July 12, 2021 BARRON’S M11
Research Reports
HowAnalystsSizeUpCompanies
Thesereports,excerptedandeditedbyBarron’s,wereissuedrecentlybyinvestmentand
research firms. The reports are a sampling of analysts’ thinking; they should not be
consideredtheviewsorrecommendationsofBarron’s.Someofthereports’issuershave
provided, or hope to provide, investment-banking or other services to the companies
being analyzed.
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Otis Worldwide• OTIS-NYSE
Outperform • Price $82.66 on July 6
by RBC Capital Markets
Otis [which makes elevators and escalators]
has operationally underperformed peers in
the past decade, due to a weaker exposure
to a booming China, underinvestment, and
the unwinding of previous overearning.
With the Chinese market stabilizing and
Otis’ capital expenditures rising to levels
more in line with peers’, its relative under-
performance will decline. Indeed, its organic
growth shortfall versus peers has already
been halved since 2016. Similarly, margins
now appear sustainable. Moving forward,
Otis is likely to remain a slightly slower-
growth company than its competitors Kone
and Schindler, but thanks to its larger ser-
vice exposure, it should earn higher margins
and return on common equity....We derive
our $95 price target using a discounted cash
flow analysis, with an upward adjustment
reflecting the likelihood of greater-than-
expected capital returns.
Virgin Galactic Holdings• SPCE-NYSE
Outperform • Price $46.31 on July 6
by Cowen
Following the news that Richard Branson [the
company’s founder] will be on the second test
flight, on July 11, we are more positive about
the prospects of a successful commercial flight
program in 2022. Visibility, marketing pro-
grams, and ticket sales should support the
stock’s valuation. We raise our price target on
the stock [which had a strong runup this past
week] to $51 on 22 times estimated fiscal-2030
enterprise value to Ebitda [earnings before
interest, taxes, depreciation, and amortiza-
tion]. We base our target multiple on 2030
Ebitda because of the long-term nature of the
business model, and the scarcity of the luxury
experience and capabilities Virgin Galactic
will offer. We see significant growth opportu-
nities as the company leverages its proprie-
tary technology and manufacturing capability
for commercial spaceflights and high-speed
point-to-point travel. We expect Virgin to
have a highly profitable commercial space-
flight business. It has a first-mover advantage
in a high-barrier-to-entry market and is well-
positioned to capitalize on strong demand.
Ares Commercial Real Estate
- ACRE-NYSE
Buy • Price $14.82 on July 2
by BTIG
We reiterate our $16.50 price target on Ares
[which originates and invests in commercial
real-estate assets], following investor meet-
ings with CEO Bryan Donohoe and CFO
Tae-Sik Yoon, which highlighted that ACRE
is well-positioned to maintain earnings power.
That should give investors confidence in the
sustainability of Ares’ 35-cents-a-share quar-
terly dividend (including supplementals). We
view Ares, which yields 9.4%, to be attrac-
tively valued, having pulled back about 10%
since launching its recent equity offering. The
pullback was unwarranted, given the com-
pany’s strong balance sheet, credit perfor-
mance, and high return on equity, largely in-
sulated from changes in interest rates.
CSX• CSX-Nasdaq
Buy • Price $32.98 on July 8
by Benchmark
We reiterate our Buy rating and $36 price
target. Second-quarter and full-year earn-
ings-per-share estimates remain unchanged.
We now have CSX valued at 20.4 times 2022
estimated EPS, versus its peer average of
22.3 times. CSX is currently the second-
cheapest railroad [in our coverage uni-
verrse], based on our 2022 EPS estimates,
but has the second-highest free-cash-flow
yield (CSX, 4.5%; peers, 3.8%).
Globant• GLOB-NYSE
Outperform • Price $216.11 on July 7
by Wedbush
We are raising our 2022 revenue/cash EPS
estimates. We believe that pandemic-driven,
accelerated demand for the social, mobile,
analytics, and cloud services provided by
Globant will likely result in a multiyear
cycle uptick in organic revenue growth of
four to five percentage points, from the
low-20% to mid-20% levels. Relative to its
peers, [Globant, which is based in Luxem-
bourg and mainly serves corporate clients in
the U.S., United Kingdom, and Latin Amer-
ica,] has underperformed its peers. This can
be traced to concerns over the company’s
exposure to the travel/hospitality industry
(airlines, cruises), which accounts for 7% of
sales (down from 15% prepandemic), as well
as to the stock’s inclusion in Latin America-
based emerging markets funds. However,
we see ample opportunity for the stock to
catch up. Our price target is $240.
