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.
SoFi Technologies SOFI-Nasdaq
Outperform Price $12.25 on Jan. 19
We’re initiating coverage of SoFi with an Outperform rating and a $20 price target. Our rating is based on the company’s strong growth outlook, with a five-year revenue compound annual growth rate of 28% through 2026. An increasing brand presence should drive member growth; its integrated technology platform, Galileo, is a competitive advantage that allows for a seamless cross-buying experience aimed at a digitally native younger cohort; it has strong unit economics across its products; we expect credit quality to be stronger than peers, given that its borrowers are at the higher end of the credit spectrum, with an average FICO of 750; and the company’s pending bank charter [approved on Jan. 18] should accelerate earnings growth, in our view. The company is a one-stop shop for financial services, and this is a significant competitive advantage over neobank competitors that tend to focus on niche offerings rather than the full financial picture.
Plug Power PLUG-Nasdaq
Outperform Price $21.14 on Jan. 19
by Evercore ISI
This year will be a breakout year for Plug Power as the company begins its green hydrogen production ramp in North America; scales its gigafactory in New York, and breaks ground on a new gigafactory in South Korea with its partner SK Group; begins delivering vehicles in France through the Renault joint venture; adds incremental pedestal customers in materials handling; accelerates electrolyzer sales globally; and integrates recent acquisitions. The development of the hydrogen economy is accelerating, and Plug is leading the charge. We remain Outperform on the shares. Price target: $50.
OutperformPrice $58.02 on Jan. 19
Fastenal reported strong results for the fourth quarter of 2021. December average daily sales came in above expectations, and gross margin improved sequentially, driving Ebitda 3% above our estimate. We see a good setup for 2022, as revenue growth and SG&A leverage should be much improved relative to 2021, while gross margin could be better than expectations. We expect this outlook to produce double-digit earnings growth, and with the cyclical backdrop remaining favorable, we believe that Fastenal is poised to deliver strong shareholder returns in 2022. Fastenal remains a top idea. Target price: $64.
Abbott Laboratories ABT-NYSE
Overweight Price $126.67 on Jan. 18
by J.P. Morgan
As we head into fourth-quarter 2021 earnings season, Abbott’s end-market exposure makes the company once again uniquely positioned to outperform, in our view. On the Device side, we expect pockets of disruption in more-deferrable and/or hospital-exposed parts of the business, given recent Delta and Omicron headwinds. However, tailwinds to testing sales should be more than enough to offset any disruption to the base business, which should result in another top- and bottom-line beat. In all, we continue to see Abbott as a good hedge in today’s uncertain environment, with near-term testing upside, a healthy base business, and robust pipeline with Libre 3, Structural Heart, and Alinity making for an attractive outlook. Price target: $140.
Advanced Micro Devices AMD-Nasdaq
Neutral Price $128.27 on Jan. 20
by Piper Sandler
We are downgrading Advanced Micro Devices to Neutral from Overweight and decreasing our price target to $130 from $140. Our downgrade is driven by: 1) our concerns about a slowdown in the PC market during 2022; 2) the earnings and growth headwind from closing the
Xilinx deal; and 3) the broader market dynamics around high-multiple, high-growth technology stocks. Given these three dynamics, we feel there is more downside risk than upside risk at this point in time. Therefore, we are downgrading the stock to Neutral. Target price: $130.
Evoqua Water Technologies AQUA-NYSE
Outperform Price $37.65 on Jan. 20
We are upgrading Evoqua Water Technologies from Perform to Outperform, as recent trading weakness appears overdone on a compelling long-term ESG story. We remain bullish on Evoqua’s fundamental trajectory, with secular catalysts underpinning its defensive/largely recurring revenue base, steadily expanding digital and outsourced water offering, and pending tailwinds from PFAS and emerging contaminant remediation (a multibillion-dollar market opportunity over the coming years). We noted on Jan. 9 that Evoqua’s Mar Cor acquisition should bolster its competitive advantages and secular tailwinds, and that a further pullback could afford an attractive buying opportunity. With Evoqua down an incremental 11% since then we like the setup for shares going forward. Price target: $45.
To be considered for this section, material should be sent to [email protected].