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.
Microsoft -- MSFT-Nasdaq Outperform -- $419.14 on Oct. 16 by BMO Research We are removing Microsoft as one of our top picks. Over the next few quarters, we do not envision much upside tension to our/consensus top-line estimates. Feedback for Microsoft 365 Copilots remains muted, which we think limits revenue upside for the Productivity and Business Processes segment (prereclassification).
Also, we think that elevated capital expenditure and depreciation will limit margin expansion, as we have previously written. We like the long-term fundamentals of Microsoft, but given lack of upside over the next few quarters, we do not think Microsoft worthy to be one of our top picks. Price target: $500.
J.B. Hunt Transport Services -- JBHT-Nasdaq Outperform -- $174.65 on Oct. 15 by Raymond James While concerns over freight markets linger, we maintain our Outperform rating, given our view of management's long-term approach and prospects for outsize growth in out-years driven by J.B. Hunt's renewed commitment with its primary rail partner, a multiyear expansion in capacity, and improving box turns.
Further, J.B. Hunt garners a sticky growth engine in its Dedicated Contract Services business with conversion upside. While the shares trade at a heady 26 times our (what we believe will prove to be "trough") 2025 estimated earnings per share, we believe that reaccelerating load growth and improved pricing will be key to drive positive earnings drift that should in turn drive shares higher. Price target: $195.
Airbnb -- ABNB-Nasdaq Buy -- $137.27 on Oct. 16 by Benchmark Airbnb dropped its Winter Release early this morning. Unlike past releases promising future updates and hints at things to come, this release predominantly accomplished what the company had been messaging for the past couple of quarters -- a much deeper focus on co-hosting and personalization.
We had been flagging the former as an important topic for both Airbnb and the industry as a whole, especially in light of recent trade articles suggesting that the narrowing gap in price between hotels and short-term rentals, plus inconsistent property pictures and descriptions, have led to hotels taking back share.
Now, with the introduction of a co-host network in Airbnb's top 10 markets, mom-and-pop plus spec buyers should eventually have the means to help drive an overall improvement in both the listing quality and overall stay categories, along with some much-needed host tool improvements, including a chat feature and better pricing recommendations.
As for the personalization improvements to the app, will it be enough to drive enhanced conversion? Possibly, although the two bigger long-term takeaways we think are important here are a better framework for relaunching experiences and the expansion of local payments.
All of this is a step in the right direction for Airbnb, in our view, although when the company gets back to sustainable, low-double digit nights and experiences, and ultimately revenue growth, remains heavily debated. Price target: $155.
Snowflake -- SNOW-NYSE Outperform -- $118.90 on Oct. 17 by Evercore ISI Earlier this week, we attended Snowflake's Data Cloud World Tour in New York City, where we had the opportunity to speak with several of the company's partners and customers. At a high level, Snowflake [a provider of data storage via cloud computing] has been rapidly innovating over the past year, and customer interest around Snowflake products remains strong; partners continue to expand their Snowflake practices and remain bullish on the long-term opportunity surrounding the company.
In terms of key takeaways, we would highlight the following: 1) Even within the uncertain macro backdrop, the demand environment surrounding Snowflake has stabilized, if not improved, over the past three months; 2) data modernization remains a key priority for all companies as they look to leverage artificial intelligence/machine learning technologies; 3) Cortex [a suite of AI features] is showing early signs of adoption, though we remain in very early days; 4) [rival] Databricks has captured significant mind-share in terms of AI/ML work loads over the past 12 months. In addition to having a robust product road map, Databricks has made strong hires to support its rapid pace of innovation.
However, existing Snowflake customers with predominantly business-intelligence use cases are more than willing to experiment with Cortex, and Snowflake is able to help bridge the product gap through its partnerships with companies such as DataRobot and Dataiku. Price target/base case: $170.
Taiwan Semiconductor Manufacturing -- TSMC-NYSE Buy $187.48 on Oct. 17 by Needham TSMC reported a blowout quarter with revenue, gross margin, and operating margin results and guidance that well exceeded consensus estimates. Management now expects total revenue to grow by about 29% year over year for the full year versus "slightly above mid-20s" guided a quarter ago.
Capex-wise, TSMC downticked capex guidance to "slightly above $30 billion" versus $30 billion to $32 billion a quarter ago. Due to relatively downbeat quarterly capex numbers for 2024's first three quarters, the capex guidance implies that fourth-quarter 2024 capex will almost double and reach about $12 billion, probably driven by the initial N2 technology build out. Price target: $210.
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October 18, 2024 18:34 ET (22:34 GMT)
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