M12 BARRON’S September 2, 2019
Research Reports
HowAnalystsSizeUpCompanies
Thesereports,excerptedandeditedbyBarron’s,wereissuedrecentlybyinvestment
and research firms. The reports are a sampling of analysts’ thinking; they should
notbeconsideredtheviewsorrecommendationsofBarron’s.Someofthereports’
issuers have provided, or hope to provide, investment-banking or other services to
the companies being analyzed.
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VMware• VMW-NYSE
In Line • Price $132.45 on Aug. 29
by Evercore ISI
We come away from [the recent VMWorld
user conference] with greater clarity as to
VMware’s recent acquisitions and how they
fit into the company’s broader growth strat-
egy. VMware is a much broader story today
versus five years ago, in terms of the
breadth of its offerings across the comput-
ing fabric. Our conversations with partners
indicate growing interest around Kuber-
netes [software], 5G, and VMware’s part-
nerships with Amazon Web Services and
Google, in particular. That said, we expect
that investors may want to take a wait-and-
see approach as [two recent acquisitions,
Pivotal Software and cybersecurity firm
Carbon Black] are integrated into the busi-
ness, especially given a more choppy macro
backdrop. The shares are largely washed
out here, but with catalysts lacking, we con-
tinue to maintain our In Line rating and
lower our price target to $145.
Coty• COTY-NYSE
Market Perform • Price $9.33 on Aug. 28
by Wells Fargo Securities
The fiscal fourth-quarter was fairly un-
eventful, with results more or less as
expected and earning per share in line at
16 cents a share. Organic sales growth
remained weak as anticipated (-4.1%),
though Consumer Beauty was weaker
than we thought (-11.5%), and Luxury was
stronger (5.8%). Coty also announced that
it will be selling Younique back to its
founders (about 4% of sales).
Overall, we commend the new manage-
ment team for bringing stability to the
business over the past two quarters. How-
ever, we see few catalysts and think that
top-line inflection/acceleration will be nec-
essary to move the stock higher. We are
lowering our price target by $1, to $10.
Walt Disney• DIS-NYSE
Buy • Price $131.67 on Aug. 23
by Tigress Financial Partners
While Disney’s third-quarter revenue and
earnings fell short of the Street consensus
estimate, this was the first quarter the
company had reported its results with the
Fox acquisition.
Disney’s leadership position in the box
office, with its record-breaking $8 billion in
revenue for the first seven months of 2019,
is driven by the success of its recent re-
leases. Disney’s box-office strength shows
that it’s the undisputed king of content.
That will drive subscribers for its coming
direct-to-consumer streaming service, Dis-
ney+. A number of catalysts will emerge
later in this year, including a slate of poten-
tial blockbuster movies, the launch of
Disney+, and the recent openings of Star
Wars: Galaxy Edge theme parks in both
California and Florida. We view the recent
pullback as a major buying opportunity.
Williams-Sonoma• WMS-NYSE
Sector Perform • Price $68.78 on Aug. 29
by RBC Capital Markets
Williams-Sonoma delivered a second-
quarter beat, driven by very strong 6.5%
[sales] comps (versus our 3.5% estimate).
Our main concern remains the company’s
longer-term margin profile, and while valu-
ation is modest, we expect competitive pric-
ing and free-shipping pressures to weigh on
margins and growth of earnings before in-
terest and taxes over time. We continue to
believe that pricing headwinds will persist,
and remain concerned that delivery fees of
up to $399 will continue to be gradually
competed away. Consumers generally de-
spise having to pay for shipping.
First Commonwealth Financial
- FCF-NYSE
Neutral/Moderate • Price $12.25 on Aug. 27
by Boenning & Scattergood
Longer-term trends indicate that the com-
pany is making strides in improving credit
quality, adding revenue streams, and en-
gaging balance sheet growth. The shares
currently trade at a slight discount to peers
of similar size on both estimated 2019 price/
earnings (11.3 times versus 12), and pro-
forma price-to-tangible book (169% versus
175%). Although we do not believe a dis-
count is warranted, the valuation gap is not
large enough for us to upgrade our rating.
Delta Air Lines• DAL-NYSE
Outperform•Price $58.01 on Aug. 23
While we have cooled on most airline
stocks, we reiterate our Outperform rating
for Delta and $69 target price. We hosted
Paul Jacobson, executive vice president and
chief financial officer, for a lunch. Our con-
versations focused on the steps that Delta
has made to weather a downturn and re-
main investment-grade through the cycle.
Paul pointed out that Delta’s balance
sheet strength allows the airline to remain
financially nimble with respect to being able
to purchase available assets from weaker
airlines. The airline also continues to in-
crease its global reach by committing to its
foreign partners through equity stakes and
alliances. And Delta’s loyalty program is ex-
pected to generate much better margins
and free-cash-flow conversion than before.
Nonrestricted inventory and better passen-
ger flexibility to pay in miles or dollars
should continue to drive record numbers of
new [Delta credit-] card holders.
INSIDER TRANSACTIONS RATIO
0
10
20
30
40
50
60
S O N D J F M A M J JA
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 338, 825 ,860 and 33, 838 ,970 respectively; Source: Thomson Reuters
Bearish
Bullish
Ratio = 10
INSIDER TRANSACTIONS: Recent Filings
Purchases
$ Val
Company/Symbol Insiders Shares (000's)DishNetworkDISH 1 300,000 9,354
MirumPharmaceuticalsMIRM 1 332,000 4,980DonnelleyFinancialSolutionsDFIN 1 314,057 3,587
WayfairW 1 29,000 3,183FossilFOSL 2 220,000 2,215KlxEnergyServicesKLXE 3 126,135 1,480
E.W.ScrippsSSP 1 100,000 1,200
JCPenneyCompanyJCP 4 1,350,000 777HorizonGlobalHZN 3 196,400 766GogoGOGO 2 191,309 759ElancoAnimalHealthELAN 2 26,030 698TownSportsInternationalCLUB 1 395,126 665
OtelcoOTEL 1 53,454 641BainCapitalSpecialtyFinanceBCSF 2 32,900 601TristateCapitalTSC 2 26,000 505Greenhill&CoGHL 1 36,761 504LyondellbasellIndustriesNvLYB 1 7,246 499
CitizensFinancialGroupCFG 1 15,000 487
Parker-HannifinPH 1 3,000 475BrighthouseFinancialBHF 2 13,000 463Sales
$ Val
Company/Symbol Insiders Shares (000's)RestaurantBrandsInternationalQSR 2 691,222 53,263
HomeDepotHD 6 229,960 50,490
PapaJohn'sInternationalPZZA 1 725,861 31,312EsteeLauderCosEL 2 131,976 26,795TargetTGT 8 227,137 23,789Procter&GamblePG 11 189,532 22,647RingcentralRNG 3 145,252 20,335
EssexPropertyTrustESS 1 35,250 11,253ServiceCorporationInternationalSCI 1 230,300 10,837AlteryxAYX 2 82,129 10,803TylerTechnologiesTYL 3 38,000 9,779SwitchSWCH 1 583,343 9,509
HmsHMSY 6 210,933 8,050
AvalaraAVLR 4 92,535 7,983HPHPQ 1 437,171 7,873SmartsheetSMAR 4 147,372 7,433
RealpageRP 1 114,550 7,258EdwardsLifesciencesEW 2 30,350 6,552
IntuitINTU 3 23,546 6,530FairIsaacFICO 1 18,057 6,334Aninsiderisanyofficer,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