JPMorgan's US equity research team has identified the "most compelling structural and tactical short opportunities" for the second half of 2024. Sector-specific recommendations and analyst insights include:
Capital Goods/Industrial: • Werner Enterprises (WERN.US): Analyst Brian Ossenbeck cited persistent freight market weakness, excess capacity, muted demand, and tariff uncertainties driving "rates continuing to bottom out." • Kennametal (KMT.US): Tami Zakaria flagged margin compression from tariffs amid soft end-market volumes. • The Middleby Corp (MIDD.US): Zakaria warned tariff-driven price hikes could further suppress already weak demand, pressuring foodservice and processing margins.
Consumer: • Rivian Automotive (RIVN.US): Ryan Brinkman projected worsening EBITDA losses and free cash outflows due to EV subsidy phase-outs and tariffs. • Tesla (TSLA.US): Brinkman highlighted subsidy cuts threatening already-thin EBIT margins (below GM and Ford), while sensor limitations may derail robotaxi ambitions. • Beyond Meat (BYND.US): Ken Goldman questioned viability amid industry headwinds and cash burn. • Choice Hotels (CHH.US): Daniel Politzer forecast subpar adjusted EBITDA growth through 2027—hundreds of bps below Wyndham Hotels' projected 7% CAGR. • Installed Building Products (IBP.US): Michael Rehaut noted the stock's 26% June rally (vs 16% peer average) and premium valuation signal underperformance. • LGI Homes (LGIH.US): Rehaut saw moderate downside risk despite 0.6x P/B ratio if ROE deteriorates. • NVR Inc. (NVR.US): JPM's 2025 EPS estimate is 7% below consensus, suggesting lagging results. • Stanley Black & Decker (SWK.US): Rehaut warned of valuation compression with target multiples 1x below current and 3x under 10-year average. • Whirlpool (WHR.US): June's 38% surge (vs 14% peers) and rich valuation imply underperformance. • Cheesecake Factory (CAKE.US): John Ivankoe argued shares fully reflect Flower Child’s $1B potential amid peaking core margins. • Shake Shack (SHAK.US): Rahul Krotthapalli cited an unsustainable premium price point amid fast-casual operational shifts requiring heavy marketing.
Energy: • Canadian Solar (CSIQ.US): Mark Strouse warned of oversupply and pricing risks, noting potential equity sales in US manufacturing assets per IRA rules. • ChargePoint (CHPT.US): Bill Peterson cited EV adoption headwinds and high rates challenging charger growth. • Nabors Industries (NBR.US): Grant Hynes highlighted above-average debt despite comparable FCF/EV. • Vital Energy (VTLE.US): Zach Parham noted limited post-2026 FCF, high leverage, and shorter inventory cycles.
Financials: • Circle Internet (CRCL.US): Kenneth Worthington flagged USDC growth and regulatory risks. • Lincoln National (LNC.US): Jimmy Bhullar pointed to cautious trends and capital constraints. • Lineage (LINE.US): Michael Mueller anticipated Q2 guidance cuts. • Howard Hughes (HHH.US): Anthony Paolone saw land sales pressured by housing softness. • Comerica (CMA.US): Anthony Elian expected muted H2 loan growth amid macro uncertainty and lingering CRE drag. • Texas Capital (TCBI.US): Elian noted nascent investment banking with high costs limiting profit contribution.
Healthcare: • Moderna (MRNA.US): Jessica Fye cited cash burn, regulatory hurdles, and litigation. • Precigen (PGEN.US): Brian Cheng expressed caution on August 27 FDA decision for PRGN-2012, expecting slow commercialization. • Myriad Genetics (MYGN.US): Rachel Vatnsdal saw limited incremental buyers amid investor preference for high-growth diagnostics. • Integra LifeSciences (IART.US): Robbie Marcus projected continued underperformance with back-half-weighted execution and unconservative 2025 guidance.
Materials: • CF Industries (CF.US): Jeffrey Zekauskas warned blue ammonia plant CAPEX would constrain multi-year FCF.
Media & Telecom: • SBA Communications (SBAC.US): Richard Choe flagged limited leasing growth, Latam pressure, and rising interest expenses. • Snap (SNAP.US): Doug Anmuth cited challenges shifting to direct-response ads amid volatile brand spending. • Bumble (BMBL.US): Cory Carpenter noted accelerating user declines during rebranding with margin pressure. • Paramount (PARA.US): David Karnovsky saw revenue pressures and potential merger guidance disappointment. • Altice USA (ATUS.US): Sebastiano Petti projected EBITDA pressure from marketing costs for user growth.
Technology: • Mobileye (MBLY.US): Samik Chatterjee highlighted 66x forward P/E as excessive for mid-single-digit growth. • Super Micro (SMCI.US): Chatterjee expected estimates to fall despite AI demand, citing inferior margins. • Lightspeed (LSPD.US): Tien-tsin Huang advised monitoring execution amid fierce competition. • Western Union (WU.US): Huang cited restrictive immigration policies and Q2 remittance softness limiting upside. • Intel (INTC.US): Harlan Sur noted simultaneous struggles in process catch-up and CPU share stabilization. • Skyworks (SWKS.US): Peter Peng projected below-seasonal H2 demand on tariff/trade impacts.
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