Mattel stock could jump 50% on rising earnings

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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.

Mattel

MAT-Nasdaq

To buy Price $22.19 on June 16

by MKM Partners

A group meeting we recently hosted with Mattel management helped solidify our view that the company is the best idea in our media and entertainment coverage universe. The combination of key film licenses [including tie-ins with Jurassic World: Dominion and Top Gun: Maverick] and new product rollouts in the second half of 2022, along with good visibility into this year’s input costs, have placed Mattel well positioned to achieve its targets of 8% to 10% net sales growth. at constant exchange rates, a gross margin of 47% and EPS growth of 15%. Additionally, we believe upcoming growth initiatives should help Mattel grow EPS at a compound annual growth rate of 20% through 2024. Price target: $34.

Hershey

HSY-NYSE

Surpass Price $206.19 on June 16

by RBC Capital Markets

Our business contacts have informed us that Hershey announced a price increase effective today covering its entire portfolio, with an average increase in the range of 13% to 14%. The price increase will vary by pack size: 17% increase on king-size packs, 17% on single-size packs, and 9%-14% on bags. Our channel checks have confirmed that prices will rise on seasonal products, with an announcement in 2023. We view this as a positive, given Hershey’s market share momentum and the forgiving nature of the company’s portfolio. Price target: $237.

Micron Technology

MU-Nasdaq

To buy Price $62.62 on June 10

by UBS

Amid macro concerns, we believe investors continue to overlook several key factors. First, although weakness in the PC/smartphone end market weighs somewhat on DRAM average selling prices in the near term, we expect very strong price support heading into 2023 as supply growth sector bits should compress considerably. Second, demand is expected to be dampened by the cloud as new server platforms with large increases in memory content rise in 2023 (Genoa and Sapphire Rapids). Third, MU’s cost position should be very good as its run on 1beta nearly canceled

Samsung
it is

technology leader in DRAM at the moment, and MU is also at the moment the technology leader, without exception, in NAND. Considering all of these industry and MU-specific factors, we expect MU’s BPA to hold up very well. Price target: $115.

Arista Networks

ANET-NYSE

Surpass Price $91.86 on June 13

by Evercore ISI

Despite recent market and geopolitical uncertainties, ANET remains an essential name to own in the networking/hardware space as the company progresses into its second phase of growth, which we believe will involve growth of more than 20% , but with better vertical and product diversity. . We see multiple levers that will enable ANET to sustain double-digit growth. Additionally, we like ANET in this tumultuous market time for its management team, which has a disciplined record of conservatism (consecutively beating the last 32 EPS prints). And strong purchase commitments of over $4 billion provide visibility into outsized multi-year growth. Price target: $160.

Raytheon Technologies

RTX-NYSE

Overweight Price $91.95 on June 13

by JP Morgan

We arranged a call with Wes Kremer, President of Raytheon Missiles & Defense (RMD), to discuss the outlook for this business. RMD has recently had difficulties with its supply chain and these challenges are not yet in the rearview mirror. Over time, however, RMD sees strong demand driving revenue growth, combining changes to support profitability, and incrementally improving execution. A better demand picture compared to a year ago reinforces management’s confidence in achieving at least the midpoint of the 2025 RMD targets set in May 2021. RTX remains a relatively safe, liquid and leading combination of quality Aero and Defense franchises with a solid balance sheet and the ability to return money. We maintain our overweight rating and year-end price target of $105.

Continental Resources

CLR-NYSE

Equal weight Price $74.22 on June 14

by Wells Fargo

CLR reported that it had received a non-binding proposal from the Hamm family to acquire in cash all outstanding common shares of the company not already held by Harold Hamm, his trust and other family members ( 17% of the outstanding shares) for $70 per share. There was early speculation from investors that a potential competing bid for the shares or even the whole company could emerge. We prefer to sit on the sidelines pending any potential future trades.

We view the move as a way for Mr. Hamm to pursue a differentiated strategy in the US shale without being beholden to public equity markets. At our recent energy conference, CLR management appeared open to pursuing a differentiated shale development strategy by acquiring, exploring and developing reserves in “second tier” areas with greater geological complexity, for example the Powder River Basin and southern Delaware. Price target: $82.

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