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.
Uber Technologies
UBER-NYSE
Buy (four stars out of five) • Price $31.70 March 31
by CFRA
Our Buy reflects our favorable views for both the Mobility and [food] Delivery segments, coupled with our belief that Uber will be disciplined on costs. We see it as a market-share taker, like its emphasis on product innovation, and see many levers to pull to control costs.
Uber’s greater emphasis on subscription offerings (25% of gross bookings) and advertising ($500 million run rate in fourth quarter versus $350 million in the third quarter) put it in a good position to see notable free-cash-flow growth through 2024 and GAAP net income profitability in 2023.
Risks include changes to the regulatory landscape, slower-than-expected adoption of transportation as a service, greater-than-expected competitive pressures, and a longer-than-expected period to generate positive free cash flow.
Twelve-month price target: $42.
HSBC Holdings
0005-Hong Kong
Overweight • Price HK$54 on April 4
by
J.P. Morgan
Although the market has some concerns about HSBC’s capital situation and potential structural changes, we believe that fundamentals remain solid for [the banking company, whose U.S. shares trade under the symbol HSBC].
We see support for revenue growth in the medium term, given the outlook for United Kingdom/U.S. interest rates continuing to rise. There has been sequential improvement in HSBC’s Asia business since the second quarter of 2022, mainly driven by a rebound in Hong Kong, given the reopening [from the Covid-19 pandemic]. With capital below the group’s 14% to 14.5% target range and subject to volatility from the rate environment, we expect limited incremental excess capital return in the near term.
The medium-term capital trajectory should still allow $1 billion to $2 billion of share buybacks a year and a dividend payout rate around 50%, with the announced sale of HSBC’s Canadian operations (subject to approvals) providing additional capital release.
Our price target: HK$66 [US$8.41].
Titan Machinery
TITN-Nasdaq
Buy • Price $28.13 on April 4
by B. Riley
The 41% drop in Titan Machinery’s share price since its 52-week high on March 7 is overdone and represents an attractive buying opportunity for long-term investors looking for a strong business with a clean balance sheet. Although we appreciate some
investors’ concerns regarding late-cycle industrial stocks and global economic uncertainties, we believe that the shares have approached a very attractive valuation level, with fairly good visibility, near term. At $28.13, they trade at 3.6 times our calendar-year 2023 estimate of enterprise value/earnings before interest, taxes, depreciation, and amortization, or Ebitda, versus their peer group’s 5.3 times and a significantly higher historical average. As such, we reiterate our Buy rating and $48 price target.
CrowdStrike Holdings
CRWD-Nasdaq
Buy • Price $136.86 on April 4
by Needham
At an upbeat virtual analyst day, CrowdStrike offered a strong, positive tone and a compelling strategy, replete with robust long-term goals, and addressed the key parts of the bear-camp thesis.
We come away with a reinforced belief that CrowdStrike is delivering a strong, multifaceted platform that addresses a broad range of security challenges in a comprehensive, integrated manner.
CrowdStrike reaffirmed its core proposition that it is a platform, not just an endpoint company. CrowdStrike went on to allay concerns [that it could lose market share] to
Microsoft
[ticker: MSFT], noting that it is taking share and laying out the technical and efficacy reasons for its head-to-head success against Microsoft. We’re raising our price target to $170 from $165.
Gulfport Energy
GPOR-NYSE
Neutral • Price $79.44 on April 4
by Mizuho Securities
Our price target for Gulfport Energy is $93 per share [versus $90 previously]. This is based on a net asset value model using future cash flows from developed and undeveloped upstream reserves, with a base-case price outlook of $70/barrel West Texas Intermediate, $4.25/thousand cubic foot Nymex gas, and a 10% discount rate. [However,] constrained operations in Appalachia and lower-than-peer reserve depth are a key risk to the investment case. Also, Gulfport Energy pays no dividend, putting it behind peers when it comes to cash return.
IMAX
IMAX-NYSE
Buy • Price $19.01 on April 4
by Rosenblatt Securities
IMAX reported a better-than-expected [first quarter] gross box office of $273.2 million, driving upward revisions to our estimates for that period, 2023, and 2024.
We are reiterating our $25 price target, as the combination of a recovery in China and a strong coming film slate—including May 5’s Guardians of the Galaxy Vol. 3 and July 14’s Mission: Impossible—Dead Reckoning Part 1—set the stage for positive earnings revisions that aren’t reflected in the stock’s modest multiple below 10 times EV/Ebitda.
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