Analysts Stocks

      Daily Update - March 7, 2023

      Selected highlights of the day

      By: Matthew Otto

      Turbulent Skies

      The U.S. Justice Department has initiated action to stop the proposed acquisition of Spirit Airlines by JetBlue Airways. This follows JetBlue’s month-long negotiations, where a bidding war led them to come out ahead as the potential new owner. The troubling matter is that if the transaction succeeds then 80% of the domestic market in the United States would be dominated by four carriers: American Airlines, United Airlines, Delta Air Lines and Southwest Airlines. Despite this looming specter, JetBlue remains confident that the agreement will reach its finality in early 2024. Consequently, there is more than adequate time for litigation proceedings to take place should they be found necessary under antitrust law.

      • Exane BNP Paribas analyst James Hollins has upgraded United Airlines Holdings from an Underperform to Outperform, with a $70 target price.
      • Evercore ISI Group analyst Duane Pfennigwerth has upgraded Delta Air Lines from In-Line to Outperform and upped the price target from $40 to $47.

      Papa John’s

      Announced that Jefferey Smith, CEO of activist investor Starboard Value LP and chair of Papa John’s board, has resigned effective March 1. Christopher Coleman, who has been on the board since 2012, has been named as his successor. In addition, the pizza chain has entered into an agreement to buy back 2.2 million of its own shares owned by Starboard for $82.52 a share, which is a 4% discount over the closing price on Wednesday. The company plans to fund the buyback with cash on hand and funds available under its revolving credit facility, leaving about $90 million remaining under the company’s current authorization.

      • Brian Mullan, an analyst at Deutsche Bank, has reassessed his Hold rating and raised his price target from $80 to $86.

      General Electric

      Will discuss its business and outlook at an investor event on Thursday, with updates expected on the planned spinoff of its struggling power and renewables business as GE Vernova. The company is expected to reaffirm the breakup timing and may update its 2023 financial guidance. Analysts predict a focus on the ramp-up in commercial engine deliveries and services, including the growth in Leap engine deliveries expected in 2023. Free cash flow (FCF) remains the key operating metric, with the 2023 FCF guidance range of $3.4 billion to $4.2 billion assuming, at the midpoint, that cash flow will grow by $700 million.

      • Yesterday analyst Andrew Obin, of B of A Securities, set up a Buy rating and a raised price target of $96 up from $92.
      • Seth Seifman of JP Morgan took a Neutral recommendation—along with a $88 price target.

      HYLN

      • Goldman Sachs analyst Mark Delaney has kept a Sell rating on Hyliion Holdings however he raised his price target from $2.25 to $2.5.

      Last week, Hyliion reported $1.1 million in revenue from Hybrid sales in the fourth quarter. However, the company’s operating expenses for the same period were $31.6 million, which is $5 million more than last year due to increased spending on research and development. Hyliion currently has $422 million in cash, short-term, and long-term investments, which is enough to fund their current commercialization activities for the Hypertruck ERX powertrain, as well as the initial development activities for the KARNO product and the Hyzon Motors collaboration project.

      For the full-year 2022, Hyliion had a net loss of $153.4 million. This amount includes $124.6 million, which excludes one-time research and development expenses related to the KARNO generator acquisition. For the full-year 2023, the company anticipates that its operating expenses will be in the range of $130 to $140 million. This reflects their continued focus on delivering the Hypertruck ERX system in late 2023 and their efforts to develop the KARNO generator technology, which is a power generation system that converts various types of fuels, such as natural gas or hydrogen.

      SentinelOne

      SentinelOne has entered into a strategic partnership with Wiz, a cloud security company, to provide customers with an end-to-end cloud security solution. The partnership will combine Wiz’s Cloud Native Application Protection Platform (CNAPP) with SentinelOne’s Cloud Workload Protection Platform (CWPP) to offer a comprehensive cloud security solution. The solution will provide customers with capabilities to detect, prevent, investigate, and respond to cloud security threats.

      • Barclays Analyst Saket Kalia has maintained his equal weight rating and lowered the price target from $18 to $17.

      Anika Therapeutics

      Reported its financial results for the fourth quarter and full year ended December 31, 2022. The company recorded a revenue growth of 11% in the fourth quarter of 2022, which amounted to $39.6 million, compared with $35.8 million in the same period in 2021. The revenue for fiscal 2022 increased by 6% to $156.2 million, compared with $147.8 million in 2021. Anika’s gross margin was 61%, and the net loss was ($4.9) million, or ($0.34) per share, compared to a net loss of ($5.8) million, or ($0.40) per share, in the prior year period.

      Anika expects to achieve revenue growth of 1% to 4% in fiscal year 2023, with an overall revenue range of $158 million to $163 million. The company expects Joint Preservation and Restoration to grow by 10% to 15%. It anticipates a decrease of approximately 35% in Non-Orthopedic revenues. Additionally, the company expects a growth of 2% to 4% in revenue from OA Pain Management.

      • Barrington Research analyst Michael Petusky has issued a downgrade to Anika  from Outperform to Market Perform.