Bi-Weekly Stock Market Action Review - 9/9/2022

Selected stock price targets highlights

By: Teni Nyca Antenor

Energy Sector – Attention paid to uranium

“Energy demand and prices are soaring. The world is shifting towards clean energy, so nuclear power is making a strong and long awaited resurgence,” NewMediaWire reports.

Japan’s Prime Minister announced plans to reopen 17 idle nuclear power plants.
The European Union parliament labels nuclear energy as “green.”
Germany postpones the closure of its last three nuclear power plants.
The U.S government issued a ‘request for proposal’ (RFP) to increase Uranium Reserve.
Tesla CEO Elon Musk says he is “pronuclear.”

Potential change for uranium energy stock value:

TD Securities analyst Craig Hutchison forecasts higher uranium prices. Difficulty in de-risking and repositioning nuclear fuel supply chains away from Russian supply will push the prices.

On 8/24/22 Craig resumed coverage on DNN with a $1.73 price target and Speculative Buy rating.

Scotiabank analyst Orest Wowkodaw anticipates 5% of the world’s nuclear capacity to reopen by 2030. Orest has a CCJ price target of $33.84 and a rating of Sector Perform.

According to Benzinga, “If an investor had bought $1000 of UEC stock 5 years ago, it would be worth $3,240.31 today based on a price of $4.17 for UEC at the time of writing.”

Nvidia And AMD Stock Plunged After U.S. Limited AI Chips Sales To China

On August 26, 2022, the U.S. government imposed new export limits on AI chips to Russia, Hong Kong, and China, effective immediately. High-end processing machines and software to design future chips were also restricted.

Nvidia expects to lose $400 million in potential sales.
Advanced Micro Devices’ MI250 is affected by the new rule. However, AMD tells StreetInsider that the new requirements would not materially affect its business.
Experts say the ban will affect China’s largest tech companies, including BABA and BIDU, Benzinga reports.

The new export limitation is based on the pretext of misuse by foreign military.

Stock forecasts analysts for Nvidia?

“The news comes at an inopportune time given weakness in Nvidia’s gaming segment and other macro concerns,” noted BofA analyst Vivek Arya. The repercussions, however, “could be manageable over time.”

Arya maintained a $220 price target for NVDA and a Buy rating.

Morgan Stanley analyst Joseph Moore sees a risk of nearer-term disruption. Moore remains cautious as the timeline to get the licenses is unclear. The wall street expert also expects a potential loss in revenue to be less than $400 million per quarter.

Moore kept a $182 price target and an Equal Weight rating for Nvidia.

Goldman Sachs analyst Toshiya Hari reiterated NVDA price target of $162 and a Buy rating. Despite the near-term impact, Hari is still positive about the company’s long-term growth opportunity.

Is AMD a buy right now?

Morgan Stanley analyst Joseph Moore who kept a $103 AMD price target and Overweight rating isn’t too worried about the stock. “As far as AMD is concerned, the impact is lower given the company’s “relatively early traction in data center AI applications”,” StreetInsider reports.

Amazon Is Dumping Its U.S. Warehouses

Slow sales growth is forcing Amazon to abandon existing and planned U.S. warehouses.

MWPL International Inc says AMZN stopped 42 planned facilities. And delayed another 21 locations’ opening, as reported by Bloomberg.
In July, Amazon reported the slowest growth rate in more than 2 decades. But publicized better than expected results, according to the New York Times.

“Amazon is a dynamic business and we are constantly exploring new locations,” Amazon spokesperson Maria Boschetti tells Fox News Digital. She says it’s common to explore many locations simultaneously. And so is adjusting timetables depending on needs.

Telsey analyst Joseph Feldman keeps a $150 price target on the stock and Outperform rating. The analyst sees strong e-commerce demand for essential and discretionary products. Amazon Web Services also shows strong growth and profitability.

“Despite potential macro pressures, we’re encouraged that AMZN will continue to accelerate Revenue growth in the back half on more favorable comps & focused execution in both Retail & AWS,” said JP Morgan analyst Doug Anmuth. He adds that AMZN will continue to gain leverage in productivity and fulfillment. And in 2023, it will have greater margin expansion.

Anmuth has a $185 price target on Amazon and an Overweight rating.

Campbell Soup Dips After Q4 report

Campbell Soup Company reported higher sales and lower profits for Q4 2022.

On a reported and organic basis, net sales for Q4 2022 increased 6% YoY to $2 billion. Adjusted EPS grew 8% to $0.56 and gross margin rose to 31.3%.
On a GAAP basis, net income dropped 66% year-over-year to $96 million. And gross margin fell to 28.7%.

