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These reports, excerpted and edited by Barron’s, were issued recently by investment and research firms. The reports are a sampling of analysts’ thinking; they should not be considered the views or recommendations of Barron’s. Some of the reports’ issuers have provided, or hope to provide, investment-banking or other services to the companies being analyzed.
Walt
Disney
DIS-NYSE
Buy Price $174.86 on June 17
by Guggenheim
We have refined our parks model to reflect our view of a faster pace of reopening trends and stronger consumer spending than previously forecast. Of note, the state of California has allowed Disneyland to return to full capacity as of June 15, and Disneyland Paris is scheduled to reopen on June 17. While management has guided to low-double digit attendance growth over the next several months, we anticipate that strong demand and a high level of execution will support a steep recovery rate, with fiscal-2022 revenue matching 2019 levels. Our updated analysis draws from the healthy return of broader domestic restaurant demand, tempered by the longer expected booking lead time for vacation windows, particularly at Walt Disney World. We are raising our price target to $215 from $210 on our higher long-term outlook.
MP MaterialsMP-NYSE
Overweight Price $31.79 on June 15
by J.P. Morgan
We are initiating coverage of rare-earth producer MP Materials with an Overweight rating and Dec. 21 price target of $41. Neodymium prices are down 30% since recent highs in early March, while MP stock has dropped 36% since a high of $49.44 on March 2 of this year (versus the S&P 500 index’s 10% increase). We think this pressure on neodymium prices should reverse, as solid demand growth and lagging supply should push prices higher over the next several years, while prices could also see a seasonal bump over the summer. MP is well placed to take advantage of a strengthening market for neodymium and praseodymium, as it should be one of the lowest-cost producers in the world and an attractive partner for customers looking to secure supply outside of China. The company has a strong balance sheet, with net cash of about $450 million. MP is also looking to move up the value chain into rare-earth magnets, and successful execution of this plan could drive multiple expansion for the company.
Coinbase
GlobalCOIN-Nasdaq
Buy Price $232.21 on June 16
by Canaccord Genuity
If the future of finance, stores of value, and innovative ways of transacting goods and
services becomes increasingly tied to the blockchain, we believe that Coinbase stands to be a major beneficiary. We view Coinbase as a kind of “super on-ramp” to everything cryptocurrency, and that holds true for consumers, institutions, and enterprises….At the same time, we are cognizant of the fact that the Coinbase profit-and-loss model today is exposed to material fluctuation, as it is highly correlated to crypto spot prices. This, in our view, means that if we are in a Bitcoin holding pattern here for a while, Coinbase could probably experience sequentially weaker financial performance.
We are bucking some short-term noise and what has been a material share price pullback and initiating here at Buy. Our one-year price target of $285 is equivalent to 12 times our 2022 enterprise value/sales estimate. We see this as reasonable, given a target multiple slightly below parity with more-mature trading exchanges and high-growth fintechs.
Infosys
INFY-NYSE
Outperform Price $20.23 on June 16
by Wedbush
We maintain our bullish stance on Infosys after recent checks with the company. We specifically believe that Infosys is headed toward a multiyear cycle of double-digit growth rates, reflecting: 1) a pandemic-driven acceleration in enterprise adoption of digital-transformation initiatives; 2) an expanding critical mass of digital/SMAC (social, mobile, analytics, and cloud)-based revenue mix, which we peg at 50%-plus of total revenues, propelled by both organic growth and recent mergers-and-acquisitions activity; 3) 12 to 24 months of booking strength that is yet to convert into revenues, providing strong visibility; 4) a well-oiled recruiting engine, which will become critical as the industry returns to a normalized recruiting environment; and 5) ample cushion for absorbing rising wage inflation and hiring costs. Collectively, we expect further price/earnings ratio expansion as the company demonstrates its ability to sustain low- to mid-double digit revenue growth rates. Price target: $25.
Oatly Group
OTLY-Nasdaq
Perform Price $27.82 on June 17
by Oppenheimer
Earlier this week, we launched coverage of Oatly with a Perform rating. We look very favorably upon the company’s longer-term growth prospects, but we believe that shares now reflect the bull case following the strong post-initial-public-offering rally. In recent weeks, we have observed aggressive marketing efforts in lower Manhattan highlighting the brand. These include ads entering subway stops and on the front of public buses. Core competencies for the company include success on the branding and marketing front. Oatly Group takes a creative approach in driving brand awareness.
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