First Hawaiian• FHB-Nasdaq
Market Perform • Price $28.50 on July 6
by Raymond James
Initiating coverage. Headquartered in Hono-
lulu, First Hawaiian is one of Hawaii’s oldest
and largest financial institutions. The Hawai-
ian economy is earlier in the economic recov-
ery than the rest of the country, as tourism
restrictions are just now being lifted, which
should fuel economic and travel trends. First
Hawaiian is positioned for improving credit
trends and accelerated loan growth into 2022,
Additionally, the bank maintains an enviable
low-cost core deposit base. [However, the
shares trade at a premium to peers.]
INSIDER TRANSACTIONS RATIO
0
19
38
57
76
95
114
133
152
J A S O N D J F M A M JJ
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 507, 174 ,948 and 33, 587 ,476 respectively; Source: Thomson Reuters
Bearish
Bullish
Ratio = 15
INSIDER TRANSACTIONS: Recent Filings
Purchases
$ Val
Company/Symbol Insiders Shares (000's)Cvrx CVRX 3 526,099 13,394
LarimarTherapeutics LRMR 2 742,420 6,496GraphiteBio GRPH 2 185,882 5,130
DocumentSecuritySystems DSS 1 1,555,000 2,643Sentinelone S 5 41,450 1,848Hc2 HCHC 1 205,939 814
LuminarTechnologies LAZR 2 27,272 600
PiedmontLithium PLL 2 6,500 466Acnb ACNB 1 10,000 281VincerxPharma VINC 2 20,799 258SparkEnergy SPKE 1 23,000 252FgNewAmericaAcquisition FGNA 1 20,000 230
Cel-Sci CVM 3 27,500 220Electrocore ECOR 3 200,000 200AlzamendNeuro ALZN 1 26,000 196HookerFurniture HOFT 1 5,000 174GolubCapitalBdc GBDC 1 10,000 155
MitchamIndustries MIND 1 50,000 100
KarunaTherapeutics KRTX 1 636 75Astronova ALOT 1 4,000 55Sales
$ Val
Company/Symbol Insiders Shares (000's)MisterCarWash MCW 5 2,485,127 51,616
Copart CPRT 3 367,479 49,037
TraneTechnologies TT 3 241,050 44,355Roku ROKU 1 85,000 37,403Airbnb ABNB 3 233,166 35,740UnitySoftware U 2 262,705 28,042Carmax KMX 6 201,940 26,381
Crowdstrike CRWD 2 94,281 23,958Coursera COUR 9 578,668 23,403Novavax NVAX 2 108,075 23,164EsteeLauderCompanies EL 1 63,516 20,163Salesforce.Com CRM 4 76,797 19,129
ZoominfoTechnologies ZI 1 348,501 17,835
Draftkings DKNG 1 333,333 17,416Telos TLS 5 532,514 17,312Visa V 4 68,805 16,375
Calix CALX 1 291,581 14,287Bigcommerce BIGC 2 218,754 14,257
AdtalemGlobalEducation ATGE 1 359,907 13,946Zynga ZNGA 2 1,243,513 13,355Aninsiderisanyofficer,directororownerof10%ormoreofaclassofacompany'ssecurities.Inmostcases,aninsidermustreportanytradetothe
SECwithintwobusinessdays.ThetableshighlightcompaniesthatfiledwiththeSECthroughlastWednesday.Thetablesdonotincludepension-
planoremployeestock-optionactivity,tradesbybeneficialownersof10%ormore,tradesunder$2pershareortradesunder100shares.The
"Purchases"columnincludesonlyopen-marketandprivatepurchases;the"Sales"columnincludesonlyopen-marketandprivatesales,and
excludestradesprecededbyoptionexerciseinthe12monthspriortothereportedevent. Source:ThomsonReuters