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These reports, adopted and edited by Barron’s, have recently been issued by investment and research firms. The reports are a sample of analyst thinking; they should not be construed as the views or recommendations of Barron’s. Some publishers of the reports have provided or hope to provide investment banking or other services to the companies being analyzed.
Kenvue
KVUE NYSE
Overweight • Price $26.30 on May 26
by J.P. Morgan
We are launching coverage of Kenvue with an Overweight rating and a December 2023 price target of $29. As the largest pure-play consumer health company in the world following the separation from parent company Johnson & Johnson, Kenvue is uniquely positioned to benefit from consumer megatrends (self-care, ageing).
We expect Kenvue to deliver resilient growth in large accessible markets going forward, with iconic brands forming strong consumer connections from birth across a portfolio of cold, flu, pain, allergy and smoking cessation, over-the-counter, skin care, mouthwash, among others baby care and wound care.
As a standalone company, we believe that Kenvue’s board of directors and management will be more focused and responsible for the company’s growth and profitability following the separation that began in 2019, with significant opportunities for scale.
At our December 2023 price target of $29, Kenvue will be valued at 16 times enterprise value over estimated EBITDA for 2024, which is about the point where Colgate-Palmolive trades with an overweight rating for an estimated 2023.
C3.ai
AI NYSE
Outperforming • Price $40.01 on June 1
by Wedbush
We upgrade C3 from Neutral to Outperform and raise our price target from $24 to $50.
While it will be a bumpy road, we believe that C3 has turned a corner and is poised to capitalize now on the transformative $800 billion artificial intelligence opportunity over the next decade, with use cases growing across the board. and the company is in a unique position to lead and monetize it, looking ahead over the next 12 to 18 months.
C3.ai delivered solid fiscal fourth quarter results with top and bottom line beats. With the company’s goal of being cash positive and non-GAAP profitable by fiscal 2024, we believe this quarter was another big step in the right direction.
CSX
CSX-Nasdaq
Buy • Price $30.67 on May 31
by UBS
We are upgrading CSX [the railroad company} from Neutral to Buy. Our analysis of interest rate changes, ISM new orders, and industrial production point to weakening and an eventual bottoming in industrial-related volumes in second-quarter 2024 or third-quarter 2024.
However, with intermodal volumes likely bottoming year over year in the second quarter, we see a path to volume growth for CSX in 2024 with intermodal growth of 4% offsetting a 1% decline in merchandise.
CSX has also realized the most significant improvement in manifest train speed (30% year over year) of all the rails, which positions CSX to capture share from trucks. With rail stocks typically bottoming several months before volumes bottom and CSX trading at only 15 times our estimated 2024 earnings per share, we believe now is an attractive entry point ahead of a potential volume inflection in 2024.
Price target: $37.
Toast
TOST-NYSE
Buy • Price $20.97 on June 1
by BofA Global Research
We initiate coverage of leading restaurant technology provider Toast with a Buy rating and $26 price objective. Our checks at last week’s National Restaurant Association conference illustrated that Toast delivers best-in-class, cloud-native, point-of-sale software/hardware technology to the restaurant industry. Beyond point of sale, the innovative Toast platform integrates payment processing, restaurant operations, digital ordering and delivery, team and table management, payroll, lending, and reporting/analytics.
Adjusted Ebitda margins have steadily improved over the past five quarters, and Toast forecasts positive adjusted Ebitda for the second half of 2023. Free cash flow is also expected to turn positive later this year.
Ryanair Holdings
RYAAY-Nasdaq
Strong • Buy Price $106.39 on June 1
by Raymond James
We are increasing our earnings forecast following Ryanair’s fiscal fourth-quarter 2023 report and investor meetings that we hosted last week, primarily reflecting a stronger fare environment and lower fuel forecast, partly offset by the updated fuel hedge position and greater nonfuel unit cost pressure.
Despite embedding characteristic conservatism in its fiscal-2024 outlook, near-term trends remain constructive, and the recently announced MAX-10 order combined with an increased likelihood of industry consolidation in Europe bode well for Ryanair’s longer-term outlook, given its cost and balance sheet (net cash) advantage relative peers.
We continue to believe that Ryanair is well positioned to take advantage of further demand strengthening in the region as well as having a unique advantage to avoid possible shocks in the industry as peers grapple with higher debt burdens and cost pressures.
Target price: $128.
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