GE shares are overpriced, hurting Teladoc, and more analysts

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These reports, excerpted and edited by Barron’s, were recently published by investment and research firms. The reports are a sample of the analysts’ thinking; they should not be considered Barron’s opinions or recommendations. Some of the issuers of the reports have provided, or expect to provide, investment banking or other services to the companies analyzed.


General Electric

GE-NYSE

Neutral Price $78.21 on April 27

by JP Morgan

General Electric is going through a tough time, born out of leverage issues that, combined with tough end markets and intensified competition, have left the company with large liabilities and little free cash flow, or FCF. , to support her. The company undertook major portfolio movements to [reduce leverage], diluting future fundamental earnings and FCF. We believe incomplete guidance is preventing an ever-optimistic street from resetting [its forecasts], making the stock cheaper than it is. We continue to see structural concerns in GE’s core power markets, and now structural weakness in aviation, combined with still relatively high financial leverage and many extreme liabilities, all impediments to a rapid turnaround. . Given what we view as low earnings quality, we believe FCF remains the most relevant metric for valuation and stocks are expensive on this basis, with investors giving the benefit of the doubt to an improvement in price. years to come. We stay away. December price target: $55.


Fiserv

FISV-Nasdaq

Surpass Price $100.81 on April 27

by Raymond James

We maintain our outperformance rating [on the financial-services and payment-technology company], after better than expected first quarter results. The merchant sector continues to drive the upside, accounting for the full pace of revenue in the quarter, driven by 39% growth in Clover and 20% volume growth in Carat. That said, we note that the FCF conversion [the ability to turn operating profits into free cash flow] likely to remain a sticking point for investors as first quarter conversion of just 65% is well below historic levels, although we note management reaffirmed expectations of 95% to 100% conversion . Although some may have hoped that the company would at least point to the top of its financial guidance after the first quarter rise, we believe management is prudent to wait, given the macroeconomic uncertainty. With stocks trading at around 13 times estimated earnings for 2023, despite earnings per share growth in the mid-1920s, we find the risk/reward ratio attractive. Price target: $120.


Global beam

Beem Nasdaq

To buy Price $17.15 on April 25

by Maxim Group

Beam sells products for charging electric vehicles without connection to a power grid. The company’s main EV ARC [charging station] fits in a parking space, generates electricity from solar panels and stores energy with batteries. Beam trades at an enterprise value/revenue multiple of 6.9 times our 2022 revenue estimate of $23.1 million. Our $50 share price target is based on an EV/revenue multiple of 10.9 times our 2023 revenue estimate of $46.5 million. We expect revenue to accelerate in 2022 and remain above 100% growth in 2023, and Beam’s gross margin to turn positive in 2022. Our rating is based on our outlook for EV charging demand and clean energy.


Teladoc

Health TDOC-NYSE

Neutral Price $55.99 on April 27

by Credit Suisse

While Teladoc’s first quarter results tracked the consensus estimate, updated estimates for 2022 of consolidated revenue and EBITDA were reduced by 6% and 26%, respectively, at the midpoint, the high end of the range for the total number of visits being lowered. Although Teladoc continues to expect sustainable growth in its line of products and services, it is struggling in the direct-to-consumer mental health and chronic disease markets. In the mental health market, higher advertising costs in some channels are driving a lower than expected return on marketing spend. In the chronic disease market, Teladoc is experiencing an extended sales cycle as employers and health plans evaluate their long-term strategies to deliver the benefits and care their populations need. As a result, Teladoc now assumes a 10% lower revenue return per dollar of ad spend for the full year and takes a $6.6 billion impairment on goodwill. We downgrade the stock to Outperform and lower our price target to $35 from $114.


Barrett Business Services

BBSI-Nasdaq

Surpass Price $73 on April 27

by Barrington Research

Barrett is a leading provider of business management solutions, combining human resource outsourcing and professional management consulting into a single operational platform. We are waiting for Barrett [which is scheduled to report results on May 4] to have revenue of $257.6 million in the first quarter. Our forecast represents a year-over-year increase of 17% and sequentially stable change. The company’s PEO revenue [revenue from services, such as human resources, that a customer needs but that don’t add to its profits] is based on a percentage of gross billing. In the fourth quarter of 2021, Gross Billings increased 13%, year-over-year, following growth of 12% in the third quarter and growth of 17% in the second quarter. Gross Billings growth over the past three quarters compares favorably to the previous four quarters. Stock price target: $85.

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