February 15, 2021 BARRON’S M11
ResearchReports
HowAnalystsSizeUpCompanies
These reports, excerpted and edited by Barron’s, were issued recently by investment
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have provided, or hope to provide, investment-banking or other services to the
companies being analyzed.
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Freeport-McMoRan•FCX-NYSE
- Price $32.02 on Feb. 9
by J.P. Morgan
We are upgrading Freeport-McMoRan to an
Overweight rating and a $37 December 2021
price target. Freeport is the largest copper
pure play, with one of the highest-quality
assets in the history of resource extraction:
Grasberg in Indonesia, which is ramping up
through 2022. In addition, Freeport’s portfolio
of assets in the Americas provides a stable
base of production, as well as additional long-
term growth potential.
As copper and gold production grows and
major project capital expenditures decline,
the company should generate significant free
cash flow. We model $14 billion in free cash
flow for 2021-23, representing about a third
of Freeport’s current market cap.
Beyond allowing Freeport to drive net debt
to a target of $3 billion to $4 billion within the
next 12 months, the ramp in free cash will
allow Freeport to return capital to sharehold-
ers via a variable dividend. Our analysis sug-
gests that such a strategy results in outper-
formance over time, on both a relative and
absolute basis. Given the trends in electric
vehicles and renewables, we believe in cop-
per’s long-term secular demand story.
Western Union•WU-NYSE
- Price $23.47 on Feb. 10
by BTIG
While Western Union’s discount valuation
has persisted, its fourth-quarter report
provided plenty of reasons for the stock
deserving a larger earnings multiple.
Among them: the ongoing growth of its
digital money-transfer business, which
during the quarter posted monthly active
customer growth of 49% and is on pace to
generate about $1 billion in revenue in
2021; expanding operating margins, fueled
by management’s cost-reduction initiatives;
and the underappreciated potential of
Western Union’s white-label program
[which allows money transfers via third
parties]. Price target: $28.
Adobe Systems•ADBE-Nasdaq
- Price $458.77 on Jan. 29
by Edward Jones
Adobe is the clear leader in the growing
markets of digital publishing and marketing
analytics, led by a management team with a
strong track record for executing on strat-
egy. After transitioning to a subscription-
[software] model, Adobe is well positioned
for good recurring revenue growth and has
the financial flexibility to invest in new
products, including machine learning and
augmented reality. Adobe trades at a pre-
mium to its peers, which is warranted,
based on its leadership position in growing
markets, innovative product suite, and
proven management team.
New York Community Bank
- NYCB-NYSE
- Price $10.77 on Jan. 27
by BofA Securities
[New] CEO Tom Cangemi was very clear
during today’s earnings conference call that
management is focused on evaluating
growth opportunities. It sees significant
room to bring in core deposits from its ex-
isting customer base, a historically untapped
opportunity. Branch consolidation should
provide a cost-saving opportunity. We also
sensed a greater openness to add lending
capabilities via opportunistic hiring. On the
macro front, a steepening yield curve should
be a tailwind for lending margin, while a
steady reopening of New York should re-
move the city’s commercial real-estate-
driven overhang on the stock.
In addition, management reiterated its
interest in partnering with another bank and
staying on the lookout for merger-and-
acquisition opportunities. We believe that
the recent CEO change opens the door for
a lot more merger opportunities, especially
merger-of-equals deals. Price objective: $13.
Altice USA•ATUS-NYSE
- Price $37.65 on Feb. 11
by Macquarie Research
Altice’s fourth quarter was strong in dollar
terms, but light in subscription numbers,
which had been strong in the first three
quarters. Residential video lost 74,000 subs,
accelerating a downward trend to minus
6.9%, year over year. Altice added 7,000 mo-
bile lines, also the lowest figure of the year.
We are lowering 2021 estimated earnings
per share from $1.44 to $1.14 on the com-
pany’s conservative guidance. However, we
like Altice’s incremental growth potential
and cash focus. At 10 times enterprise value/
earnings before interest, taxes, deprecia-
tion, and amortization, the stock remains
inexpensive versus peersComcast(ticker:
CMCSA) andCharter Communications
(CHTR). Our 12-month price target is $40.
Zynga•ZNGA-Nasdaq
- Price $11.16 on Feb. 10
by KeyBanc Capital Markets
Zynga [a digital-game maker] reported solid
fourth-quarter earnings and guided bookings
above consensus for 2021. We expect double-
digit bookings growth in 2022, with margin
expansion. There are a multitude of growth
opportunities with the potential to signifi-
cantly scale up the company’s size over the
next several years. We’re raising our price
target to $13.50 [from $12.50] based on 16
times estimated 2022 EV/Ebitda.
INSIDERTRANSACTIONSRATIO
0
10
20
30
40
50
60
F M A M J J A S O N D JF
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 674, 831 ,652 and 13, 878 ,856 respectively; Source: Thomson Reuters
Bearish
Bullish
Ratio=49
INSIDER TRANSACTIONS: Recent Filings
Purchases
$ Val
Company/Symbol Insiders Shares (000's)NorthernOilAndGasNOG 2 537,821 5,244
Yield10BioscienceYTEN 1 101,400 1,242HysterYaleMaterialsHandlingHY 1 12,459 1,074
Harley-DavidsonHOG 2 31,535 1,025InspiremdNSPR 4 483,850 590AffiliatedManagersAMG 1 4,000 545
AnthemANTM 1 1,700 503
UnitedhealthUNH 1 1,500 499ApolloEndosurgeryAPEN 1 103,006 482UgiUGI 1 10,000 375Cullen/FrostBankersCFR 1 3,500 324AdtalemGlobalEducationATGE 3 7,611 301
EnterpriseFinancialServicesEFSC 1 7,500 274AmericanFinancialAFG 1 2,500 241BiogenBIIB 1 898 240CharlesSchwabSCHW 1 3,636 197PcbBancorpPCB 1 15,702 190
FastenalFAST 2 4,000 188
NicholasFinancialNICK 2 16,167 1741StSourceSRCE 1 4,300 171Sales
$ Val
Company/Symbol Insiders Shares (000's)DatadogDDOG 4 947,300 97,480
TeladocHealthTDOC 3 197,541 52,149
MonolithicPowerSystemsMPWR 5 137,292 50,498WaltDisneyDIS 1 237,136 41,743PalantirTechnologiesPLTR 1 1,285,123 40,595MotorolaSolutionsMSI 1 207,273 37,883MedalliaMDLA 2 907,196 36,805
KossKOSS 8 1,034,667 35,542AbbottLaboratoriesABT 3 270,273 33,346ApolloGlobalManagementAPO 2 553,188 28,014AllegiantTravelALGT 8 122,000 26,096HessHES 8 446,522 25,635
CharlesSchwabSCHW 1 464,661 25,372
TeConnectivityTEL 3 184,700 23,556LigandPharmaceuticalsLGND 3 117,310 22,228MongodbMDB 4 54,540 21,220
IntelliaTherapeuticsNTLA 2 294,878 19,970HcaHealthcareHCA 7 109,045 19,264
GuardantHealthGH 1 116,180 18,929ScottsMiracle-GroSMG 5 78,066 18,505Aninsiderisanyofficer,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