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.
Buy • Price $272.93 on September 7
The recent Ameriprise bank [regulatory filing] reinforces our conviction in our forecast at 140 basis points [1.4 percentage points] expansion in returns from its second to its third quarter. There are reporting and timing differences between regulatory filings and GAAP reports, so precise quarter-to-quarter movements can sometimes be off, but over time, trends in the banking subsidiary d ‘Ameriprise align with reported results. We expect net interest income to more than double in 2022. Our share price target of $320 is approximately 11 times our earnings estimate for 2023 ($29.50 per share), which according to us, is cautious.
Global Apollo Management
Overweight • Price $55.62 on September 6
by Wells Fargo
During this year’s stock sale, Apollo shares performed roughly in line with the [alternative-asset management] group (down 22%, since the start of the year, to September 6, compared to a drop of 18% for the
and 23% for the other alternative manager stocks we cover), while the average decline in life insurance stocks was only 6%. For us, the relative performance mainly reflects concerns about the less traditional investment strategy of Apollo’s life insurance subsidiary, Athene (the source of 50% of Apollo’s earnings). But we now see a more favorable environment for alternative credit-focused securities, particularly Apollo, given its focus on investment quality.
Blackstone Mortgage Trust
Buy • Price $28.76 on September 7
The stock fell to about 1.05 times its net asset value and yielded 8.6%, compared to an average of 9.5% for commercial mortgage real estate investment funds. In the short term, we are still attracted by the potential for higher earnings and book value from rising short-term interest rates. Some of that advantage should start showing up in earnings this quarter, given the Federal Reserve’s 0.75% rate hike in July and the expected 0.75% hike later this month. We expect there to be less upside in the Europe portfolio. Our price target of $32 is based on around 1.15 times book value and a dividend yield of around 8%.
Market Performance • Price $39.33 on September 2
by Barrington Research
Methode’s automotive segment net sales decreased 9.8% to $176.6 million in the first quarter from $195.8 million a year earlier, primarily due to a large program abandonment in North America and lower demand in Asia, due to lockdowns in China. Operating profit decreased by 46.2%, from $27.3 million (13.9% margin) to $14.7 million (8.3% margin), mainly due to the declining sales and rising material costs. Methode’s industrial segment net sales increased 17.3% to a record $92.1 million from $78.5 million, driven by higher sales in power distribution and manufacturing. commercial vehicle lighting. We are maintaining our market performance rating on the stock. Once we go beyond [the current uncertain economic environment]a longer-term investment opportunity could materialize around electric vehicles.
NWL – Nasdaq
Strong Buy • Priced at $17.98 on September 6
by Raymond James
Following Tuesday [earnings] pre-announcement, we reduce our price target to $23 from $26 on Newell, [which makes personal care and household products]. But we maintain our Strong Buy as we believe today’s lower estimates should adequately reflect the challenging backdrop and related inventory shedding by retailers, while the stock’s valuation is attractive even on the basis of our downward forecast.
Outperformance • Price $33.25 on September 7
by RBC Capital Markets
Rivian and Mercedes-Benz this morning signed a [agreement] for the co-production of electric vans in Europe, from a few years. The JV plant will produce two vans, one based on Rivian’s light van platform and the other on MB’s MB Vans electric architecture platform. The plan includes common assembly lines to take advantage of operational synergies. This should help Rivian save capital (as opposed to a self-driving strategy) and potentially accelerate its entry into the attractive van market in Europe. Our price target on Rivian is $75.
Hold • Price $4.93 on September 2
by Ford Equity Research
Our recommendation is the result of our systematic analysis of Nokia’s earnings strength, relative valuation and recent share price movements. Nokia’s profits have been flat for the past five quarters. Its operating profit return of 8.3% ranks above 73% of other companies in our market universe. But its share price is down 18.6% in the past 12 months, 3.1% in the last quarter and 4.3% in the last month. This historical performance indicates average price performance over the next one to three months.
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