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.
Bed Bath & Beyond
Buy Price $33.29 on June 29
by B Riley Securities
We are initiating coverage with a 12-month price target of $44 a share. We believe BBBY’s new management team has made significant improvements to reduce its cost structure and fund investments to elevate it into a top omnichannel retailer in the bed, bath, and home space. Bed Bath & Beyond is trading around 10.9 times our fiscal 2022 EPS estimate and 14.2 times the Street’s, which we believe doesn’t fully account for significant margin improvements. This compares with BBBY’s five-year historical average of 9.9 times and peers’ 16.8. We base our price target on 16 times our FY22 EPS earnings estimate. This is appropriate, given significantly improving margins, from cost cuts, fewer stores, and a rebased cost of goods sold, along with improved e-commerce capabilities. We also expect sales to benefit from the rollout of unique owned brands, which offer value and differentiation from rivals’ products.
Outperform Price $26 on June 28
by Raymond James
We are raising our 12-month price target on the stock to $40, from $35, after hosting a virtual fireside chat with CEO Aaron Levie and CFO Dylan Smith, in which we received an update on the company’s key product and market initiatives. We suspect that Box’s ambition to provide a unified/secure platform for content will increasingly resonate with customers. With other products set to increase the customer value proposition, Box will continue widening the gap between it and legacy content-management platforms. With other dynamics (particularly work from anywhere trends) driving companies to rethink their digital strategies, investors may underappreciate the fundamental tailwinds for Box. And we’re encouraged by Box’s execution on its more balanced growth/profitability approach, including significant margin expansion. With the stock at just five times our 2022 revenue estimate, the risk/reward is attractive.
Hold Price $78.12 on June 25
We are initiating coverage with a Hold rating and 12-month target price of $82. Planet Fitness is the leading franchiser in the health-club industry; its high-volume/low-price strategy has helped it achieve roughly 22% member share. Its scale advantages and the strength of its franchisees have allowed the company to weather the pandemic without a single Covid-related unit closure. Planet Fitness will return to expansion, but we think the stock’s valuation is currently reasonable, given the uncertainty about the time needed for franchisees to rebuild their resources.
Outperform Price $32.35 on June 30
by Barrington Research
FranklinCovey [which provides digital training products to improve employee sales and other performance] reported fiscal third-quarter results that topped expectations by a wide margin. Management raised its fiscal 2021 guidance and suggested likely upside to its long-term financial targets. Revenue increased 58.3%, to $58.7 million, from $37.1 million in the pandemic-impacted third quarter last year. Adjusted Ebitda [earnings before interest, taxes, depreciation, and amortization] was $8.6 million, versus an adjusted Ebitda loss of $3.6 million, reflecting increased sales and improved margins. GAAP net was $12.8 million, or 90 cents a share, versus a loss of $11 million, or 79 cents, last year. Excluding a $10.9 million tax benefit, diluted EPS would have been 13 cents a share. Management raised its fiscal 2021 Ebitda guidance, to $24.5 million-$26.5 million, from $20 million-$22 million.
Mid Penn Bancorp
Overweight Price $27.45 on June 30
by Piper Sandler
MPB has announced a definitive agreement to acquire Harrisburg, Pa.-based
(RIVE), parent of Riverview Bank, in an all-stock transaction valued at $125 million. The deal is more financial than strategic; it marks the expansion of Millersburg, Pa.-based MPB, which has $3.4 billion in assets, into the Lehigh Valley and State College region, adding to its franchise in the western part of the state. At its core, it provides enough scale and overlap to generate 50% cost savings. [Piper Sandler advised MPB on the transaction.] Our stock-price target is $30.
Buy Price $136.06 on June 29
Our latest view on EEFT [which offers worldwide electronic payment services] is that while European travel is showing signs of improvement, the pace is relatively slow. That causes us to temper our fiscal 2021 expectations for the positive bump that summer tourism typically brings to the company. However, we are positive on Euronet’s omnichannel approach to money transfer and expect share gains over the next several years; our current price target is $180. With the shares trading at a price/earnings multiple around 16 times our FY22 estimate, we view the risk-reward as favorable
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