CPB CEO and President Mark Clouse said the company stepped up with supply chain performance and effective revenue management to counter inflation. And that their solid foundation and momentum “will serve us well in fiscal 2023.”

“All-in, there were few surprises in results, but we nonetheless expect the stock to modestly lag peers,” tells Jason English. The Goldman Sachs analyst has a $43 price target and Sell rating on the stock.

Morgan Stanley agrees, “CPB’s Q4 results were in-line with expectations across essentially every metric, reflecting solid organic sales growth and its second consecutive quarter of YoY gross margin expansion given last year’s easy compares.” Analyst Pamela Kaufman has a $48 price target and Equal-Weight rating.

Piper Sandler analyst Michael Lavery cut CPB price target to $46 and kept a Neutral rating. Inflation will continue to pull Campbell Soup in fiscal Q4, the analyst told investors. However, in fiscal 2023, inflation will be in the low-teens.

LULU Drowns In Praise After Earnings Report

Lululemon topped Q2 analyst consensus:

EPS was $2.2 vs analyst estimate of $1.86
Revenue was $1.9 billion vs analyst estimate of $1.77 billion

In store traffic and e-commerce sites remain booming despite the macro-environment challenges. “This speaks to the strength of our multi-dimensional operating model,” the company said in a press release.

“Stand-out is an understatement,” Morgan Stanley analyst Alex Straton praised. To which Goldman Sachs analyst Brooke Roach adds, “brand remains best-in-class.”

Stifel analyst Jim Duffy increased LULU price target to $400 (from $381) and kept a Buy rating after the report. “Across channels, categories, and geographies,” its revenue growth in Q2 showed strength.

Jefferies analyst Randal Konik on the other hand calls a sell on rally. “He believes the company “will likely have to walk back” its long-term projections as competition rises, end markets weaken, and promotions increase industry-wide,” reports The Fly. Konik has a $200 price target and Underperform rating on the stock.

AVGO Receives Price Target Cuts Despite Q3 Results Beating Expectations

Broadcom topped Q3 expectations:

EPS was $9.73 vs analyst estimate of $9.56
Revenue was at $8.46 billion vs analyst estimates of $8.41 million

In a press release, AVGO expects, “solid demand across our end markets to continue in the fourth quarter, reflecting continued investment by our customers of next generation technologies in data centers, broadband, and wireless.”

Despite the better than expected results from the recent quarter, AVGO received price target cuts from the following analysts:

Jefferies analyst Mark Lipacis cut the price target to $620 (from $720) and kept a Buy rating.

Lipacis rated a Buy based on “posted strength across cloud, enterprise, and telcos, and posited low inventory risk for its components.” He estimates dividends to deliver a 3.9% dividend yield at $19.25. On U.S. export ban to China, the analyst thinks “the risk is low.”

Truist analyst William Stein cut the price target to $630 (from $658) and kept a Buy rating.

Stein commended AVGO for the results despite the negative tech data points. Above-consensus guidance and positive messaging around the supply chain was great. Stein recommends to buy Broadcom stock for its 3.3% dividend yield. The analyst also expects M&A benefits and a 20% dividend hike this year.

BMO Capital analyst Ambrish Srivastava cut the price target to $650 (from $675) and kept an Outperform rating.

Srivastava does not see any weakness in the company’s core semiconductor business despite the growing backlog. However, he says “nobody is immune to a deep slowdown.” The analyst sees a “sharp deceleration” in fundamentals for 2023.

CVS To Acquire SGFY For $8 billion

CVS Health and Signify Health have agreed to a definitive acquisition agreement.

CVS will acquire SGFY for $8 billion or $30.5 per share, cash.
Both companies anticipate closing the transaction in the first half of 2023.

Kyle Armbrester, CEO of Signify Health, said CVS Health is the ideal partner. The acquisition will build an integrated experience. And it will support “a more proactive, preventive and holistic approach to patient care.”

Following the agreement, Baird raised SGFY price target to $30.5 (from $28). However, analyst Vikram Kesavabhotla downgraded the stock’s rating to Neutral from Outperform.

Karen S. Lynch, President and CEO of CVS Health, said “Signify Health will play a critical role in advancing our health care services strategy.” SGFY will also help their growth in value-based care.

Mizuho analyst Ann Hynes seconds saying the acquisition will “bolster health services business growth.” Hynes reiterated a $120 price target and a Buy rating for CVS.

“For CVS, a deal with Signify would make strategic sense as it would help potentially improve care and reduce costs by ensuring patients receive the help they need after medical procedures to prevent new hospitalizations, among other things,” StreetInsider reports.

