Daily Update - May 1, 2023
By Matthew Otto
Selected stock price target highlights of the day
JPM
JPMorgan Chase has announced its acquisition of most of First Republic Bank after the troubled bank was seized by U.S. regulators. As part of the deal, JPMorgan will pay $10.6 billion to the U.S. Federal Deposit Insurance Corp (FDIC) for the assets of the San Francisco-based lender.
JPMorgan has also entered into a loss-share agreement with the FDIC for single-family, residential, and commercial loans acquired from First Republic Bank. However, JPMorgan will not assume First Republic Bank’s corporate debt or preferred stock.
The acquisition of First Republic Bank allows for an orderly failure of the bank and prevents regulators from having to insure all deposits. This marks the third major U.S. lender to fail in two months, following the closures of Silicon Valley Bank and Signature Bank in March.
First Republic Bank experienced significant pressure after disclosing more than $100 billion in outflows during the first quarter and exploring options for its future. The acquisition by JPMorgan aims to minimize costs to the Deposit Insurance Fund (DIF), with the FDIC estimating the cost to be around $13 billion.
JPMorgan has taken over all of First Republic Bank’s deposits and will repay $25 billion of the $30 billion deposited by larger banks in March. The acquired assets include $173 billion of loans, $30 billion of securities, and $92 billion of deposits.
Immediate implications
JPMorgan anticipates a one-time, post-tax gain of approximately $2.6 billion from the deal, offset by an estimated $2 billion of post-tax restructuring costs over the next 18 months. The bank expects to maintain a strong capital position and healthy liquidity buffers after the acquisition.
JPMorgan’s acquisition of First Republic Bank’s assets will result in the reopening of the bank’s 84 offices in eight states as branches of JPMorgan Chase Bank.
- No new analyst recommendations are given at this time.
CHD
Church & Dwight reported its financial results for the first quarter of 2023 last Thursday.
The company’s net sales grew by 10.2% to $1,429.8 million, with organic sales up 5.7%.
The domestic segment saw a 12.2% increase in net sales, while international sales were up 7.5%. However, Specialty Products net sales decreased by 5.9%. Gross margin increased by 90 basis points to 43.5%, and reported EPS was $0.82.
Adjusted EPS is raised to +2% to +4%, and cash from operations is raised to approximately $950 million.
Church & Dwight CEO Matthew Farrell stated that the company’s recent acquisitions, including THERABREATH mouthwash and HERO, have both experienced double-digit consumption growth and market share gains, and that the company’s domestic brands grew consumption in 12 of 17 categories in which it competes. The company also announced several new product launches in 2023, including a new ARM & HAMMER Litter product and new products from the TROJAN, THERABREATH, NAIR, HERO, and BATISTE brands.
Church & Dwight has raised its full-year outlook for sales, EPS, gross margin, and cash flow following its strong first-quarter performance. CEO Matthew Farrell expects the sales and earnings momentum from Q1 to continue throughout 2023 driven by strong demand for the company’s products. The company now expects full-year reported sales growth to be approximately 6-7% and organic sales growth to be approximately 3-4%. The reported gross margin is expected to expand approximately 120 basis points versus 2022. The company expects adjusted EPS to be 2-4%. It plans to increase marketing as a percentage of net sales to 10.5%, compared to 10% in 2022. The company is pursuing accretive acquisitions with an emphasis on fast-moving consumable products.
Wall Street Action
On Friday:
- Citigroup analyst Filippo Falorni: Raised the price target to $101 and maintained a Neutral rating.
- Deutsche Bank analyst Steve Powers: Increased the price target to $105 and kept a Hold rating.
- Truist Securities analyst Bill Chappell: Lifted the price target to $95 with Hold rating.
- Morgan Stanley analyst Dara Mohsenian: Boosted the price target to $106 and maintained an Overweight rating.
- Wells Fargo analyst Chris Carey: Upped the price target to $108 and kept an Overweight rating.
- Goldman Sachs analyst Jason English: Raised the price target to $97 while reiterating a Neutral rating.
- JPMorgan analyst Andrea Teixeira: Raised the price target to $86.
- RBC Capital analyst Nik Modi: Raised the price target to $91.
looking at Apple on AnaChart
Notable analysts with opposing opinions are Dara Mohsenian of Morgan Stanley with an Overweight and a $100 price target versus Barclays analyst Lauren Lieberman with an Underweight and a $83 price target.
Apple is expected to report strong earnings in its second-quarter report on Thursday
According to Wedbush analyst Daniel Ives, with iPhone sales fueled by Chinese demand. Ives believes that iPhone revenue will be in-line with expectations. The consensus forecasts is predicting a $92.91 billion in revenue for the March quarter and $48.8 billion in iPhone sales.
Apple is expected to report strong earnings in its second-quarter report on Thursday
Wedbush reiterated its Outperform rating and $205 target price. Ives believes that Apple will provide conservative guidance for the June quarter.
Wedbush calculates that the average selling price of an iPhone is rising while Apple is gaining market share in China.
BAML analyst Wamsi Mohan shares a similar opinion about the expected results and has reiterated a Hold rating with a light upgrade to his price target from $168 to $173.
Belowis a snapshot of the top daily stock price target moves on AnaChart
