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.
United Parcel Service UPS-NYSE
Outperform Price $201.06 on June 10
by Oppenheimer
At its recent investor day, UPS highlighted targeted areas of growth, including small and medium-size businesses, healthcare, and international; provided 2023 financial targets; and established new environmental, social, and corporate governance targets. Its 2023 financial targets include about $98 billion-$102 billion in revenue, an adjusted operating margin around 12.7% to 13.7%, cumulative 2021-23 capex around $13.5 billion to $14.5 billion, and adjusted return on invested capital of about 26% to 29% are solid, albeit seemingly not sufficiently ambitious per market expectations. But we perceive the guidance as appropriately conservative, achievable with upside potential. We’re increasing our 12-to-18-month stock-price target to $222 from $210.
DTE Energy DTE-NYSE
Buy Price $138.99 on June 10
by Seaport Research Partners
We raise our price target to $148 from $141 as we await the spinoff of DTE Energy’s midstream gas operations (ticker: DTM) as soon as June 17 (in when-issued trading). We brace for some volatility in DTM due to shareholder rotation, but DTE’s current market valuation seems to imply just $10 to $11 a share. DTM has yet to establish its dividend, but we estimate that the combined annualized 2021 per share payouts for DTE and DTM should be about $4.71, 8.5% higher than DTE’s current dividend of $4.34, with 8% to 10% annual growth to follow.
Sherwin-Williams SHW-NYSE
Overweight Price $281 on June 8
by KeyBanc Capital Markets
Sherwin-Williams has raised its fiscal-2021 earnings guidance by 4% (with a $9.25 midpoint) on about a 2% higher sales outlook, led by TAG (professional users) and Performance (industrial users), as do-it-yourself trends fell short of expectations. For us, the key to the paint company’s outlook is industry supporting net pricing (up 7% in August) amid rising input costs and secular growth. We are raising our EPS estimates to $9.25 from $9.05 for fiscal 2021 and to $10.58 from $10.29 for fiscal 2022, both on higher sales. We are raising our stock-price target to $320 from $300.
Tesla TSLA-Nasdaq
Outperform Price $605.13 on June 8
by Wedbush
There was a lot of nervousness on the Street heading into the [release of the China Passenger Car Association sales] numbers for May, after Tesla saw a very soft April performance in China. The Street was bracing for the worst and instead got a robust 33,463 deliveries. including 21,936 sold domestically and 11,527 exported to Europe. This was a 29% jump from April’s figure.
Tesla appears to have handled its shaky Chinese public relations issues (involving safety) well. We believe that, starting in June, the electric-vehicle maker will be on a 300,000 annual run-rate for deliveries in China. The growth story appears back on track in this linchpin region, despite the skeptics and haters piling on. The pent-up-demand story remains firm for Tesla for the next few years, and the company should continue its strong sales trend in June and the year’s second half, with Model Y sales a key driver, along with the mainstay Model 3. We maintain our $1,000 price target.
Penumbra PEN-NYSE
Buy Price $253.56 on June 3
by BTIG
As a follow-up to our September 2020 survey, we conducted a second survey of 26 U.S.-based stroke doctors in May, to get clarity on Penumbra’s position in the U.S. neurovascular-treatment market. In conjunction with our survey’s results, we are upgrading Penumbra [which provides devices and therapies to treat medical problems including strokes and blood clots] to Buy from Neutral, with a $291 price target.
Our second survey suggests that doctors have stuck with Penumbra’s stroke portfolio, despite what might have been share losses early in fiscal 2021, due to competitive trials. Respondents expect to maintain Penumbra product use from here, although at lower share levels than found in our previous survey. We think that, if Penumbra’s U.S. share holds (even at this lower level), upside versus Street expectations could come from its performance in China and elsewhere or new “paradigm” shifts in stroke treatment, to which management has alluded.
Restoration Hardware RH-NYSE
Outperform Price $611.33 on June 9
by Cowen
Restoration Hardware had another impressive top- and bottom-line beat in its latest quarter and issued strong guidance. Successful expansion into Europe next year should support a rerating of its shares. We are raising our price target to $750 from $680—27 times our fiscal-2022 EPS estimate. We view RH as a leader in an estimated $57 billion market, with a 4.5% market share and a significant runway for further gains. RH remains in the earlier innings of a multiyear transformation journey, with secular tailwinds and ongoing revenue and margin catalysts.
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