According to Credit Suisse analyst A.J. Rice, the acquisition is “part of the company’s overarching strategy.” She also thinks CVS will “pursue more M&A, as management suggested in our Virtual HQ Visit.”

Coupa Software Gains After Record Revenues

Coupa Software traded higher after it reported a beat-and-raise quarter.

Earnings per share was $0.20 vs the average analyst estimate of $0.09
Revenue was $211 million vs the average analyst estimate of $192.7 million

“We’re proud of our results this quarter,” said chairman and CEO of Coupa, Rob Bernshteyn. “We delivered record revenues, strong growth in our subscription calculated billings, and we continue to deliver strong cash flows and profitability on a Non-GAAP basis.”

The software company anticipates a better quarter and full year ahead.

For the quarter, COUP anticipates a $0.08-$0.10 EPS vs a consensus of $0.06. Revenue at $211-214 million vs consensus of $214 million.
For 2023, COUP expects a $0.37-$0.44 EPS vs a consensus of $0.26. Revenue at $841 million vs consensus of $840.3 million.

Coupa Software’s Board of Directors has also authorized a share repurchase program with a $100 million cap.

Analysts have mixed reactions to Coupa’s better-than-expected Q2 results.

Truist analyst Terry Tillman cut COUP price target to $75 (from $85). The analyst kept a Buy rating. In a research note, Terry praised the “solid beat” Q2 results and “improved profitability” outlook. The analyst’s lowered price targets reflect “macro uncertainty” in European and North American markets.
Wells Fargo analyst Michael Turrin cut the firm’s price target to $65 (from $80). The analyst kept an Equal Weight rating. Turrin “still sees elevated uncertainty ahead for the second half of the year, and expects shares will remain volatile until consistent signs of recovery take shape,” The Fly reports
Raymond James analyst Brian Peterson cut COUP price target to $75 (from $90). The analyst kept an Outperform rating. Peterson was impressed by how discipline on margins drove the bottom-line outlook’s increase.
Barclays analyst Raimo Lenschow cut the firm’s price target to $71 (from $85). The analyst kept an Equal Weight rating. Lenschow was not impressed, COUP “did not necessarily have a stellar quarter in terms of growth rates achieved.” According to The Fly, “He says Coupa benefited from the fact that growth expectations were reset at the beginning of the year already.”
Piper Sandler analyst Brent Bracelin upped COUP price target to $67 (from $65). The analyst kept a Neutral rating. The analyst commented the Q2 growth was solid despite the macro challenges.
BofA analyst Brad Sills upped the price target to $78 (from $75) and kept a Buy rating. “Coupa saw continued strength in the North American market across both mid-size and enterprise segments,” Sills noted.
RBC analyst Rishi Jaluria kept $COUP price target of $55 and Underperform rating. “Fourth quarter will be “the make-or-break quarter,” given Coupa Software’s bookings seasonality,” Benzinga reported.
Canaccord analyst Joseph Vafi kept a price target of $100 and a Buy rating. In a research note, Vafi commented, “we believe that COUP’s competitive moat is only widening and deepening across core procurement, with expansion opportunities continuing to make themselves evident.”

Here’s What Analysts Have To Say About Apple’s New Products

On September 7, 2022, Apple presented its new Apple products. The company launched the new iPhone 14, Apple Watch, and the 2nd generation AirPods Pro.

“Preorders for these smartphones open this Friday and costs are the same compared to last year’s models,” according to InvestorPlace writer William White.

“The event was largely in-line with our expectations, although some may be slightly surprised by the lack of pricing action,” said Evercore analyst Amit Daryanani. Barclays seconds this, saying they “saw little surprises except for price points.”

“Apple’s stock was up slightly on the day but we see little reason for incremental positivity on a product launch that was largely as expected,” said Goldman Sachs’ Rod Hall.

The stock movement was consistent according to Bernstein analyst Tony Sacconaghi. The analyst noted, “Apple’s stock reaction was muted yesterday (-100bps relative) and we expect the stock could largely tread water for the several months, until investors gain better visibility into the strength of the iPhone 14 cycle.”

Here are the analyst ratings following the launch:

Barclays raised their price target to $207 (from $192) and kept an Equal Weight rating.
Oppenheimer analyst Martin Yang reiterated a $190 price target and Outperform rating.
Deutsche kept their Buy rating.
Morgan Stanley reiterated a $180 price target on Apple and an Overweight rating.
Bernstein maintains a $170 price target and Market Perform rating.
Credit Suisse kept AAPL price target of $201 and Outperform rating.
Piper Sandler reiterated a $195 price target and Overweight rating.