Barron's - USA (2020-08-03)

M10 BARRON’S August 3, 2020

Research Reports

HowAnalystsSizeUpCompanies

These reports, excerpted and edited by Barron’s, were issued recently by investment and

researchfirms.Thereportsareasamplingofanalysts’thinking;theyshouldnotbeconsidered

theviewsorrecommendationsofBarron’s.Someofthereports’issuershaveprovided,orhope

toprovide,investment-bankingorotherservicestothecompaniesbeinganalyzed.

To be considered for this section, material

should be sent [email protected].

Trane Technologies•TT-NYSE

Sector Perform•Price $110.47 on July 29

by RBC Capital Markets

Trane Technologies has transformed into a

heating, ventilation, and air conditioning

pure play, just as Covid-19 is sparking new

HVAC demand in commercial indoor air

quality and residential air conditioning.

In the second quarter, Trane handily beat

the consensus earnings estimate by 52 cents

a share or about 70%. Its approximately

13% organic revenue decline came in at less

than half our minus-28% estimate. The stock

has also quickly become an environmental,

social, and corporate governance favorite.

Risk/reward looks mostly balanced here.

Trane has highlighted the Covid-driven

long-term secular boost that its commercial

HVAC business is seeing from [concerns

about air quality within buildings]. While

there are no federal mandates yet, many

buildings are constructed to Ashrae [Ameri-

can Society of Heating, Refrigerating and

Air-Conditioning Engineers] standards, and

employees are increasingly demanding more

sophisticated and safer HVAC systems.

Trane trades at 22.8 times our 2021 EPS

estimate, a 2% discount to peers. Looking

ahead, the company has tightened its 2020

sales analysis from down 15% to 25%, year-

over-year, to down 10% to 15%. We are rais-

ing our 2020/2021 EPS estimates by 95 and

80 cents, to $4 and $4.85, respectively, and

our stock price target by $16, to $97.

Horizon Technology Finance

• HRZN-Nasdaq

Buy•Price $11.57 on July 30

by Maxim Group

HRZN reported second-quarter net invest-

ment income of 40 cents a share (aided by

income from liquidity events) versus its

quarterly dividend of 30 cents (paid at 10

cents a month, and declared through De-

cember 2020). [Earnings under generally

accepted accounting principles were] 47

cents a share. With GAAP EPS exceeding

the dividend, net asset value per share was

up 1.4%, to $11.64.

We regard this as outperformance in a

Covid-19 environment, and attribute it to

HRZN’s focus on technology and life sci-

ences. We maintain our 2021 dividend esti-

mate at $1.20. Over the next four quarters,

we expect a dividend yield of 10.4% and stock

price appreciation of 8%, to our price target

of $12, resulting in about an 18% total return.

Texas Instruments•TXN-NYSE

by BofA Securities

We assign a $155 price objective to Texas

Instruments, based on 26 times estimated

2021 enterprise value/free cash flow. Our

target is justified by TXN’s best-in-class

profitability and cash flow returns. Diversi-

fied peers trade in a range of 14-to-40 times.

Boeing•BA-NYSE

Hold•Price $166.01 on July 29

by Canaccord Genuity

We are maintaining our Hold rating and

$155 price target on Boeing. Until we get

better confidence in the pace of 737 MAX de-

liveries and the broader macro backdrop, the

stock will see limited upside. Management

sounds relatively cautious on the outlook, and

it appears that further cost actions will be

necessary beyond the about 10% headcount

reduction the company has implemented.

Boeing has come back from the liquidity

cliff, and with the U.S. government support,

there is a relatively high floor on the stock.

However, it will likely be 2023 before we get

back to a more “normal” year, given the cur-

rent uncertainty around airline and leasing

company financial health.

Amedisys•AMED-Nasdaq

by Benchmark

AMED’s home health care and hospice vol-

umes recovered strongly in June, provid-

ing enough visibility for management to

reinstate 2020 guidance nicely above the

consensus model. We saw signs of this re-

covery when we upgraded our rating to

Buy in June.

Other than a small rise in missed visits

in some new hot spots (e.g., Florida), we

see only tailwinds for AMED heading into

2021. They include an increasing share of

post-acute admissions, a 2.6% Medicare

rate update for both home health care and

hospice, and likely home health mergers

and acquisition momentum.

Reinstated Ebitda and adjusted EPS

guidance is now 15% ahead of our prior

model, and we are increasing our stock

price target to $250 (from $210).

Kadant• KAI-NYSE

Market Perform•Price $110 on July 30

by Barrington Research

Kadant reported second-quarter results that

beat consensus expectations. Adjusted Ebitda

and adjusted earnings per share were better

than our expectations, while revenue was

roughly in line with our expectation. On a

consensus basis, the company is trading at

26.1 and 22.3 times fiscal 2020 and 2021 earn-

ings, respectively, and 14.3 times and 12.9

times fiscal 2020 and 2021 Ebitda, respec-

tively. This represents a premium to its peer

group, which we believe is warranted.

[However,] we are maintaining our Market

Perform investment rating, primarily based

on valuation.

