migration to cloud-hosted data centers and hybrid cloud infrastructures.
Regions Financial RF-NYSE
Buy (4 stars out of 5) Price $21.80 on Dec. 31
by CFRA
Regions’ earnings will benefit from lower net interest margin volatility versus peers’, given its extensive hedging program, and [from] prudently beginning to reposition its balance sheet for likely rising rates in 2022/2023. RF also plans to continue looking for nonbank acquisitions to sustain its fee-growth momentum. Loan growth is likely to remain sluggish in the near term. Net charge-offs are improving, and Regions is expected to make 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, a 20% discount to its peers’ average 15.9. We are bullish, given RF’s healthy dividend (2.8%) and an expected pickup in loan growth in 2022.
KB Home KBH-NYSE
Outperform Price $43.81 on Jan. 4
by Wedbush
We reiterate our Outperform rating ahead of KB Home’s fourth-quarter (November)
EPS release, scheduled after the market close on Jan. 12. In our November call with
management, we discussed pricing (KB was raising house prices in line with local trends), supply-chain issues (no better and no worse at that time), and the gross-margin headwind from lumber-price inflation (which 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 KRNY-Nasdaq
Neutral Price $13.59 on Jan. 5
by Piper Sandler
We are lowering our rating from Overweight. The stock has moved up nicely and now trades within 3% of our 12-month price target of $14. On a price/earnings basis, KRNY is trading at a premium to peers (14.5 times versus 11.6). Although it has a bit of excess capital, it’s no longer wildly overcapitalized. We don’t, however, expect multiple compression for this well-managed bank.
Emerson Electric EMR-NYSE
Outperform Price $95.83 on Jan. 3
by RBC Capital Markets
We are upgrading Emerson from Sector Perform, given a confluence of positives. The shares are trading below their three-year relative P/E support level, and our sum-of-the-parts (SOP) valuation implies 25% upside in a potential value-unlocking breakup. We consider F2022 guidance to be appropriately conservative. The rebound in oil capital spending remains the key unknown. Emerson ranks as a hybrid [company] in our investment framework. [The U.S. economy] recently started Phase 2 of its cyclical recovery, in which midtier earnings-quality hybrids historically outperform 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 activist surface, given the multi-industry sector’s renewed Urge to Demerge, following General Electric’s [ticker:
GE] breakup announcement. Our SOP valuation indicates a $116 price target, up from $104.
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