M10 BARRON’S September 28, 2020
Research Reports
HowAnalystsSizeUpCompanies
These reports, excerpted and edited by Barron’s, were issued recently by investment and
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toprovide,investment-bankingorotherservicestothecompaniesbeinganalyzed.
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Nike• NKE-NYSE
Buy • Price $116.87 on Sept 23
by Guggenheim
Nike reported strong fiscal first-quarter
results, with earnings per share nearly two
times our expectation (95 cents versus 51
cents). Under the leadership of CEO John
Donahoe, Nike is rapidly embarking on the
next era of its history; this will be digitally
led and likely be defined by even greater
separation versus industry peers, as well
as from Nike’s own historical rates of pro-
ductivity, consumer engagement, and finan-
cial performance. Overall, our investment
thesis on NKE was further reinforced by
the results and strategy put forth by the
company last night. We are raising our es-
timates and price target ($165 from $150).
Nike remains our Best Idea.
Enterprise Products• EPD NYSE
Strong Buy • Price $15.33 on Sept. 24
by Raymond James
Enterprise [a natural-gas and oil pipeline
company] has not been immune to the head-
winds plaguing the broader midstream sec-
tor. However, EPD’s unique combination of
integration, strong balance sheet, and re-
turn on invested capital record remains
among the very best in class. We see Enter-
prise as arguably best positioned in its
space to withstand the volatile macro land-
scape. Moreover, it trades at an attractive
(and safe) 11.5% yield and heavily histori-
cally discounted eight times 2021 enterprise
value/Ebitda [earnings before interest,
taxes, depreciation, and amortization]. We
reiterate our $25 target price, based on our
2021 valuation.
Union Pacific• UNP- NYSE
Buy • Price of $194.32 on Sept. 24
by Benchmark
We maintain our Buy rating on Union Pa-
cific and raise our price target from $190 to
$220. Our target assumes that the shares
are valued at 23 times our 2021 estimate
and 20 times our 2022 forecast. On a rela-
tive basis, UNP trades at a 5% premium to
the one-year forward S&P market multiple.
On a 2021 estimated free-cash-flow basis,
we have Union Pacific trading at 4.3%,
slightly above its peers.
Due to its successful implementation of
precision scheduled railroading, UNP is not
only better positioned to withstand eco-
nomic shocks like the current one, but also
to benefit over the long term. Coming out of
this recession, we look for better incremen-
tal margins/free-cash-flow conversion.
By 2022, we think Union Pacific can earn
anywhere from $10.20 to $11. At $11 of EPS
and an undiscounted 20 multiple, UNP
would be worth $220.
Goldman Sachs• GS-NYSE
Buy • Price $186.18 on Sept. 23
by UBS
Goldman is generating solid results in the
current environment, and potential volatility
from the coming U.S. election could allow
for a solid fourth quarter, bridging to first-
quarter seasonal strength. Furthermore, in
2021 we expect the efficiency efforts from
GS’s strategic plans to begin to impact its
profit-and-loss line, leading to upside to
earnings forecasts.
We see a path to 12%-plus returns on tan-
gible equity, yet Goldman is trading below
tangible book value. M&A announcements
are beginning to pick up, underwriting re-
sults have been very robust, and trading
volume and investor engagement has re-
mained elevated, all of which play to Gold-
man’s traditional strengths. As some of
these revenues recover (while trading nor-
malizes), Goldman’s efficiency efforts should
limit expense growth.
We are raising our 2020 EPS estimate by
16%, to $14.80, driven by expected strength
in trading, and our 2021 EPS estimate by
5%, to $24.50, on improved expense disci-
pline. We also are raising our price target to
$245, from $220. This applies a 10 times
multiple (previously 9.5 times) on our up-
dated 2021 EPS estimate.
WesBanco• WSBC-Nasdaq
Outperform/Moderate Risk • Price: $19.60
on Sept. 24
by Boenning & Scattergood
We are resuming coverage of WesBanco,
with a $27.50 price target, based on approxi-
mately 1.3 times tangible book and 11 times
price-to-normalized earnings.
WesBanco is the parent company of Wes-
Banco Bank, which operates 237 branches
in Indiana, Kentucky, Maryland, Ohio, Penn-
sylvania, and West Virginia. It had over
$16.8 billion in assets as of June 30, and
over $10.9 billion in loans. We believe
WSBC’s discounted valuation of 0.93 times
tangible book, versus peer average at 1.03
times, is unwarranted. We also believe that
WSBC’s strong deposit base is being
largely overlooked. Furthermore, its strong
capital level provides sufficient cushion in
the event of a more severe credit downturn.
Our Outperform rating is driven by these
attributes and valuation, where we see
nearly 25% upside to our target price.
We would potentially look to downgrade
this name upon its approaching our price
target, or if credit worsens materially from
our forecast. We are also monitoring Wes-
Banco’s hotel portfolio, which comprises 7%
of its total loans, for additional signs of
stress, given Covid-19’s impact on travel.
INSIDER TRANSACTIONS RATIO
0
10
20
30
40
50
60
O N D J F M A M J J AS
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 587, 687 ,126 and 95, 295 ,357 respectively; Source: Thomson Reuters
Bearish
Bullish Ratio = 6
INSIDER TRANSACTIONS: Recent Filings
Purchases
$ Val
Company/Symbol Insiders Shares (000's)Metacrine MTCR 12 7,613,070 76,892
Stepstone STEP 8 222,157 5,554TravelcentersOfAmerica TA 1 104,738 2,259
CassavaSciences SAVA 2 262,000 1,900OutsetMedical OM 3 23,500 1,411AvadelPharmaceuticals AVDL 3 192,000 1,108
PactivEvergreen PTVE 3 76,342 1,039
VoxxInternational VOXX 1 97,042 756KingswayFinancial KFS 4 240,288 743CbFinancialServices CBFV 2 25,858 493EntercomCommunications ETM 2 285,108 403OfgBancorp OFG 2 31,152 397
HighwoodsProperties HIW 1 10,000 337Cryolife CRY 2 20,000 333ArlingtonAssetInvestment AI 2 120,000 321Weyerhaeuser WY 1 10,000 291LibertyLatinAmericaLtd LILA 2 35,000 290
ChathamLodgingTrust CLDT 1 32,600 265
Vereit VER 1 40,000 253SaulCenters BFS 1 10,000 249Sales
$ Val
Company/Symbol Insiders Shares (000's)JfrogLimited FROG 3 1,438,000 93,154
BrighamMinerals MNRL 2 10,915,540 88,165
Knight-SwiftTransportation KNX 2 1,067,885 43,739Paylocity PCTY 1 275,328 40,630Schrodinger SDGR 2 593,889 31,517Square SQ 1 200,000 30,786PelotonInteractive PTON 2 333,500 27,017
Beigene BGNE 2 85,228 21,629BroadridgeFinancialSolutions BR 1 153,438 20,741OnewaterMarine ONEW 7 1,044,565 19,847CoupaSoftware COUP 4 78,523 19,242RaptTherapeutics RAPT 1 608,000 18,757
BeyondMeat BYND 1 127,500 18,464
Workday WDAY 2 86,094 17,919Q2 QTWO 2 201,025 17,739Stamps.Com STMP 2 76,319 16,629
Netflix NFLX 1 34,853 16,614Zscaler ZS 5 120,991 15,942
Okta OKTA 5 75,719 14,752Docusign DOCU 3 74,298 14,404Aninsiderisanyofficer,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