INSIDER TRANSACTIONS RATIO

0

10

20

30

40

50

60

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

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 367, 305 ,836 and 22, 466 ,887 respectively; Source: Thomson Reuters

Bearish

Bullish

Ratio = 16

INSIDER TRANSACTIONS: Recent Filings

Purchases

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

CasiPharmaceuticalsCASI 2 4,172,579 7,928 KinderMorganKMI 1 300,000 4,242

AT&TT 1 100,000 2,969 MontroseEnvironmentalMEG 2 93,000 2,023

MerrimackPharmaceuticalsMACK 2 354,548 1,104

PandionTherapeuticsPAND 1 46,111 830 AcerTherapeuticsACER 4 223,570 782 JamfJAMF 3 23,076 600

IntelINTC 1 8,021 401

FbFinancialFBK 1 15,250 384

RepublicBancorpRBCAA 1 8,000 251

LimestoneBancorpLMST 1 18,763 206 OncternalTherapeuticsONCT 2 51,972 124

WashingtonFederalWAFD 1 5,300 123

CadenceBancorpCADE 1 15,000 122

FirstBusinessFinancialServicesFBIZ 2 7,213 106

NewResidentialInvestmentNRZ 1 10,000 77 TristateCapitalTSC 1 5,000 67 CenturyBancorpCNBKA 3 828 64

BankOfCommerceBOCH 1 8,000 63

Sales

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

DanaherDHR 7 394,010 76,935 ThermoFisherScientificTMO 4 88,731 36,076 MedpaceMEDP 1 243,518 30,495

CarmaxKMX 4 285,117 27,862

Coca-ColaKO 1 498,905 24,166

MastercardMA 1 61,067 19,290

IdexIEX 2 103,060 17,396 Salesforce.ComCRM 4 80,454 15,337

GracoGGG 3 248,454 13,498

Alarm.ComALRM 1 200,000 13,455

Floor&DecorFND 3 187,910 12,352

ThunderBridgeAcquisitionRPAY 3 492,995 11,271 PaccarPCAR 9 117,143 10,048 IntercontinentalExchangeICE 2 103,000 9,842

Knight-SwiftTransportationKNX 3 202,690 9,373

TexasInstrumentsTXN 3 65,411 8,572 IridiumCommunicationsIRDM 2 300,000 8,500

MedalliaMDLA 2 255,793 7,923 DigitalRealtyTrustDLR 1 50,000 7,541

IqviaIQV 1 46,080 7,373

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

Barron's - USA (2020-08-03)

Sector Perform•Price $110.47 on July 29

by RBC Capital Markets

Trane Technologies has transformed into a

heating, ventilation, and air conditioning

pure play, just as Covid-19 is sparking new

HVAC demand in commercial indoor air

quality and residential air conditioning.

In the second quarter, Trane handily beat

the consensus earnings estimate by 52 cents

a share or about 70%. Its approximately

13% organic revenue decline came in at less

than half our minus-28% estimate. The stock

has also quickly become an environmental,

social, and corporate governance favorite.

Risk/reward looks mostly balanced here.

Trane has highlighted the Covid-driven

long-term secular boost that its commercial

HVAC business is seeing from [concerns

about air quality within buildings]. While

there are no federal mandates yet, many

buildings are constructed to Ashrae [Ameri-

can Society of Heating, Refrigerating and

Air-Conditioning Engineers] standards, and

employees are increasingly demanding more

sophisticated and safer HVAC systems.

Trane trades at 22.8 times our 2021 EPS

estimate, a 2% discount to peers. Looking

ahead, the company has tightened its 2020

sales analysis from down 15% to 25%, year-

over-year, to down 10% to 15%. We are rais-

ing our 2020/2021 EPS estimates by 95 and

80 cents, to $4 and $4.85, respectively, and

our stock price target by $16, to $97.

• HRZN-Nasdaq

Buy•Price $11.57 on July 30

by Maxim Group

HRZN reported second-quarter net invest-

ment income of 40 cents a share (aided by

income from liquidity events) versus its

quarterly dividend of 30 cents (paid at 10

cents a month, and declared through De-

cember 2020). [Earnings under generally

accepted accounting principles were] 47

cents a share. With GAAP EPS exceeding

the dividend, net asset value per share was

up 1.4%, to $11.64.

We regard this as outperformance in a

Covid-19 environment, and attribute it to

HRZN’s focus on technology and life sci-

ences. We maintain our 2021 dividend esti-

mate at $1.20. Over the next four quarters,

we expect a dividend yield of 10.4% and stock

price appreciation of 8%, to our price target

of $12, resulting in about an 18% total return.

Buy•Price $129.63 on July 27

by BofA Securities

We assign a $155 price objective to Texas

Instruments, based on 26 times estimated

2021 enterprise value/free cash flow. Our

target is justified by TXN’s best-in-class

profitability and cash flow returns. Diversi-

fied peers trade in a range of 14-to-40 times.

Hold•Price $166.01 on July 29

by Canaccord Genuity

We are maintaining our Hold rating and

$155 price target on Boeing. Until we get

better confidence in the pace of 737 MAX de-

liveries and the broader macro backdrop, the

stock will see limited upside. Management

sounds relatively cautious on the outlook, and

it appears that further cost actions will be

necessary beyond the about 10% headcount

reduction the company has implemented.

Boeing has come back from the liquidity

cliff, and with the U.S. government support,

there is a relatively high floor on the stock.

However, it will likely be 2023 before we get

back to a more “normal” year, given the cur-

rent uncertainty around airline and leasing