Four stocks analysts are sweet on, and two with sour notes.
In stock market news, big names such as the FAANGs — Facebook Inc. (ticker: FB), Apple Inc. (AAPL), Amazon.com Inc. (AMZN), Netflix Inc. (NFLX), and Alphabet Inc.’s (GOOG, GOOGL) Google — often dominate the headlines and crowd out hundreds of other publicly traded companies that operate outside of the 24/7 news cycle. This list bucks that trend and includes a smattering of well-known companies — and a few newcomers — that fly under the radar. Deutsche Bank recently updated their price targets for six such stocks. Here are the changes, ordered from the largest decreases to the biggest increases.
Boston Beer Co. Inc. (SAM)
With 2020 revenues of $1.85 billion, Boston Beer Co. was the second-largest craft brewing company in America in 2020, with well-known labels such as Sam Adams, Truly and Twisted Tea. The stock soared during the pandemic, but second-quarter earnings revealed slower-than-expected depletions growth for its hard seltzer products, and the stock fell 26% after the release. Deutsche Bank recently revised its price target for SAM stock to $564 per share from $695 per share, with analyst Steve Powers noting the “uncertain (and lower)” hard seltzer demand. “The haste with which the hard seltzer deceleration caught the company off-guard between April and August led SAM to first lower guidance alongside 2Q results in late-July,” Powers says. The company went on to fully withdraw guidance. Even after withdrawing guidance, the stock traded relatively even, indicating a possible floor for this once hot stock. SAM is one of just two companies on this list with a “hold” rating.
Price target change: -14.4%
Dave and Buster’s Entertainment Inc. (PLAY)
Dave and Buster’s owns and operates entertainment and dining venues with the slogan “Eat Drink Play and Watch.” With market capitalization of $2 billion, the restaurant chain’s public comparables include Denny’s Corp. (DENN), Ruth’s Hospitality Group Inc. (RUTH) and Cheesecake Factory Inc. (CAKE), and the company boasts a forward price-to-earnings ratio of about 14, one of the lowest in its sector. This past quarter, Dave and Buster’s adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA, totaled $119.6 million, and Deutsche Bank analyst Brian Mullen notes that margins “were 660 basis points above the corresponding quarter from 2019 and were 446 basis points above 2019 levels for the entirety of the first half of 2021.” Despite Deutsche Bank reducing its price target to $50 per share for PLAY stock, the company still considers PLAY a buy.
Price target change: -12.3%
General Mills Inc. (GIS)
General Mills manufactures and markets well-known brands like Annie’s, Cheerios, Lucky Charms, Häagen-Dazs and Pillsbury. General Mills has the second-largest market capitalization (about $36 billion) in the packaged-foods industry and competes directly with Kraft Heinz Co. (KHC), Kellogg Co. (K) and Conagra Brands Inc. (CAG). General Mills relies on its strong brands to command a premium price amid an increasing amount of privately labeled, cheaper options. Inflationary pressure on raw materials poses the biggest threats for its top and bottom lines, as General Mills relies heavily on agricultural commodities and has little room to raise prices. However, Powers notes that “while inflation and margin pressure from commodities, freight, labor, and supply chain challenges may worsen, the company appears fairly confident in its efforts to utilize pricing, productivity, and restructuring to fully offset such headwinds and protect margins.” Deutsche Bank recently revised its price target for General Mills from $70 to $71 per share and gives the stock a “buy” rating.
Price target change: +1.4%
Kroger Co. (KR)
Kroger is the nation’s largest grocer and has complemented its traditional grocery services with privately labeled products, full-service pharmacies and fuel centers, creating diverse streams of revenue. Earlier this month, the company unveiled Kroger Delivery Now, an e-commerce strategy, and chief executive officer Brian McMullen expects it to help the company double both digital sales and profitability rate by 2023. There’s a lot to like about Kroger stock. It is up over 25% year to date, the company beat second-quarter 2021 earnings-per-share forecasts, it posts a forward price-earnings ratio of about 12, and it just increased its dividend for the 15th consecutive year. All said, Deutsche Bank revised its price target up from $42 to $43 per share but currently rates the stock as a “hold,” with Deutsche Bank analyst Krisztina Katai noting, “the bar was unarguably very high and perfection was needed to see a positive reaction in light of the stock’s recent rally.”
Price target change: +2.4%
Vici Properties Inc. (VICI)
Vici Properties Inc. formed in 2017 after Caesars Entertainment placed its operating division, Caesars Entertainment Operating Co., into bankruptcy and spun it into two entities: the real estate investment trust Vici and a separate company that operates the properties. Today, Vici leases hundreds of gaming, hospitality and entertainment destinations to operators such as Caesars, Penn National Gaming Inc. (PENN), Hard Rock, Century Casinos and Jack Entertainment. In August, the company announced a deal to acquire MGM Growth Properties for $17.2 billion, which would make it the largest landowner on the Las Vegas Strip. After the announcement, Deutsche Bank analyst Carlo Santarelli revised his price target from $36 to $38 per share. Vici expects to close the MGM Growth Properties deal in the first half of 2022, which could give investors time to buy before synergies manifest, Santarelli notes.
Price target change: +5.6%
Albemarle Corp. (ALB)
Founded in 1993 and headquartered in Charlotte, North Carolina, Albemarle develops, manufactures and markets bromine, catalysts and lithium, a crucial component in batteries for electric vehicles. For the second quarter of 2021, the lithium business line brought in more than $109 million in EBITDA, representing 56.2% of the company’s total EBITDA. What’s more, the company expects full-year 2022 adjusted EBITDA to be up 25% to 35%, primarily due to higher pricing and volumes for lithium. Albemarle recently announced a strategic review of its catalyst business segment, and Deutsche Bank Analyst David Begleiter believes this “will lead to the sale of the business for around $2 billion.” Albemarle, he says, could become a “pure-play lithium and bromine company,” with bromine eventually becoming a “high quality, high margin specialty business.” Deutsche Bank revised its price target for Albemarle from $245 per share to $270 and lists the stock as a “buy.”
Price target change: +10.2%
Stocks with adjusted analyst price targets:
— Boston Beer Co. Inc. (SAM)
— General Mills Inc. (GIS)
— Dave and Buster’s Entertainment Inc. (PLAY)
— General Mills Inc. (GIS)
— VICI Properties Inc. (VICI)
— Albemarle Corp. (ALB)
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