Edited by
These reports, excerpted and edited by Barron's, were issued recently by investment and research firms. The reports are a sampling of analysts' thinking; they should not be considered the views or recommendations of Barron's. Some of the reports' issuers have provided, or hope to provide, investment-banking or other services to the companies being analyzed.
Tesla -- TSLA-Nasdaq Outperform -- Price $177.29 by Wedbush It is a pop-the-Champagne moment for Elon Musk and Tesla shareholders, based on Musk's X post that both the hot-button 2018 comp package and incorporation in Texas have been overwhelmingly approved. This removes a $20 to $25 overhang on the shares that has weighed on them since the head-scratching Delaware ruling set this Twilight Zone soap opera in motion earlier this year.
We believe that an overwhelming retail presence voting to greenlight both proposals was key to approval, despite some large shareholders voting no. In addition, based on all of our discussions over the past month, large shareholders at the end of the day knew that voting no would risk Musk potentially eventually leaving as CEO; that risk far overweighed the reward in voting no on this proposal, despite some obvious frustration with Musk. We have been perplexed this week when some sell-side peers said this package wouldn't pass, as the groundswell momentum to get this done was crystal clear among retail and institutional investors. We maintain our Outperform rating and $275 price target.
First Solar -- FSLR-Nasdaq Overweight -- Price $279.80 on June 12 by Oppenheimer We hosted First Solar Chief Financial Officer Alex Bradley on an investor call with commentary pointing to pricing support and incremental demand growth. Management noted price stability in response to clarity on domestic content guidelines and in response to the initial ruling on its International Trade Commission case. We believe that the company is also seeing incremental demand from customers working with hyperscalers and pre-existing corporate customers looking to source domestic solar equipment. As the company continues to execute on its manufacturing scale-up, we see potential for First Solar to realize better-than-anticipated pricing/margin driven by higher blending on non-U.S. modules in U.S. projects, improved conversion efficiency, and higher underlying power prices. We raise our price target to $325 as we see significant potential for incremental operating leverage.
Warner Bros. Discovery -- WBD-Nasdaq Buy -- Price $8.04 on June 12 by Benchmark We maintain our Buy rating and $20 price target for Warner Bros. Discovery, with a marginal positive being TNT Sports' announcement yesterday that it has secured decadelong French Open Tennis rights. The $650 million bid (according to The Athletic) surprisingly displaces NBCUniversal, with coverage led by TNT complemented by TBS and truTV carrying weekday matches.
Early-round matches will also be shown on Max alongside continued Eurosport coverage. TNT Sports Chair and CEO Luis Silberwasser cited the network's breadth of content, including the National Hockey League, U.S. soccer, Nascar, and now Roland Garros and College Football Playoff games (sublicensed from ESPN). Tennis is the most year-round sport and Warner Bros. Discovery's Bleacher Report and other digital properties should be well positioned to elicit fan enthusiast interest. High volume coverage of all four tennis Grand Slams on Venue is also a distinct positive for the new JV streaming service operated by Warner Bros. Discovery, Fox, and Walt Disney.
General Motors -- GM-NYSE Buy -- Price $47.57 on June 11 by UBS General Motors announced a new, $6 billion share repurchase authorization (11% of current market cap). We believe that a new buyback program was generally expected around this level. Still, we view this is as a positive event, as it shows confidence in GM's ability to generate free cash flow and deliver on its commitment to return cash to shareholders. We believe that GM will continue to utilize a significant portion of FCF generation to return to shareholders for the foreseeable future. Recall that in November 2023, GM announced a $10 billion accelerated share repurchase, or ASR. Given current cash balance and expected free cash flow, we had expected that GM would be able to announce another share buyback but didn't expect an ASR, given GM's desire to not go below $18 billion to $20 billion in cash. This program isn't an ASR, and the authorization will be executed opportunistically.
GM also announced they expect the remaining $1.1 billion of a prior $1.4 billion authorization to be completed by end of second-quarter 2024. So, using this new authorization can likely begin in third-quarter 2024. Price target: $58.
Casey's General Store -- CASY-Nasdaq Market Perform -- Price $462.01 on June 13 by BMO Research Casey's fourth-quarter 2024 and fiscal-year 2025 guidance highlighted the resilience of Casey's model, especially in light of weakening data points across the convenience-store industry.
Management's decisions around pricing through the cycle, store simplification, and innovation of prepared foods are clearly helping to bolster Casey's competitive advantages. We raise our target to $400, now 26 to 27 times price/earnings or 13 times enterprise value to Ebitda. But we remain Market Perform despite impressive trends, as our higher target price is primarily driven by higher [fuel] margin estimates, where we still see risk of volatility, and multiples now solidly above pre-Covid levels.
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June 14, 2024 19:17 ET (23:17 GMT)
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