These reports, excerpted and edited by Barron’s, were recently published by investment and research firms. The reports are a sample of the analysts’ thinking; they should not be considered Barron’s opinions or recommendations. Some of the issuers of the reports have provided, or expect to provide, investment banking or other services to the companies analyzed.
Microsoft
• MSFT-Nasdaq
Outperformance • Price $337.20 on July 13
by Oppenheimer
We are raising our price target for Microsoft to $410 from $330, based on estimated earnings per share of 32x the 2024 calendar of $13, close to 35x highs of 2020. We believe Microsoft will improve its position already dominant enterprise IT, as the only player with an integrated platform/AI, three in fact, and with the key wholesale market via Teams/Azure.
It can also uniquely integrate compute/network/security services, which converge. It has one billion Windows users and 1.5 billion devices; no one in the business segment comes close. They have access to their own and others’ enterprise applications and data to drive network automation and new services. AWS and Google should remain strong in wholesale, but neither the customer base nor the front-end operating system and integrated applications.
American bank
• USB-NYSE
Buy • Price $33.74 on July 11
by BofA Securities
We are raising our rating on US Bancorp from Neutral to Buy. We believe that investors’ focus on building capital has drawn attention away from what is among the highest quality franchises in US banking.
USB’s scale, earnings accuracy and strong execution should lead to superior EPS growth and stock outperformance, with stocks trading at eight times estimated 2024 EPS, a discount to PNC Financial and Wells Fargo. The company has a resilient fee revenue base, bolstered by a differentiated payments business. The payments sector offers a bullish option for inventory valuation. Price target: $40.
IMAX
• IMAX-NYSE
Outperformance • Price $17.08 on July 13
by Wedbush
IMAX remains on Wedbush’s list of top ideas, given that we believe IMAX is 1) the best way to play the theatrical rebound in 2023 as it gains market share, 2) best positioned to leverage of consumers’ continued shift to premium screens, 3) a solid way to position itself for the ongoing economic rebound in China, and 4) to increase its global relevance by expanding its local language content ( 30 to 40 titles expected in 2023).
The Street currently values IMAX at seven times 2025 earnings before interest, taxes, depreciation and amortization, or Ebitda, according to a mature national theater chain. With IMAX’s large global footprint, growth potential, and market share gains on its growing base of joint venture screens, it’s clear that IMAX’s stock is currently undervalued. Price target: $26.
Oracle
• ORCL-NYSE
Buy • Price $116.02 on July 12
by Mizuho Securities
We attended an Oracle event hosted by CEO Safra Catz and Executive Vice President Mike Sicilia at the NYSE. We came away with growing confidence in Oracle’s ability to drive Oracle Cloud Infrastructure’s growth, improve margins, and drive cross-selling to Cerner’s customer base.
We believe Oracle has successfully transitioned to become the fourth largest hyperscaler and, coupled with its leadership in enterprise resource planning in the cloud, the next phase of Oracle’s journey has only just begun.
We expect Oracle to deliver solid revenue and cash flow growth over the medium term and exceed its FY26 targets. We reiterate our Buy rating and $150 price target .
American Tower
• AMT-NYSE
Outperformance • Price $195.43 on July 13
by BMO Capital Markets
We are initiating on AMT with an outperform rating and a target price of $230. We see AMT as the best way to invest in the global theme of wireless connectivity and increased data usage. With a diverse global portfolio, AMT has a long multi-year growth track, outpaces headwinds including Sprint’s churn, and a resolution in India is approaching.
We expect AMT to generate an adjusted FFO/equity compound annual growth rate of 7.7%, ahead of its peers, and dividend growth of 10% per year. With the shares trading at 18.5 times 2024E AFFO/share, we consider the risk/reward ratio compelling.
Haverty Furniture
• HVT-NYSE
Buy • Price $30.59 on July 10
by reference
We are launching the Haverty hedge with a buy rating and a price target of $41. HVT is a family-controlled furniture retailer in the Southeast, operating 123 stores in 16 states. We believe the company’s debt-free balance sheet, strong free cash flow and continuously refined operations, combined with its current valuation, make an attractive investment thesis for the stock.
Additionally, the migration to the Southeast HVT market is running counter to national housing trends, and big box bankruptcies present opportunistic growth opportunities. After strong selling during Covid, current financial metrics are clouded and not fully understood by investors.
Macy’s
• M-NYSE
Sale • Price $16.13 on July 11
by UBS
The reason our M rating is Sell is that we believe the company will miss Street’s earnings expectations this year and over the long term. In the near term, we believe the US consumer spending environment will deteriorate, which will negatively impact M more than the market expects.
In the long term, we believe the high street is underestimating the pressure on M’s revenue from losing market share as consumers migrate to pure online channels, better value retailers such as TJX, and brand stores and websites. Price target: $12.
To be considered for this section, material should be sent to Research@barrons.com.