Barron\'s - 16.09.2019

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September 16, 2019 BARRON’S M11


Research Reports


HowAnalystsSizeUpCompanies


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Netflix•NFLX-Nasdaq


Outperform•Price $294.34 on Sept. 9


by Credit Suisse


Our tracking of app downloads data through


the first seven weeks of the third quarter


suggests a broad-based rebound in global


Netflix trends, reversing its mysteriously


poor second-quarter performance. A more


marketable content slate appears to be con-


tributing, based on the timing of download


improvements in certain countries, including


Saudi Arabia cracking the top 10. It is un-


clear if India’s addition of a mobile tier of


service is enhancing a rebound there, but


international ex-India is similarly improved.


Our updated content tracker shows


many more original-content releases in the


third quarter, in particular for international


series and Hollywood dramas; several key


titles are left (including Ryan Murphy’s


first show). We have materially higher con-


tent spending year over year for the fourth


quarter, notably forThe CrownS3,The


Witcher, The Irishman,and6 Under-


ground.


Netflix’s original slate dwarfs the new


entrants. We have tracked 48 titles in de-


velopment at Disney+ (launching Nov. 12),


43 at Apple’s TV+, and 23 at HBO Max


(launching in spring 2020), versus Netflix’s


71 English-language dramas, 62 non-Eng-


lish series, 32 comedies, and 108 films in


development (not including unscripted


shows, documentaries, and animated fea-


tures). Netflix trades at 15 times our esti-


mated 2023 price/earnings ratio; our $440


target is unchanged.


Chipotle Mexican Grill•CMG-NYSE


Outperform•Price $836.32 on Sept. 9


by Wedbush


As the industry transitions toward a


larger mix of digital transactions, we be-


lieve that Chipotle is in a leading position


to establish a digital moat. We not only


continue to see near-term momentum as


management executes toward this transi-


tion, but also we believe that CMG is poised


to sustain outsize same-store sales and


earnings-per-share growth in the medium


to long term in an industry where...growth


is likely to command an increasing pre-


mium. Therefore, we upgrade to Outper-


form from Neutral.


We believe that digital sales at CMG


are on a path toward a 30%+ sales mix ex-


iting 2021. On the third-party marketplace


front, we expect CMG to adopt incremen-


tal partners, given their varying regional


market-share dynamics, adding additional


layers of comp. Meanwhile, we expect the


promotional collaboration between CMG


and existing partnerships to continue to


drive increased transactions. With respect


to Chipotle’s own app, aside from a favor-


able promotional cadence, we expect loy-


alty to act as the primary lever behind


both adoption and usage, positioning CMG


at the top of restaurant apps likely to find


space on customers’ handheld devices


We are increasing our 2019 EPS esti-


mate to $13.78 from $13.34. We are also in-


creasing our 2020 EPS estimate to $18.32


from $17.96, and our 2021 EPS estimate to


$23.19 from $22.49. We are increasing our


price target to $980 from $780. Our price


target represents a 52 times multiple on


our higher 2020 EPS estimate, net of cash.


TD Ameritrade•AMTD-Nasdaq


Buy•Price on Sept. 11 $48.59


by Sandler O’Neill Partners


Trading in August was above our expecta-


tions, as daily average revenue trades came


in at 898,000 (+12% month over month,


+15% year over year). We are raising our


fiscal-2019 EPS estimate by two cents a


share, to $4.04, while maintaining our fiscal


2020 estimate, also $4.04. Our price target of


$60 is based on about a 15 times multiple of


our fiscal-2020 estimate, which is at a mod-


est discount to TD Ameritrade’s historical


average P/E multiple, due to multiple con-


traction across the peer group because of


the interest rate outlook for 2019 and 2020.


Varian Medical Systems•VAR-NYSE


Outperform•Price $115.19 on Sept. 11


by Baird Equity Research


Varian announced this afternoon that


China has granted a tariff exclusion re-


quest for medical linear accelerators,


reversing a tariff policy that has been in


effect since Aug. 23, 2018. The tariffs im-


pacted those systems manufactured by


Varian at its Palo Alto facility (i.e., all sys-


tems other than Halcyon, which is manu-


factured in China).


