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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.
NextEra Energy
NEE-NYSE
Buy Price $87.84 on Dec. 1
by BofA Global Research
We hosted senior management in New York, where the company continued to articulate its bullish message regarding U.S. decarbonization opportunities. NextEra [a major electric utility] has delivered a consistently positive adjusted EPS trajectory, with periodic rebasing and a rising growth outlook. The company has grown above 9% annually, well above its legacy rate and even the current 6%-8% (high-end) target. Due to the magnitude of [decarbonization and other] opportunities from the [Biden administration’s Build Back Better plan], we would not be surprised if further positive baselining to the compound annual growth rate in earnings per share is announced at NextEra’s 2022 June Analyst Day, with a focus on the company’s Florida Power and Light unit. Price objective: $98.
DraftKings
DKNG-Nasdaq
Buy Price $31.24 on Dec. 1
by Benchmark
We have rationalized our DKNG valuation target multiple, observant of a broader market trend in high growth and gaming stocks. DraftKings’ share price is down 42% over the past three months. We suspect the market is effectively pricing concerns over Omicron’s potential influence on the economy and sports, inflation’s impact on economic growth and consumer discretionary spending, and a recent hawkish pivot from the Federal Reserve that includes an accelerated view on interest-rate increases, which can have an exaggerated impact on high-multiple growth companies. We have reduced our FY21 adjusted Ebitda [earnings before interest, taxes, depreciation, and amortization] expectation for the online gaming company to account for anticipated incremental marketing spending for opening operations in new states, including Arizona and Connecticut. DKNG ended F2Q21 with $2.6 billion in cash and $1.3 billion of debt. Price target: $50.
DocuSign
DOCU-Nasdaq
Outperform Price $233.82 on Dec. 2
by Baird
After the markets closed on Dec. 2, DocuSign announced third-quarter results that saw revenue outperform, but billings and fourth-quarter guidance fail to meet expectations (leading the stock to be down nearly 30% in after-hours trading). DocuSign attributed the quarterly miss to softer-than-expected e-signature renewals and a lack of sales execution on cross-sell/upsell products. Fourth-quarter revenue growth now calls for 30% growth, versus the prior 34% consensus, and billings guidance calls for 22% growth, versus the consensus 32%. While the stock will likely be a “show-me” story in the near term, we believe DocuSign’s long-term fundamentals remain intact.
The TradeDesk TTD-Nasdaq
Buy Price $95.22 on Dec. 1
by Needham
We are raising our price target on
The Trade Desk
[which operates a cloud-based ad platform] to $115, from $100, based on yesterday’s TTD’s Solimar platform demo, which we hosted, and a Q&A session with the company’s founder and CEO, Jeff Green. [Among many other things, he said] that
Amazon.com
[AMZN] isn’t a competitor to TTD because many advertisers won’t share data with Amazon because it competes with them. Green believes that AMZN’s advertising competes with [
Alphabet
] GOOGL Search, not TTD. Also, international revenue was 13% of The TradeDesk’s total revenue in the third quarter and is growing faster than U.S. revenue. He expects the trend to continue.
OKTA
OKTA-Nasdaq
Outperform Price $198.08 on Dec. 1
by RBC Capital Markets
Okta [which provides identity-management services for businesses] delivered another strong quarter, beating expectations. Revenue growth, at 40%, accelerated for the second quarter in a row. We liked the initial look into fiscal 2023, indicating 37% revenue growth that we think could work higher through the year. We think the stock remains attractive on accelerating trends. We maintain our $300 price target.
Roku
ROKU-Nasdaq
Buy Price $235.16 on Nov. 29
by Benchmark
Here we are again. Shares of Roku have been cut in half on fears of share loss, following two quarters of disappointing net adds. Sentiment remains extremely negative. We think this is an ideal setup for the stock, especially since our channel checks indicate a much healthier in-stock level of Roku TVs at both
Walmart
(WMT) and
Best Buy
(BBY) than feared, while we think a Google-Roku resolution [to a contract dispute] could be in the offing, even if a temporary blackout occurs.
This feels like spring 2020, even including a Covid spike, when bears argued that Roku would see increasing competition and decreasing leverage in [programming] negotiations. While competition has grown, we believe Roku will be a share gainer, with upside to net adds both domestically and from international expansion, plus total platform revenue outperformance. Price target: $525.
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