NEW YORK: These reports are issued recently by investment and research firms. They are also available in the company-research area. Some of the reports’ issuers have provided, or hope to provide, investment-banking or other services to the companies being analyzed.
Union Pacific • UNP-NYSE
Buy • Price $107.51 on April 28
by Deutsche Bank
We are maintaining our 2015-16 EPS estimates of $6.28 and $7.20, respectively, as we see a compelling multiyear earnings growth story supported by secular intermodal, petrochemical, and especially Mexican opportunities. The big railroad moves goods from every major commodity group to and from Mexico, in a business split between a unit of Kansas City Southern (KSU) and Ferromex, a private rail consortium in which Union Pacific holds a 26% stake. Northbound shipments account for roughly half of UNP’s overall cross-border traffic, predominantly consisting of finished vehicles, auto parts, beer, and food products, and intermodal shipments. Southbound shipments are mostly of auto parts, grain, dry feed ingredients, intermodal, steel, plastics, minerals, meals and oils, and soda ash.
We maintain our Buy rating and set our price target at $126.
Ametek • AME-NYSE
Buy • Price $52.31 on April 28
by Jefferies
First-quarter 2015 earnings were up 11%, in line with our and the Street’s forecasts. Organic sales, up 1%, were short of our expectation of 2%, but margins were long. As we expected, the designer and manufacturer of high-tech measuring, monitoring, and imaging instruments, and advanced materials for aerospace, energy, and medical markets, reaffirmed its 2015 EPS guidance at $2.58 to $2.63 (+7% to +9% year over year) via cost-reduction plans to offset slower organic sales and a more difficult foreign-exchange environment.
We are maintaining our 2015 EPS estimate of $2.62 (+8% Y/Y). For 2016, our EPS estimate is also unchanged at $2.91 (+11% Y/Y), and our year-end price target is set at $65 per share.
C.H. Robinson Worldwide • CHRW-Nasdaq
Overweight • Price $68.94 on April 27
by Barclays
Early this year, we felt like one of the only bulls on the shares of the third-party shipping and logistics provider. But now earnings have come in below our first-quarter estimate, and, more importantly and to the credit of the bears, net revenue growth of 6% in April suggested a material slowing in the core transportation business. The company’s recent acquisition of Freightquote should be adding close to 6% to net revenue growth this year; that suggests there’s been limited organic expansion, at least early this spring. Gross margins did improve, but owing largely to the pass-through of fuel surcharges. Despite slightly brighter freight-market outlooks, we think growth challenges will persist in the less-robust spot-trucking business in 2015, although CHRW shares do trade at a discounted valuation, relative to the company’s history and especially for an asset-light, high-return business.
Our target price: $77, down from $80.
Celldex Therapeutics • CLDX-Nasdaq
Buy • Price $23.92 on April 28
by Brean Capital
The biopharmaceutical company reported first-quarter 2015 revenue of $500,000 and a loss per share of 33 cents. Those numbers, reasonably in line with consensus estimates, are immaterial metrics at present. General and administrative expense was $6 million and research-and-development expense was $25 million in the quarter, versus $6 million and $27 million in fourth quarter 2014. Most importantly, Celldex ended first quarter 2015 with a healthy $360 million in cash and investments, which should be sufficient to support operations and clinical development through 2017, assuming full approval for Rintega—a treatment for glioblastoma, or GBM, a kind of brain tumor—that is currently in Phase 3 trials.
Our target price is set at $35.
Container Store • TCS-NYSE
Outperform • Price $21.69 on April 15
by Credit Suisse
We continue to view the retailer—which specializes in storage and organizing products mainly for the home, including shelving, bins, and closet systems—as a winning concept with long-term growth potential. But the key investment question for this growth story continues to be whether it can reverse the traffic declines seen over the last two years, and/or offset those declines with ticket-driving initiatives.
Weaker fiscal 2014 (ended February 2015) results and first-quarter fiscal 2015 comp guidance suggest little immediate improvement on the traffic issue. Like other retailers, TCS has been hurt by slowing traffic. That has been one of the biggest pushbacks on this story, with the inevitable questions about promotional and pricing strategies. With the power of initiatives in its closet systems [which are generally high-ticket items], traffic does seem less important to the story right now, and we do see opportunities in the company’s marketing drive to generate more store visits per customer. But we are still reducing our fiscal 2015 EPS estimates from 62 cents to 32 cents and our 12-month price to $18, from $27.
