March 16, 2020 BARRON’S M11
Research Reports
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United Parcel Service•UPS-NYSE
Buy•Price $87.18 on March 10
by Stifel
After the selloff in the market, one of the
names most interesting to us, due to
healthy cash generation, is UPS. While
we’re lowering estimates for the parcel
names, we believe UPS [which just an-
nounced that it will have a new CEO, effec-
tive June 1] has a steadier earnings and
cash-flow profile that investors should find
attractive in a fearful market.
Domestic Package (63% of revenue; 54%
of earnings before interest and taxes) is
where the business is growing nicely,
given the assumption of FedEx business
for Amazon.com. Margins leave something
to be desired, but as long as volume isn’t
hit too hard by the coronavirus, earnings
should be OK. We are reducing our 2020
and 2021 earnings-per-share estimates
from $7.90 and $8.35, respectively, to $7.02
and $7.71. FedEx next week will give us
the latest update on the parcel market’s
outlook, so we may revise estimates again.
Regardless, we feel UPS stock is compel-
ling enough to warrant an upgrade in the
middle of this selloff. Target price: $104.
Torm•TRMD-Nasdaq
Outperform•Price $7.10 on March 11
by Evercore ISI
Torm posted fourth-quarter 2019 EPS of 37
cents (excluding one-time items), a penny
below our forecast, but still representing its
most profitable period since first-quarter
- The company [a tanker concern that
transports refined-oil products] has re-es-
tablished a dividend for the period, with 10
cents a share recommended to the board
and likely to be paid on May 6. Further-
more, the board has approved the begin-
ning of a modest share-buyback program
for the first half of 2020, adding to the total
capital return. Perhaps most importantly,
first-quarter-to-date rates have come in
very strong, and with 87% of the quarter
already booked, Torm is trending toward a
more-than-doubling of its EPS for first-
quarter 2020 versus fourth-quarter 2019.
Developments in the tanker market are
fluid, with plummeting demand forecasts
offset by accelerating oil production and as-
sociated floating storage. The supply side
remains constrained, however, with uncer-
tainty keeping the order book muted. We
are maintaining our spot-rate forecasts
through 2021 for now, pointing to substan-
tial EPS expansion at Torm in 2020 and
- We retain our Outperform rating, but
lower our price target to $16 from $18.
Charter Communications
- CHTR-Nasdaq
Buy•Price $476.76 on March 11
by Benchmark Research
We are upgrading our rating to Buy from
Hold, with a $573 price target, which is
ahead of our prior $541 fair value assess-
ment. We view cable stocks as good haven
candidates, given their recurring revenue
and battened-down capital structures, de-
spite Monday’s indiscriminate selloff of vir-
tually all leveraged names. Also, we are in-
creasingly confident that 5G may have only
a near-neutral effect on cable, even as mo-
bile carriers with ambitious deployment
plans (at perhaps naive cost assessments)
may be disciplined into more rational be-
havior, given possible prolonged economic
and debt-market dislocations. Our $573
price target assumes that the S&P 500 in-
dex ends 2020 at 2800 and represents a
near-17 times target multiple of earnings.
Rosetta Stone•RST-NYSE
Outperform•Price $11.60 on March 12
by Barrington Research
Last night, after the market close, Rosetta
Stone reported results of its fourth quarter
and year, ended Dec. 31, that were generally
better than expected. Guidance for 2020 was
lowered, due primarily to planned invest-
ments in sales and marketing and an abun-
dance of caution, while longer-term expecta-
tions were reaffirmed across most key
metrics.The stock fell on the reduced guid-
ance and is down 30% year to date. With the
transition to a subscription model complete,
we’d be buyers onweakness.Reiterate
Outperform rating. Suitability/Risk: specu-
lative. Our price target goes to $20 from
$25, to reflect lower multiple assumptions
and slightly lower revenue expectations.
Carnival•CCL-NYSE
Overweight•Price $18.59 on March 12
by Wells Fargo Securities
After a series of company and industry-
related Covid-19 announcements, Carnival
has announced the suspension of Prin-
cess brand operations (about 20% of its
cruise capacity) for 60 days. This will fur-
ther question the company’s near-term li-
quidity (a dividend suspension is a fore-
gone conclusion). We estimate that the loss
of Princess revenue will have about a $2-a-
share 2020 impact on Carnival.
Covid-19’s impact on the industry
will be severe. But major operators are al-
most “too big to fail” from the perspective
of European ship building. There probably
will be broad EU/U.K./North American/
Chinese/Australian government support
for the travel/tourism industry, given
Covid-19’s unusually severe impact. And
return of capital to shareholders is likely
to continue in fiscal 2020-21.
INSIDER TRANSACTIONS RATIO
0102030405060M A M J J A S O N D J FMRatio of Insiders Sales to Buys. Readings under 12:1 are Bullish. Those over 20:1 are Bearish.The total top20 sales and buys are 413, 145 ,563 and 83, 503 ,288 respectively; Source: Thomson ReutersBearish
Bullish
Ratio = 5INSIDER TRANSACTIONS: Recent Filings
Purchases
$Val
Company/Symbol Insiders Shares (000's)EnergyTransferET 4 1,368,400 10,657
NewellBrandsNWL 4 707,078 10,413
SixFlagsEntertainmentSIX 1 300,000 6,595
KinderMorganKMI 1 300,000 5,854
PlanetFitnessPLNT 4 86,000 5,510NielsenHoldingsNLSN 1 250,000 4,083
AmercoUHAL 3 13,000 4,058
TrinityIndustriesTRN 2 177,235 3,613
NorthernOilAndGasNOG 1 3,352,443 3,584
Freeport-McmoranFCX 2 335,000 3,358
AmnealPharmaceuticalsAMRX 3 850,000 3,157
QurateRetailQRTEA 1 550,000 2,995
WesternMidstreamPartnersWES 2 422,200 2,913
ProsperityBancsharesPB 5 56,300 2,880
NustarEnergyNS 5 236,000 2,585RevolveGroupRVLV 2 196,000 2,569
PncFinancialServicesGroupPNC 1 24,415 2,500
UpworkUPWK 2 275,000 2,217
RangeResourcesRRC 2 918,128 2,014
KarAuctionServicesKAR 3 111,355 1,951Sales
$ Val
Company/Symbol Insiders Shares (000's)SbaCommunicationsSBAC 6 161,990 47,467
ZoetisZTS 2 307,438 43,411
Marsh&MclennanCosMMC 6 310,267 33,146
TellurianTELL 1 17,988,676 27,496
QuestDiagnosticsDGX 1 230,178 25,935
TradeDeskTTD 2 80,004 21,973
AlteryxAYX 2 148,950 21,082
BlacklineBL 1 314,798 19,407
ZoomVideoCommunicationsZM 4 172,860 19,399
BroadcomAVGO 1 75,000 18,962AmerescoAMRC 2 805,000 17,104
ThermoFisherScientificTMO 2 49,000 15,767
TylerTechnologiesTYL 3 46,000 15,179
ExtraSpaceStorageEXR 2 130,000 14,114
Five9FIVN 5 184,134 13,414BeyondMeatBYND 2 134,083 13,379
RealpageRP 1 200,000 12,569
Salesforce.comCRM 4 75,119 12,410
SlackTechnologiesWORK 4 349,452 10,481
QorvoQRVO 2 111,102 10,450Aninsiderisanyofficer,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