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.
Cisco Systems CSCO-Nasdaq
Outperform Price $57.56 on Sept. 15
by Credit Suisse
We are upgrading Cisco to Outperform from Neutral. Investor sentiment on the stock is cautiously optimistic, but we believe that the cautiousness will abate as Cisco executes on its long-term guidance, while ramping up its recurring-revenue plans. Our updated fiscal-2023 earnings-per-share estimate is $3.68. There is clearly higher quality embedded in the product orders than investors initially appreciated, supported by management’s above-consensus estimate of 5% to 7% compound annual revenue growth through fiscal 2025. We [think] enterprise and public sector customers (about 55% of total revenue) are only beginning their new wave of product orders and deployments. Going forward, we see around 64% of Cisco’s free cash flow going toward buybacks and dividends. We are increasing our target price to $74 from $56.
Electronic Arts EA-Nasdaq
Outperform Price $137.04 on Sept. 15
by Wedbush
Electronic Arts has delayed the release of the Battlefield 2042 videogame to Nov. 19 from Oct. 22. EA attributed the delay to the lingering pandemic, with the development teams still working from home. EA maintained fiscal-2022 net bookings guidance of $7.4 billion, with EPS guidance of $6.40 presumably unchanged. Our estimates remain at $7.5 billion and $6.75, as we expect launch quarter sell-in of 10 million units. We believe that the revised release date will be met and that [reviews of Battlefield 2042] will support the decision to delay. Price target: $194
Exact Sciences EXAS-Nasdaq
Buy Price $104.65 on Sept. 15
by Benchmark Research
Exact Sciences says it has hired 400 sales reps during September who were previously employed by Pfizer [ticker: PFE] and had been selling Cologuard [an in-home colon-cancer test] under a promotion agreement between the companies, which could be renegotiated. The additional reps bring the Exact Sciences field sales team to more than 850 people. The company also has announced that it will begin a new clinical trial to validate its circulating-tumor DNA (ctDNA) test to detect minimal residual disease, or MRD, to predict cancer recurrence in Stage 2 and Stage 3 colorectal cancer patients. The study is expected to enroll approximately 750 patients at 35 sites in the U.S. and Canada. The next milestone for the MRD project is the second-half 2022 release of data from an early case-control study. We reiterate our Buy rating on the stock. Price target: $165.
Albireo Pharma ALBO-Nasdaq
Buy Price $28.88 on Sept. 14
by H.C. Wainwright & Co.
Albireo has announced that its Bylvay, the first approved nonsurgical treatment for all types of progressive familial intrahepatic cholestasis [a disorder that can lead to liver failure] is now available by prescription in Germany. Albireo reported that market-promotion and patient-support activities are under way, with an established commercial team in that country, which Albireo believes represents the largest market potential for Bylvay in Europe. Importantly, Albireo has submitted [data, with the aim of ensuring reimbursement for Bylvay patients,] in Germany. Concurrently, Bylvay’s U.S. market launch is well under way, and evaluations by a number of reimbursement agencies in Europe are ongoing to expand Bylvay’s patient access and market reach to other countries there. We affirm our Buy rating on the stock, with a $79 price target.
Regions Financial RF-NYSE
Buy Price $19.89 on Sept. 13
by Edward Jones
Regions Financial has a strong presence and loyal customer base in several fast-growing markets in the Southeast. In addition, management has executed well by streamlining operations, lessening the impact from low interest rates. In our view, the current share price provides an attractive opportunity for long-term investors. With nearly two-thirds of its deposits coming from retail clients, RF has one of the industry’s lowest deposit costs. Given that a large portion of bank earnings are driven by the spread between what’s earned on loans and what’s paid to customers on deposits, this low-cost funding is a long-term competitive advantage. However, because larger peers have more resources, Regions will continually need to spend more and spend wisely to defend its turf.
Papa John’s International PZZA-Nasdaq
Buy Price $127.81 on Sept. 14
by Stifel
Our Buy thesis continues to unfold: strong sales momentum [aided by the return of sports with live audiences], combined with franchisees having greater confidence in management’s plans, leading to more unit growth. Eighty percent of that growth is expected to come from international markets, but we also expect net additions to increase in the domestic market. Over the next few years, we believe that compounding sales growth will lead to consistent Ebit [earnings before interest and taxes] margin expansion and high-teens EPS growth. Target price: $140.
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