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.
Buy Price $57.26 on July 27
We are initiating coverage with a Buy rating and a 12-month price target of $81, 21.7 times our fiscal 2024 earnings estimate of $3.73 a share. Semtech is one of the most diversified companies of its size in the mixed signal/analog universe, both from a product and end-market perspective—achieved through strategic acquisitions and internal development.
Semtech capitalizes on industry trends that are expected to provide significant growth, such as the Internet of Things, more bandwidth over high-speed networks, and smaller, highly-integrated system requirements for greater mobility. The resulting product platforms are some of the most innovative and widely used in the markets that Semtech serves.
Sector Perform Price $183.66 on July 27
by RBC Capital Markets
Based on multi-industry reports thus far this earnings season, Honeywell’s second-quarter results look favorable, with a modest beat and raise in a tough operating environment. The beat was broad-based on the top line against lowered expectations. There was a modest 4% operating beat, and free cash flow was seasonally soft.
On the guidance front, 3Q metrics were mostly below consensus, with a modest boost to the low end of Honeywell’s 2022 EPS guidance. We also point out that the 2022 free cash-flow guidance was reiterated, but was offset by new assumptions of $200 million in lower operating cash flow and capex.
Finally, we liked the announcement of Vimal Kupar’s appointment as president and chief operating officer, effective immediately. Kapur has extensive operating experience in his 33 years at Honeywell. In our view, this gives CEO Darius Adamczyk a new partner in the C-suite, who can help shoulder the load on strategy formation, operating oversight, and likely some investor/analyst-facing duties.
Honeywell’s shares have underperformed peers’ by 230 basis points [2.3%] over the past three weeks and are trading just above the midpoint of the company’s historical relative price/earnings range, suggesting balanced expectations. Price target: $184.
Buy Price $33.40 on July 20
by BofA Securities
The typical bearish view [on this banking company] centers around credit concerns and accelerating funding costs. While rising deposit costs are expected to limit Ally’s near-term revenue growth, management is placing greater emphasis on managing expenses in the current environment, helping to relieve some pressure on preprovision net revenue.
We are lowering our FY22 EPS estimate by 8%, to $7.06 (from $7.65), primarily reflecting higher provisions, but are raising our FY23 estimate by 1%, to $5.82 (from $5.74). Investors may question whether shares of Ally are cheap or a value trap.
We will leave you with this: At 4.5 times next year’s earnings, the shares trade at an 18% discount to their fiscal 2020 average. And the stock trades below one times price to tangible book value, despite expectations that Ally can sustainably generate a 16% to 18% return on average tangible common shareholders’ equity. Price objective: $42.
Overweight Price $69.88 on July 27
by Piper Sandler
Impinj has performed very much like one of our top picks. The company [which specializes in wirelessly connecting everyday devices to the internet] handily beat Street expectations [for its latest quarter] and provided September-quarter guidance well ahead of expectations.
Conditions continue to be ripe for Impinj to be successful in the near- and mid-term, and we expect its technology to be transformative in the long term. Impinj is seeing access to a greater level of supply [for its products], letting it increase revenue. In addition, the company is pivoting towards greater profitability and free cash flow. We are raising our price target to $100 from $80.
Hold (Three stars out of five) Price $34.52 on July 25
Our Hold opinion reflects a view that the car and truck maker’s volume and margins will remain under pressure in the near term. We also see risks related to its planned shift to an all-electric fleet, as well as ongoing losses in the Cruise [self-driving vehicle] segment. GM has struggled to find commercial success in electric vehicles.
Now, it plans to debut six EV models utilizing its Ultium battery system by mid-2023, with a goal of offering 30 globally by mid-decade. GM is particularly leveraged to China (46% of vehicle sales in 2021). Risks included [higher] interest rates, gasoline prices, and raw material costs. Competitive pressures and currency rates could also be more or less favorable.
The basis of our 12-month price target of $36 is a price/earnings multiple of 5.5 times our 2023 EPS forecast of $6.50, a discount to GM’s 10-year average forward P/E of 8.3 times, due to the increased likelihood of recession .