US Daily Brief: In-depth Analysis of Key Companies

Prepared by UBS Securities LLC, October 30, 2024

Equity Risk Premium on the Rise

According to Nicolas Le Roux, the Equity Risk Premium (ERP) is near historic lows, currently at the 15th percentile of a 100-year distribution. As we enter an era of deglobalisation, limited policy room, and higher geopolitical risks, the ERP is expected to climb higher. This shift indicates that equities will become cheaper relative to bonds.

Alphabet Inc. – Class A (GOOGL)

Providing Louder Answers to the CapEx ROIC Question

Stephen Ju notes that Alphabet’s Cloud segment’s dollar growth is outstripping YouTube’s. Google is on pace to add about \$24 billion this year, reflecting a 16% FXN growth compared to previous years. Innovation through products like Performance Max is driving this growth. Despite regulatory issues and potential market share loss, Alphabet’s incremental CapEx benefits are positively impacting Search revenue and Cloud growth. The price target has been raised to \$192 from \$187, with a Neutral rating and a market cap of \$2,119 billion.

Boston Scientific Corp (BSX)

Management Meetings Support Our Conviction in Sustained DD Sales Growth

Danielle Antalffy highlights that meetings with BSX’s CFO and senior management have reinforced confidence in the company’s ability to deliver a +9.8% to 10.6% sales growth CAGR from 2024 to 2027. The company’s product portfolio is expected to sustain recent momentum, with sales and EPS estimates for 2025 and 2026 considered too low. The stock is rated Buy, with a price target of \$102 and a market cap of \$121 billion.

Barrick Gold Corporation (GOLD)

Production/Costs Risks Lead to Downgrade

Daniel Major downgrades Barrick Gold from Buy to Neutral, citing downside risks to 2025 production and upside risks to costs. The price target has been adjusted to \$22 from \$23.

Newmont Corporation (NEM)

Loss of Confidence -> Downgrade to Neutral

Newmont’s weak 3Q24 results and downgrades to 2025 guidance have undermined confidence, resulting in material earnings downgrades. Daniel Major has downgraded the stock to Neutral, with a new price target of \$54 from \$67.

Apple Inc. (AAPL)

Soft Demand Despite Apple Intelligence

David Vogt’s analysis using UBS Evidence Lab data suggests uninspiring US wait times leading into Apple’s recent product launch. The stock remains rated Neutral with a price target of \$236.

Advanced Micro Devices (AMD)

Conservative View on GPU Story for Next Year

AMD’s guidance and commentary met expectations, but the outlook on the GPU story next year is more conservative. The stock remains a favorite pick among analysts.

Veritone Inc (VERI)

The Macro Is Still VERI Challenging

Seth Gilbert initiates coverage of Veritone Inc with a Neutral rating. While there is potential for double-digit revenue growth, macroeconomic challenges, limited revenue visibility, and profitability concerns keep the rating Neutral.

McDonald’s (MCD)

Initial Thoughts on 3Q Results

Dennis Geiger provides an initial analysis of McDonald’s 3Q results, maintaining a Buy rating with a price target of \$345.

Boot Barn Holdings Inc (BOOT)

2Q25 Report Keeps Us Neutral

Jay Sole maintains a Neutral rating on Boot Barn, adjusting the price target to \$155 from \$165 following the 2Q25 report.

Crocs Inc (CROX)

Weak Q3 Report Not a Buying Opportunity

Jay Sole advises staying Neutral on Crocs Inc after a weak Q3 report. The price target has been adjusted to \$122 from \$146.

Hanesbrands Inc (HBI)

3Q24 Preview: Balanced Upside/Downside Skew

Jay Sole’s preview of Hanesbrands’ 3Q24 results suggests a balanced upside/downside skew, maintaining a Neutral rating with a price target of \$6.5.

Ralph Lauren Corp (RL)

2Q Preview: Moderately Favorable Upside/Downside Skew

Jay Sole expects a moderately favorable upside/downside skew for Ralph Lauren’s 2Q results, raising the price target to \$287 from \$250 and maintaining a Buy rating.

VF Corp Inc (VFC)

Q2 Report Highlights Sequential Improvement

Jay Sole stays Neutral on VF Corp despite sequential improvements in the Q2 report, with a price target of \$19.

Ford Motor Co. (F)

Costs Weigh, Market Factors Add Pressure

Joseph Spak’s analysis of Ford’s 3Q24 results reveals a miss and a lowered 2024 view, maintaining a Neutral rating with a price target of \$11.

Sprouts Farmers Market Inc (SFM)

A Later Harvest?

Mark Carden adjusts the price target for Sprouts Farmers Market to \$126 from \$102, maintaining a Neutral rating.

Sysco Corp (SYY)

Still On Track To Meet Expectations

Mark Carden maintains a Buy rating on Sysco Corp with a price target of \$87, noting that the company is still on track to meet expectations.

