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These reports, extracted and edited by Barron's, were recently published by investment and research firms. The reports are a sample of the thought of analysts; they should not be considered as Barron's views or recommendations. Some of the report issuers have provided, or hope to provide, investment banking or other services to the companies analyzed.
Walmart
WMT-NYSE
Overweight of $ 95.81 on October 16 by KeyBanc Capital Markets
At an event for analysts, the retailer said that he continued to invest heavily in innovations (e-commerce, modernized stores, acquisitions). We believe that the presentation demonstrated the ability to balance investment spending thoughtfully with compensatory reductions. US Comp store growth at Walmart in the United States is expected to remain healthy at 2.5% to 3%. We also believe that the long-term prospects for the expansion of the Ebitda dollar will result in an upward revision of the stock price, which encourages us to reiterate our price target of $ 107.
Key Investment Points: 1) The company demonstrates a strong ability to optimize spending by combining tax discipline and investments in technologies that can both save money and present technologies for a better in-store experience. 2) The company's commitment to e-commerce growth, estimated at 35%, is strong and the game manual is evolving. The ramp to over 2,000 grocery store pickup locations was clearly goal-oriented and aimed to continue positive trends next year. The losses on e-commerce will continue, of course, but management seems confident about its approach to the cost curve (for example, a 10% reduction in execution costs this year) and improved composition of margins. 3) As long as the battle for retail supremacy against Amazon.com continues, we believe that we view Walmart as a long-term win-share.
The acquisition of Flipkart (in India) essentially makes the war a war on two fronts (at least), but as in the United States, we believe that the two companies can gain share from their competitors who do not do not innovate. We are also particularly optimistic about Walmart's ability to take over the grocery retailing market, given that its multi-year investments in fresh food outlets closures and e-commerce will speed up – think about
Sears Holdings
(SHLD)
TransUnion
(TRU), and others, which should provide more earnings opportunities from Walmart's core customer base.
At 20 times our estimated price / earnings ratio for 2018 and at 9.6 times our estimated enterprise value / EBITDA for 2018, we believe that the current valuation of the shares is attractive.
Netflix
NFLX-Nasdaq
Buy • Canaccord Genuity Prize of $ 384.10 on October 16th
After a volatile second quarter report and forecast, Netflix posted solid third quarter results, with subscriber growth significantly ahead of expectations and favorable Q4 customer expectations. This performance is in line with the trend of the last two "net addition" defaults (second quarter 2016 and first quarter 2017), which were also episodes of one quarter. Management also reviewed its finance officer's research, which is expected to be completed later this year or in the first quarter of next year. We are generally satisfied with our investment thesis, which is based on a rapidly expanding catalog of original content, which is generating strong growth in the number of subscribers. With stocks still 10% below peaks before second-quarter earnings, we continue to see the bullish view of the stock.
In particular, Netflix has greatly exceeded the expectations of the consensus subscribers, the domestic network by adding about 435,000, and the international network, about 1.5 million ahead of consensus and forecasts. The growth in the number of subscribers is widespread in all markets of the world. Various distribution agreements, including device partnerships, billing integrations and a bundled offer with TV / Internet service providers, open pockets of additional demand for Netflix, which supports the adoption of the streaming. In addition, a strong content base probably also contributed to net additions in the third quarter as Netflix released new seasons of Orange is the new black,Ozark, and Marvel Luke Cage, and created Insatiable,Disenchantment,Maniacal, and Sacred games.
We expect the fourth quarter forecast to maintain strong subscriber growth, with net additions forecast of $ 9.4 million, more than 20% above the consensus for this quarter. This subscriber strength is partially offset by a stronger US dollar, which has somewhat dampened reported international revenues. Management also presented the first free cash flow outlook for 2019, which is expected to allow for cash consumption of approximately $ 3 billion, given its consistently high level of investment in the content of the company. 39; origin. Slightly modified in the way the statistics are shared, starting next year, the company will only go to paid subscriptions and will stop reporting free trials.
We adjust our estimates. Our price target is $ 470 (instead of $ 450), which is 45 times our earnings per share estimate for 2024 of $ 20.13 (instead of $ 19.94).
Domino's Pizza
DPZ-NYSE
Outperformance Price $ 259.50 on October 16 by R.W. Baird
We maintain our Outperform rating and target price of $ 300. Although the third quarter report did not meet investor expectations, we found the results to be overall strong and satisfactory. [supportive of] our thesis – that Domino's is well positioned to maintain a strong operational momentum in the fourth quarter and in 2019. We consider today's retreat as an opportunity to buy shares.
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