October 26, 2020 BARRON’S M11
Research Reports
HowAnalystsSizeUpCompanies
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Tenet Healthcare•THC-NYSE
Outperform•Price $28.45 on Oct. 22
by RBC Capital Markets
Tenet Healthcare posted solid third-quarter
results, despite continued disruptions from
Covid-19. Outbreaks in certain markets led to
a significant sequential increase in Covid pa-
tients, which weighed on monthly earnings
before interest, taxes, depreciation, and
amortization, or Ebitda, performance in Au-
gust, but trends improved in September. We
are pleased to see the continued, albeit very
gradual, improvement in volume trends but
acknowledge that near-term visibility remains
challenged, with guidance still off the table
for now. We maintain our $35 price target.
Tenet’s third quarter produced a solid, 13%
beat versus our earnings estimate when
excluding Cares Act grant funds from re-
ported results and our modeled expectations.
Adjusted Ebitda of $621 million (versus our
$549 million estimate on a like-for-like basis)
reflected further sequential volume improve-
ment, a favorable commercial mix, pricing
growth, and better expense management,
particularly for labor.
Chipotle Mexican Grill•CMG-NYSE
Outperform•Price $1,343.25 on Oct. 15
by Credit Suisse
Chipotle has been the best-performing stock
in our coverage, up 60% this year. It’s one of
the few restaurant companies likely to
emerge from the pandemic in a stronger po-
sition. We believe buy-side expectations for
third-quarter same-store sales are ahead of
sell-side’s 7.2%, which embed acceleration in
August from July’s 6%-plus, though Septem-
ber likely decelerated as Chipotle lapped last
year’s launch of Carne Asada.
Digital sales were about 50% of total sales
in July, including around 25% mobile order
and pay and 25% delivery (15% third party).
Chipotle expects digital to stabilize at about
40% to 50% of sales, more than twice the
pre-Covid rate. While the shift in sales to de-
livery has weighed on margins, Chipotle re-
cently increased delivery menu prices by
around 7%, which should help margins. We
are increasing our fiscal 2020/21 earnings-
per-share estimates to $11.26/$23.58 and rais-
ing our price target to $1,500 (from $1,250).
Bristol-Myers Squibb•BMY-NYSE
Buy•Price $61 on Oct. 15
by BofA Securities
Our $80 price objective is based on a 50/50
blended average of our risk-adjusted dis-
counted cash flow and price/earnings ratio
applied to 2020 estimated earnings per share.
We assume about a 12 to 13 times 2020 P/E
multiple, given an impending patent cliff and
risks associated with later-stage pipeline as-
sets from the recent Celgene acquisition. The
risks to our price objective include negative
outcomes from later-stage pipeline assets in
development, pressures from headline dan-
gers facing the sector (including drug pricing
reform), and negative patent rulings.
WesBanco•WSBC-Nasdaq
Outperform/Moderate Risk
- Price $24.10 on Oct. 21
by Boenning & Scattergood
WesBanco [a bank holding company based in
West Virginia] reported third-quarter earn-
ings of 61 cents a share, versus our estimate
of 55 cents and the consensus forecast of 54
cents. Slightly better-than-expected net in-
terest income and better-than-expected mort-
gage banking and debit interchange fees
drove the upside, relative to our model.
Adjusted noninterest expenses were largely
in line with our estimate.
Positive takeaways: Adjusted PTPP [pre-
tax, preprovision income] of $68.1 million
came in above our $61 million estimate, as
both net interest income and fee income de-
livered upside. The net interest margin was
3.31%, down only one basis point [1/100th of
a percentage point] sequentially. Deferrals
stood at 4.9% of total loans as of Oct. 16, ver-
sus 9.9% at the end of July.
Negative takeaways: Despite effectively
nil net charge-offs and stable nonperforming
assets, criticized assets increased by 67% se-
quentially, due to negative risk rating migra-
tion within the hotel portfolio.
Our target price on WesBanco is $27.50.
Sirius XM Holdings•SIRI-Nasdaq
Sector Perform•Price $5.86 on Oct. 22
by RBC Capital Markets
Sirius XM reported strong third-quarter re-
sults, with highlights including strong Sirius
XM self-pay net adds with steady churn, bet-
ter-than-expected ad trends at Pandora, cost
containment, and accelerating share buy-
backs. The satellite-radio company’s raised
2020 guidance is nicely above estimates for
its self-pay net adds, while the financial out-
look is largely in line to modestly ahead.
Total revenue of $2.03 billion came in
7.5%/6.7% ahead of RBC/consensus fore-
casts, while adjusted Ebitda of $661 million
was 5.6%/9.3% ahead. Management notes
that it is making “significant progress” in
the Howard Stern contract renewal.
Management outlined new 2020 guidance
as follows: Sirius XM self-pay net adds
around 800,000, up from 700,000; revenue of
about $7.85 billion, up from $7.7 billion;
adjusted Ebitda around $2.475 billion (up
from $2.4 billion; free cash flow around $1.6
billion, up from previous guidance “ap-
proaching” that number. In addition, Sirius
accelerated its share repurchases, buying
$486 million worth of stock in the quarter.
INSIDER TRANSACTIONS RATIO
0
10
20
30
40
50
60
O N D J F M A M J J A S O
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 390, 190 ,436 and 41, 056 ,176 respectively; Source: Thomson Reuters
Bearish
Ratio = 10 Bullish
INSIDER TRANSACTIONS: Recent Filings
Purchases
$ Val
Company/Symbol Insiders Shares (000's)SpruceBiosciencesSPRB 4 950,000 14,250
ArrayTechnologiesARRY 1 182,772 7,119KronosBioKRON 6 189,680 5,988
ChurchillCapitalIiiMPLN 1 481,711 4,963SelectaBiosciencesSELB 1 1,887,696 4,336CodiakBiosciencesCDAK 1 235,000 2,844
CitigroupC 1 10,000 441
BiovieBIVI 1 20,100 200CarnivalCCL 1 10,000 140DariohealthDRIO 2 8,559 114HeicoHEI 1 978 109NeurotropeNTRP 1 100,000 108
LandecLNDC 1 10,000 103FastenalFAST 1 2,000 90CalMaineFoodsCALM 1 2,000 77GreenpowerMotorCompanyGP 1 5,000 57YorkWaterYORW 15 970 39
Oil-DriCorporationOfAmericaODC 1 1,000 37
HinghamInstitutionForSavingsHIFS 1 107 22BankOfSouthCarolinaBKSC 1 1,210 20Sales
$ Val
Company/Symbol Insiders Shares (000's)SquareSQ 2 210,000 39,860
QuestDiagnosticsDGX 2 327,588 39,275
SchrodingerSDGR 1 630,919 35,600DatadogDDOG 2 288,123 31,401PelotonInteractivePTON 2 203,500 26,755CintasCTAS 1 67,000 23,145CoupaSoftwareCOUP 2 62,500 19,025
Salesforce.ComCRM 4 70,800 18,301PaychexPAYX 1 216,818 18,152TwilioTWLO 3 53,800 17,864OnSemiconductorON 1 600,000 15,456GooseheadInsuranceGSHD 2 131,381 13,533
DellTechnologiesDELL 2 189,654 12,980
RingcentralRNG 4 44,681 12,438WalmartWMT 1 85,000 12,287AccenturePlcACN 8 50,472 11,619
LeviStrauss&CoLEVI 1 725,000 11,390SnapSNAP 6 370,261 10,582
CloudflareNET 2 176,000 10,325TransdigmTDG 1 21,548 10,205Aninsiderisanyofficer,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