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.
Disney’s impressive studio results continued with this past weekend’s $127 million domestic and $350 million global box office opening of Frozen 2, setting the record for the biggest global animated opening weekend and the third-highest domestic animated feature opening.
Frozen 2 also outperformed internationally, setting an all-time animation opening record, beating expectations in China, Korea, and Japan.
The strong demand in Asia bodes well for the franchise, as Disney is set to open a Frozen-themed land at Hong Kong Disneyland in 2021. We expect the studio to end the calendar year on a high note, with Star Wars: The Rise of Skywalker opening on Dec. 20, ahead of the Christmas holiday.
UnitedHealth Group
UNH-NYSE
Buy Price $282.67 on Nov. 25
by Mizuho Securities
We are raising our price target to $300 from $270, ahead of the company’s investor day on Dec. 3. We expect
UnitedHealth
to reiterate its long-term EPS growth outlook of 13% to 16% and provide detailed 2020 assumptions that support its previous directional guidance.
We expect a 2020 estimated adjusted EPS guidance range of $16.25 to $16.55, versus our $16.35 estimate and the consensus of $16.47.
Our 2020 estimate is driven by [expected] consolidated revenue and operating profit growth of 7% and 11%, respectively. We think the double-digit operating profit growth is supported by the solid revenue growth (medical membership growth of 1.7%, or 820,000 members), good medical cost trends, and the implementation of the company’s multiyear cost savings program (which should yield $500 million of savings in 2020). From a capital deployment perspective, our estimate includes $5 billion of share repurchases and no unannounced strategic M&A.
Envestnet
ENV-NYSE
Buy Price $68.28 on Nov. 27
by Sandler O’Neill Partners
Charles Schwab’s
[SCHW] acquisition of
TD Ameritrade
[AMTD] will consolidate registered investment advisor, or RIA, custodian platforms, with a potential impact on technology providers. The combined Schwab and Ameritrade will [be custodian for] over $2 trillion in assets for RIAs. We suspect this change in the custody landscape might cause Fidelity and Pershing to reconsider their broader offerings to RIAs.
If a custodian wants to compete more aggressively to win RIAs, they might consider owning Envestnet. This would give them an opportunity to control critical pieces of technology in the RIA landscape. We think the breadth of Envestnet’s offering makes it a unique property. Envestnet’s RIA offering begins with the ability to aggregate household data and create a financial plan, and extends to portfolio management and rebalancing.
We’re upgrading Envestnet to Buy from Hold, while rising the price target to $80 from $66. We are not changing our 2019, 2020, and 2021 adjusted EPS estimates of $2.14, $2.65, and $3.02. Our new price target is based on 30 times our 2020 EPS estimate.
Marvell Technology Group
MRVL-Nasdaq
Buy Price $26.68 on Nov. 26
by Benchmark
We remain positive on Marvell shares, ahead of the company’s coming fiscal third quarter report, scheduled for Dec. 3, after the market close. We believe that Marvell Technology Group is positioned to deliver inline to slightly better than consensus results and an inline 4Q outlook. Our bullish stance remains centered on our outlook on Marvell’s longer-term transition toward higher exposure to infrastructure markets.
On the earnings call, we expect updates on 1) 5G progress, 2) acquisition performance, given recent Thunder-X2 announcements and the recent closings of the Aquantia and Avera acquisitions, and 3) updates on the status of
Huawei,
which was excluded from 3Q guidance.
Dell Technologies
DELL-NYSE
Outperform Price $53.30 on Nov. 27
by Evercore ISI
Dell reported an EPS beat for the October quarter, but provided softer than expected January quarter guidance.
More importantly, Dell’s implied January quarter guidance suggests that revenues will decline modestly, year over year, reflecting slower trends on the enterprise front, coupled with headwinds from
Intel
[INTC] central processing unit shortages.
While Dell refrained from quantifying the free cash flow trajectory in fiscal year 2021, we think the risk is that free cash flow trends lower in FY21, though the company should comfortably generate around $7 billion in free cash flow (at the consolidated level) and pay down $4 billion of debt.
Price target: $60.
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