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Deutsche Bank hikes price target for Apple

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Deutsche Bank raised the firm's price target on Apple Inc (NASDAQ: AAPL) to $200 from $175 and reiterated a Buy rating on the shares. The price target implies an upside of 15.6%. Considering a "healthy demand backdrop" and Apple's "strong" portfolio across its product lines, the Street estimate for 2022 revenue growth of only 5% is too low with the push-out of some revenue from 2021 already accounting for three percentage points of growth. The analyst believes there is an upward bias to Apple's estimates. While supply chain constraints are a near-term headwind to revenue, Apple's supply chain has improved at a faster pace, with iPhone wait times shortening to only a few days, and that should be enough to drive a "beat-and-raise," Deutsche Bank says.

Bank of America downgrades Goldman Sachs citing trading business

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Bank of America  downgraded Goldman Sachs from Buy to Neutral and cut his price target from $490 to $475.
In the downgrade note, said Goldman has an impressive asset management business, but it has yet to prove its consumer and wealth management strategy will pay off for investors. The bank  expects a tough year for growth in capital markets revenue in 2022 for Goldman and anticipates a cool-down in both trading activity and IPO activity this year. In addition, he said Federal Reserve rate hikes could weigh on investor enthusiasm for non-profitable startups.

 

Morgan Stanley hikes Tesla stock price target

Morgan Stanley analyst Adam Jonas maintained an Overweight rating on Tesla shares and increased the price target from $1,200 to $1,500. The analyst maintained his bear- and bull-case price targets at $500 and $1,600, respectively. There are signs that Tesla is accelerating its lead over its EV peers, Jonas said. 

Morgan Stanley raised its fiscal-year 2022 delivery forecast for Tesla from 1.22 million units to 1.46 million units, and increased its 2030 volume estimate from 8.1 million units to 8.6 million units. Morgan Stanley attributed the increased price target for Tesla shares to higher revenue and earnings assumptions, which drive modestly higher valuations from adjacent businesses, including Network Services, etc, in its SOTP model. Almost half of the firm's $1,300 target is accounted for by its core Auto valuation of $618/share, it added. 

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Buybacks Hit Record After Pulling Back in 2020

Companies in the S&P 500 repurchased $234.5 billion in shares during the third quarter, topping the previous record of $223 billion in the fourth quarter of 2018, according to preliminary data from S&P Dow Jones Indices. The wave of share repurchases has helped propel U.S. stock indexes to dozens of records in 2021.

S&P 500 component Microsoft Corp. said in September that its board had approved a plan to repurchase up to $60 billion of its stock. Car-rental company Hertz Global Holdings Inc. recently said it would buy back as much as $2 billion of its stock, while tech company Dell Technologies Inc. is planning a $5 billion share-repurchase program.

Buybacks are just one of the forces behind the stock market’s rally. Asset prices have continued to benefit from the monetary and fiscal support that policy makers put in place to help the economy get through the pandemic. And analysts have consistently underestimated corporate earnings, which are expected to grow 45% in 2021 for companies in the S&P 500. 

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Investors this week will scrutinize signals out of the Federal Reserve’s two-day policy meeting, where officials may accelerate the process of winding down a bond-buying stimulus program. Central-bank officials could also shed more light on their expectations for interest-rate increases next year.
S&P 500 buybacks plunged from nearly $199 billion in the first quarter of 2020 to just under $89 billion in the second, as companies reeling from the onset of the pandemic moved to conserve cash. Share repurchases increased in each following quarter, approaching $199 billion again in the second quarter of 2021.
Repurchases can support stocks by reducing a company’s share count, boosting its per-share profits. And they can boost investor sentiment by suggesting executives are optimistic about their companies’ prospects and confident in their financial position.
Stock buybacks have come under fire from politicians who say companies should use cash to invest in their businesses instead of supporting their share prices. The version of the $2 trillion education, healthcare and climate spending package that passed the House in November would create a 1% tax on the net value of a company’s stock buybacks.

 

 

 

RBC Capital downgrades 3M to Underperform from Sector Perform

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RBC Capital downgrades 3M to Underperform from Sector Perform with a $166 price target, slashed from $199, anticipating a litany of operating and legal challenges that likely will extend the stock's weakness. Resulting earnings misses and guidance cuts are eroding the company's standing as a high-quality bellwether, said RBC.

 

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