Weak Ally Financial Stock Offers Strong Buying Opportunity

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These reports, extracted and edited by Barron’s, were recently published by investment and research firms. Reports are a sample of analysts’ thinking; they should not be taken as Barron’s views or recommendations. Some of the reporters have provided, or hope to provide, investment banking or other services to the companies analyzed.


Allied financial

ALLY-NYSE

Overweight Price $ 49.84 September 8

by Piper Sandler

Ally, like other consumer lenders, has underperformed most benchmarks over the past two months, having outperformed significantly in the past year. We believe the short-term underperformance is due to market concerns that we are reaching peak earnings and / or valuations. In our opinion, Ally is structurally more profitable than it was before the pandemic, due to greater pricing power in its deposit franchise. Consensus earnings estimates appear too low, given that credit normalization is unlikely to occur until 2023 and net interest margin estimates appear conservative. We are raising our price target to $ 68 from $ 67 and recommend buying the stock due to recent weakness.

ChargePoint Holdings CHPT-Nasdaq

To buy Price $ 21.23 September 1

by Needham

ChargePoint is a market leader in level 2 networking [electric vehicle] charging equipment in the United States, with over 70% market share and over 5,000 [corporate] customers around the world. The company has achieved this dominant position through superior software, excellent customer service, a step ahead of its peers, quality hardware and constant innovation. The focus on customer experience, rather than monetization, allowed it to operate a low-risk, low-capitalization business model, while deploying excess capital in R&D. The company is expected to be able to grow its revenue at a compound annual rate of 49% over the next five years. ChargePoint is debt free and has substantial cash flow. Our target price is $ 35.


Michelin

ML-France

Surpass Price 136.25 euros on September 8

by RBC Capital Markets

We have lowered our forecast for global automotive production for 2021 to 78.5 million units from 79.6 million, largely due to the semiconductor shortage. But we’re increasing our 2022/23 global estimate to 89.6 million / 92 million from 89.2 million / 91.5 million. Headwinds could continue until the first half of 2022. But we are maintaining our price target of € 143 on Michelin due to the manufacturer’s low exposure (13.5%) to OEMs, the automotive segment most affected by our forecast on the decline. If Michelin [which has American depositary shares that trade over the counter under the symbol MGDDY] succeeds in developing its specialized activities excluding tires, the stock could be reassessed beyond our evaluation methodology.


Hawaiian Holdings

HA-Nasdaq

Neutral Price $ 20.21 on September 7

by MKM partners

Hawaiian Holdings [the parent of Hawaiian Airlines] lowered its revenue forecast for the third quarter due to weakening booking trends and an increase in early cancellations, due to the current wave of Covid-19. The additional headwind is not all that surprising, given that Hawaii government officials recommend against visiting the state, while [airline] state capacity from the mainland is currently high. Hawaii is an interesting case, as the state has been incredibly restrictive during the pandemic; we’re not saying it’s a bad thing, it’s just the reality. We are increasingly concerned about the fourth quarter. Our estimate of the stock’s fair value is $ 22.

Dell Technologies DELL-NYSE

Surpass Price $ 94.74 September 8

by Evercore ISI

Ahead of Dell’s next spin-off of its roughly 81% stake in


VMware

[VMW] In early November, investors focused on understanding Dell’s core operating model, given its multiple moving parts. While Dell will no longer consolidate VMW results after the rotation, it will recognize revenue from VMW resellers. As a result, FY2021 overhaul revenue will be around $ 87 billion compared to $ 81 billion. Interest expense will be lower due to deleveraging [with the help of proceeds from a large VMW dividend]. We estimate pro forma EPS for fiscal 2022 will be close to $ 6.50, compared to $ 4.80 to $ 5.05 for fiscal 2021. We expect Dell to provide more details when it releases. analysis day of September 23. Target price: $ 114.


General Mills

GIS-NYSE

Neutral Price $ 59.38 September 8

by BofA Securities

At an investor conference, management [raised] Fiscal 2022 forecast for sales and earnings, driven by stronger than expected consumption in the first quarter and the closing of the acquisition of Tyson’s pet treats business. This could be partially offset by upward pressure on costs from commodity inflation and labor shortages. GIS now expects adjusted EPS at the high end of a range of $ 3.71 to $ 3.79. Prospects include the acquisition of pet-treats, but not the European divestiture of Yoplait. We are increasing our estimates for fiscal years 2022 to 2024 by two cents per share, to $ 3.76, $ 3.92 and $ 4.10, respectively. We also reiterate our price target of $ 66, which is based on 17 times our estimate for calendar year 2022. That’s slightly below the peer average of 18 times. Our neutral rating is based on our cautious view of fiscal 2022. As General Mills invests to maintain growth, it faces difficult tradeoffs and rising costs.

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