We estimate that management’s most


recent guidance update implied about a $55


million to $60 million gross tariff impact to


fiscal-2019 earnings before interest and


taxes, before accounting for any mitigation


benefits. Management had quantified the


revenue and Ebit impact from the China


tariffs at $48 million at the beginning of fis-


cal 2019. Back-of-the-envelope math on our


part suggests that the original $48 million


Ebit headwind estimate from the August


2018 China retaliatory tariffs amounts to


upward of about 40 cents in EPS.


Today’s announcement is a nice win for


Varian and should imply upside to current


Street estimates for fiscal 2020 and fiscal


2021, and it gives management meaningful


operating/budgeting flexibility for next


year. Price target: $158. We would be buy-


ers in the near term to the low/mid $150s.


INSIDER TRANSACTIONS RATIO


0


10


20


30


40


50


60


S O N D J F M A M J J AS


Ratio of Insiders Sales to Buys. Readings under 12:1 are Bullish. Those over 20:1 are Bearish.


The total top20 sales and buys are 500, 460 ,873 and 65, 623 ,915 respectively; Source: Thomson Reuters


Bearish


Bullish


Ratio = 8


INSIDER TRANSACTIONS: Recent Filings


Purchases


$ Val
Company/Symbol Insiders Shares (000's)

CotyCOTY 3 1,296,507 12,365
AtHomeHOME 6 1,857,693 10,582

TurningPointTherapeuticsTPTX 3 189,999 8,550
CignaCI 1 32,509 5,044

Intra-CellularTherapiesITCI 1 485,000 4,975

ClouderaCLDR 1 439,914 3,871
CapstarFinancialCSTR 9 220,635 3,400
GladstoneLandLAND 1 210,000 2,494

RbbBancorpRBB 1 115,000 2,300

ElancoAnimalHealthELAN 2 85,750 2,277

LibertyLatinAmericaLtdLILAK 1 100,000 1,700

YextYEXT 1 85,429 1,402
PrudentialFinancialPRU 3 13,580 1,138

OrganogenesisORGO 4 225,110 1,025

CottCOT 1 80,000 1,005

UnifiUFI 1 41,700 849

NeoleukinTherapeuticsNLTX 1 250,000 782
EmmausLifeSciencesEMMA 2 193,746 716
AeriePharmaceuticalsAERI 2 31,290 599

L3HarrisTechnologiesLHX 2 2,700 550

Sales


$ Val
Company/Symbol Insiders Shares (000's)

MicrosoftMSFT 6 319,385 43,844
CernerCERN 3 602,887 40,527
IntuitINTU 3 139,688 38,965

SnapSNAP 1 2,102,245 33,351

LululemonAthleticaLULU 1 145,858 29,159

CeridianHcmCDAY 1 500,000 28,000

ElasticNvESTC 3 322,688 27,514
L3HarrisTechnologiesLHX 2 129,650 27,399

AppianAPPN 3 467,000 26,019

ShockwaveMedicalSWAV 2 725,000 24,930

TotalSystemServicesTSS 3 173,011 24,378

FidelityNationalInformationServicesFIS 3 174,256 23,414
FairIsaacFICO 4 58,000 20,685
AnteroMidstreamAM 1 2,855,848 19,448

NovocureLtdNVCR 2 208,440 17,832

RingcentralRNG 5 128,126 16,852
IntegraLifesciencesIART 1 250,000 15,137

EsteeLauderCosEL 6 72,057 14,752
SbaCommunicationsSBAC 1 54,411 14,586

CargurusCARG 2 411,551 13,668

Aninsiderisanyofficer,directororownerof10%ormoreofaclassofacompany'ssecurities.Inmostcases,aninsidermustreportanytradeto
theSECwithintwobusinessdays.ThetableshighlightcompaniesthatfiledwiththeSECthroughlastWednesday.Thetablesdonotinclude
pension-planoremployeestock-optionactivity,tradesbybeneficialownersof10%ormore,tradesunder$2pershareortradesunder100
shares.The"Purchases"columnincludesonlyopen-marketandprivatepurchases;the"Sales"columnincludesonlyopen-marketandprivatesales,
andexcludestradesprecededbyoptionexerciseinthe12monthspriortothereportedevent. Source:ThomsonReuters
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