Five Below (FIVE)

Is Change Needed for this FIVE\$?

Michael Lasser conducts a deep dive into Five Below, maintaining a Buy rating with a price target of \$108.

Mister Car Wash Inc (MCW)

Will This Print Be a Wash?

Michael Lasser maintains a Neutral rating on Mister Car Wash Inc, adjusting the price target to \$7.5 from \$8.

U.S. Hardlines Retail

Talkin’ Bout Tariffs

Michael Lasser provides an in-depth look at the potential impact of tariffs on the Hardline, Broadline, and Food Retail sectors.

Helen of Troy Ltd (HELE)

Key Takeaways From Meetings With Management

Peter Grom shares key takeaways from meetings with Helen of Troy’s management, maintaining a Neutral rating with a price target of \$79.

Keurig Dr Pepper Inc (KDP)

Secondary Likely To Put Pressure On Shares

Peter Grom maintains a Buy rating on Keurig Dr Pepper Inc with a price target of \$42, noting that a secondary offering may put pressure on shares.

The Estee Lauder Companies Inc (EL)

EL Reportedly Taps CEO Successor

Peter Grom reports on Estee Lauder’s potential CEO successor, maintaining a Neutral rating with a price target of \$104.

The Scotts Miracle-Gro Co (SMG)

Scouting Report: What To Expect From F4Q

Peter Grom previews The Scotts Miracle-Gro Co’s F4Q results, maintaining a Neutral rating with a price target of \$90.

Gaming

September Vegas Revenue ex. Bac up +8% YOY

Robin M. Farley reports a positive trend in September Vegas revenue, up 8% YOY.

Hilton Worldwide Holdings, Inc. (HLT)

What’s Changing in Our Model

Robin M. Farley raises the price target for Hilton Worldwide Holdings to \$274 from \$232, maintaining a Buy rating.

Park Hotels and Resorts (PK)

Q4 at Risk from Labor Negotiations

Robin M. Farley maintains a Neutral rating on Park Hotels and Resorts with a price target of \$14, noting potential risks from labor negotiations.

Royal Caribbean (RCL)

Hints for 2025

Robin M. Farley raises the price target for Royal Caribbean to \$183, maintaining a Buy rating, and notes positive hints for 2025.

Brazilian Utilities

Enel SP and the Fear of the Dark

Giuliano Ajeje discusses concerns surrounding Enel SP, highlighting risks in the Brazilian utilities sector.

Edison International (EIX)

Progress Made but Waiting on Regulatory Outcomes

Gregg Orrill maintains a Neutral rating on Edison International with a price target of \$96, noting progress but waiting on regulatory outcomes.

First Solar Inc (FSLR)

3Q24: Near-term Shipment Bottlenecks

Jon Windham maintains a Buy rating on First Solar Inc with a price target of \$360, citing near-term shipment bottlenecks.

North America Alternative Energy

Tracking CA Residential Batteries – August 2024

Jon Windham provides insights into the tracking of California residential batteries, maintaining a positive outlook on alternative energy.

North America Environmental Services

3Q24 Preview: Indicators Point to Strong Results

Jon Windham previews strong results for the North America Environmental Services sector.

EQT Corporation (EQT)

3Q24 EBITDA Beats, Volumes Increasing into YE

Josh Silverstein maintains a Neutral rating on EQT Corporation with a price target of \$40, noting EBITDA beats and increasing volumes.

Expand Energy Corporation (EXE)

3Q24 Earnings – Expanding

Manav Gupta maintains a Neutral rating on Expand Energy Corporation with a price target of \$89, discussing expanding earnings.

ONEOK Inc. (OKE)

OKE Reports 3Q24 Results, Raises Guidance

Manav Gupta maintains a Buy rating on ONEOK Inc with a price target of \$112, noting the company’s raised guidance for 3Q24.

Phillips 66 (PSX)

PSX Reports 3Q24 Beat

Manav Gupta maintains a Buy rating on Phillips 66 with a price target of \$150, highlighting the company’s 3Q24 beat.

CenterPoint Energy Inc (CNP)

Moving Past the Storm

William Appicelli maintains a Neutral rating on CenterPoint Energy Inc with a price target of \$31, noting the company is moving past recent challenges.

FirstEnergy Corp (FE)

Light 3Q’24 EPS, Pointing to Lower Half for FY’24

William Appicelli maintains a Neutral rating on FirstEnergy Corp with a price target of \$48, highlighting light 3Q’24 EPS results.

Public Service Enterprise Group (PEG)

Potential Clean Energy Cap-ex Addition

William Appicelli raises the price target for Public Service Enterprise Group to \$98 from \$94, maintaining a Neutral rating.

