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.
Meta Platforms -- META-Nasdaq Buy -- $599.81 on Dec. 30 by Monness Crespi Hardt Meta Platforms has handily outperformed our coverage universe at large in 2024 and posted the best performance within our megacap group. Despite the stock's sharp rise, Meta's valuation remains reasonable in our view. Moreover, we believe that the ramp of newer products, the infusion of generative artificial intelligence across the portfolio, and the expansion of advertising across a wider swath of the platform, position Meta well in 2025.
Furthermore, a successful TikTok ban has the potential to further galvanize Meta's growth prospects; however, we're not counting on such an outcome. We believe that Meta is well positioned to benefit from the digital ad trend, expand the reach of its platform, innovate with gen AI, and leverage a leaner cost structure; however, regulatory scrutiny persists, and the macro remains fragile. Target price: $660.
Netflix -- NFLX-Nasdaq Neutral -- $907.55 on Dec. 27 by Seaport Research Partners In the span of a month and a half, Netflix's live sports events ambitions notably improved their case, in our opinion.
While the highly problematic buffering and pixelated streaming experience of the Jake Paul versus Mike Tyson fight was cause for concern...with that event (a global audience that peaked at 65 million concurrent streams, of which the U.S. contributed 38 million), Netflix was proving the business case of having a large global platform that could attract significant consumer demand, and that can be monetizable through advertising and reduced churn/higher lifetime value of the member. With the two Christmas Day National Football League games, there were almost no noticeable streaming issues, and the events' claims as having the second-largest global streaming audience could make Netflix's case to be a serious contender for future sports rights wins.
We reiterate our Neutral Rating on Netflix shares, as we believe valuation fully reflects the long-term opportunity set toward which the company needs to execute.
Vivid Seats -- SEAT-Nasdaq Buy -- $4.50 on Dec. 30 by Benchmark Shares of Vivid Seats soared today on rumors that the company was exploring a sale, which seems reasonable given the current market dynamics and would not surprise us if proved to be true in the short term.
While private equity was specifically mentioned, we think a strategic buyer (with PE backing) is just as, if not more, likely given the competitive headwinds in the space and the ongoing challenges posed by the primary versus secondary market battle. StubHub would seem to be the most logical buyer, effectively consolidating the secondary ticket market and allowing them to stop spending like crazy to recapture market share, although there could be some noise given Vivid's modest international assets.
American Airlines Group -- AAL-Nasdaq Outperform -- $17.61 on Dec. 30 by Raymond James We are upgrading American Airlines Group from Market Perform to Outperform on an attractive risk-reward and above-consensus forecast, which reflects an improved revenue outlook following the early-December update (albeit not much incremental revenue assumed from the new co-branded card deal), attractive competitive capacity setup, and anecdotal evidence of improved engagement with contracted corporate customers (albeit, likely at a price).
Our revised earnings forecast in general reflects recent guidance updates, our latest competitive capacity analysis, and slightly lower fuel forecast. Price target: $24.
Gray Television -- GTN-NYSE Market Perform -- $2.97 on Dec. 31 by Barrington Research Gray Television's affiliation agreement with ABC stations, which was announced on Monday, Dec. 30, was renewed through 2028. It was previously noted as accounting for about 15% of the company's overall subscriber relationships. While this makes it the smallest among the Big Four relationships, it is still an important part of the footprint, comprising 25 markets across the country.
We would anticipate that the company will provide its expectation for annual retransmission expense levels when it reports full-year results, expected for late February. When discussing its planned $60 million cost savings efforts, management noted that more impactful savings could come from the affiliate renewal cycle. The remainder of the affiliation agreements come up in the second half of 2025, so most potential savings from this cycle would come in 2026.
Compass Diversified Holdings -- CODI-NYSE Outperform -- $23.10 on Dec. 30 by William Blair Ahead of its Jan. 16 investor day, Compass Diversified Holdings announced the sale of Ergobaby [a U.S. company specializing in the manufacture and sale of baby carriers and other accessories] for $104 million (estimated at 11.4 times 2024 adjusted Ebitda) to Highlander Partners (private equity). Compass will record a pretax gain of $1 million to $8 million in the December quarter and plans to use the $99 million of net proceeds to reduce debt.
We remain encouraged by Compass' diverse portfolio, history of strong capital allocation, and internal execution. Shares have a 4.4% dividend yield and trade at 10.7 times 2024 earnings per share.
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January 03, 2025 16:59 ET (21:59 GMT)
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