Vistra Corp. (VST)

Expecting Tighter Reserve Margins in Texas

William Appicelli maintains a Buy rating on Vistra Corp with a price target of \$150, noting expectations for tighter reserve margins in Texas.

MSCI Inc. (MSCI)

Challenges for Now But Optimism Remains

Alex Kramm maintains a Buy rating on MSCI Inc with a price target of \$680 from \$695, acknowledging current challenges but remaining optimistic.

PJT Partners Inc (PJT)

Core Miss on Expenses; Dilution from Performance Awards

Brennan Hawken downgrades PJT Partners Inc to Sell with a price target of \$120, citing a core miss on expenses and dilution from performance awards.

Brown & Brown Inc (BRO)

3Q24: Programs Drives Revenue and Earnings Beat

Brian Meredith maintains a Neutral rating on Brown & Brown Inc with a price target of \$108, noting a revenue and earnings beat driven by programs.

Chubb Limited (CB)

3Q24: Earnings Beat as Fundamentals Remain Good

Brian Meredith maintains a Neutral rating on Chubb Limited with a price target of \$296, highlighting an earnings beat and strong fundamentals.

Unum Group (UNM)

3Q24: Favorable LTC Review with In-Line Results

Brian Meredith maintains a Neutral rating on Unum Group with a price target of \$63, noting favorable LTC review and in-line results.

Harmony Biosciences Holdings Inc (HRMY)

Diversification Strategy Done Right

Ashwani Verma maintains a Buy rating on Harmony Biosciences Holdings Inc with a price target of \$56, praising the company’s diversification strategy.

10X Genomics Inc (TXG)

Multiple Headwinds Challenge Near-term Outlook

Dan Leonard downgrades 10X Genomics Inc to Neutral with a price target of \$20 from \$25, citing multiple headwinds challenging the near-term outlook.

Life Sciences & Diagnostic Tools

Weekly Crowding Monitor and Doc Call Insights

Dan Leonard provides a weekly crowding monitor and positive insights on Illumina while being cautious on 10X Genomics.

AtriCure, Inc. (ATRC)

Core Open Ablation Business Strength

Danielle Antalffy maintains a Buy rating on AtriCure, Inc with a price target of \$40 from \$35, highlighting strength in the core open ablation business.

Stryker Corp (SYK)

Confidence in Sales Growth Outlook

Danielle Antalffy raises the price target for Stryker Corp to \$370 from \$366, maintaining a Neutral rating and expressing confidence in the sales growth outlook.

AnaptysBio Inc (ANAB)

Major 4Q/1Q Upcoming: Upside Potential but Uncertainty

Eliana Merle raises the price target for AnaptysBio Inc to \$33 from \$23, maintaining a Neutral rating and noting major upcoming quarters with upside potential but uncertainty.

Apellis Pharmaceuticals Inc (APLS)

C3G/IC-MPGN Detailed Data Competitive

Eliana Merle maintains a Buy rating on Apellis Pharmaceuticals Inc with a price target of \$74, highlighting competitive detailed data.

BioMarin Pharmaceutical Inc (BMRN)

Can BMN333 Drive an Inflection for Shares in ’25?

Eliana Merle raises the price target for BioMarin Pharmaceutical Inc to \$106 from \$104, maintaining a Buy rating and questioning if BMN333 can drive an inflection for shares in 2025.

Monte Rosa Therapeutics Inc (GLUE)

NVS Collaboration for VAV1 a Positive

Eliana Merle maintains a Buy rating on Monte Rosa Therapeutics Inc with a price target of \$20, noting the positive NVS collaboration for VAV1.

Revolution Medicines Inc (RVMD)

First G12D Data Encouraging

Eliana Merle maintains a Buy rating on Revolution Medicines Inc with a price target of \$65, highlighting encouraging first G12D data.

US Healthcare

Labs Job Listing Monitor and Stock Movers

Kevin Caliendo provides an overview of the US Healthcare sector, with a focus on labs job listings and today’s stock movers and key data.

AbbVie (ABBV)

ABBV Acquiring Aliada for \$1.4bn

Trung Huynh maintains a Neutral rating on AbbVie with a price target of \$195, noting the acquisition of Aliada for \$1.4 billion.

Pfizer Inc. (PFE)

3Q24 Initial Diagnosis: Substantial COVID-driven Beat

Trung Huynh maintains a Neutral rating on Pfizer with a price target of \$31, highlighting a substantial COVID-driven beat.

Crane Co. (CR)

4% EPS Beat & Modest Guidance Raise

Damian Karas maintains a Neutral rating on Crane Co. with a price target of \$152, noting a 4% EPS beat and modest guidance raise.

Flowserve Corp. (FLS)

Headline Miss, but Modest EPS Beat

Damian Karas maintains a Buy rating on Flowserve Corp with a price target of \$54, citing a modest EPS beat despite a headline miss.

ITT Inc. (ITT)