Once a stock’s share price gets too high, even a single share can become too expensive for some investors. Stock splits don’t create any inherent value, but they are typically considered bullish catalysts.
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Companies usually only issue stock splits after extended periods of strong returns, and a stock split is a sign a company’s management is confident in future growth. Several high-profile stocks have completed stock splits in 2024, including Nvidia Corp. (ticker: NVDA), Broadcom Inc. (AVGO), Walmart Inc. (WMT), Chipotle Mexican Grill (CMG) and Sony Group Corp. (SONY).
When Do Stocks Split?
Companies will often implement stock splits when their share prices get prohibitively high. While stocks can split at any price, many stocks that undergo splits were trading at $400 or higher prior to the split. Companies will likely not split their stocks if the stocks are not trading at or near all-time highs. If the company is struggling to grow and the stock is underperforming, management will likely not see a good reason to split the stock. Finally, companies that have issued stock splits in the past may be more likely to do it again, especially if it has been many years since the previous split.
Here are eight stocks recommended by CFRA analysts that could be the next to announce stock splits:
— AutoZone Inc. (AZO)
— First Citizens BancShares Inc. (FCNCA)
— Markel Group Inc. (MKL)
— TransDigm Group Inc. (TDG)
— O’Reilly Automotive Inc. (ORLY)
— Regeneron Pharmaceuticals Inc. (REGN)
— ServiceNow Inc. (NOW)
— Eli Lilly & Co. (LLY)
AutoZone Inc. (AZO)
Auto parts retailer AutoZone may be the best candidate for a stock split. AutoZone has two past stock splits, and its shares are up about 520% in the past 10 years after closing at $3,128.64 on Oct. 16. Analyst Garrett Nelson says AutoZone has generated steady earnings and revenue growth, its stock is attractively valued and it has consistently demonstrated its commitment to share buybacks. Nelson says same-store sales growth, new store openings, efficient operations and aggressive share repurchases will continue to support earnings growth in coming years. CFRA has a “buy” rating and $3,300 price target for AZO stock.
First Citizens BancShares Inc. (FCNCA)
U.S. bank First Citizens BancShares is another candidate for a stock split given its share price has gained 825% in the past 10 years, climbing to $2,043.81. First Citizens has never split its stock since its initial public offering in 1992. Analyst Alexander Yokum says First Citizens has a top-tier management team with a track record of making sound decisions and taking calculated risks. First Citizens has also boosted its earnings profile in recent years by acquiring CIT Group and Silicon Valley Bank. CFRA has a “buy” rating and $2,450 price target for FCNCA stock.
Markel Group Inc. (MKL)
Specialty insurance underwriter Markel is an excellent candidate for a stock split. Markel has never issued a stock split before, but its shares are up more than 146% in the past 10 years to $1,574.99. Analyst Catherine Seifert says better insurance pricing and additional non-insurance revenue will provide a catalyst for Markel’s revenue and earnings growth, which should drive significant upside for long-term investors. Seifert says Markel has delivered consistent underwriting profits, and the company’s premium growth rate has outpaced insurance industry peers. CFRA has a “buy” rating and $1,810 price target for MKL stock.
TransDigm Group Inc. (TDG)
TransDigm designs and manufactures original aircraft parts sold to manufacturers. The company also produces aftermarket replacement parts sold to commercial and military aircraft operators. TransDigm shares are up 700% over the past 10 years to $1,384.07. Analyst Matthew Miller says the five-year outlook for aftermarket parts and services demand is bright given Boeing Co. (BA) and other airplane manufacturers have struggled with new aircraft deliveries. Miller says TransDigm’s status as the sole supplier of many Boeing and Airbus SE (OTC: EADSY) parts gives it extreme pricing leverage. CFRA has a “buy” rating and $1,425 price target for TDG stock.
O’Reilly Automotive Inc. (ORLY)
Auto parts giant O’Reilly Automotive is another candidate for a stock split given its share price has gained 702% in the past 10 years, climbing to $1,198.90. O’Reilly’s last stock split came in 2005. Nelson says O’Reilly will likely outgrow its competitors in the next few years, outpacing both their earnings and revenue growth. He is bullish on the company’s focus on both retail and commercial customers and its potential to gain additional market share in the fragmented auto parts space. CFRA has a “buy” rating and $1,125 price target for ORLY stock.
Regeneron Pharmaceuticals Inc. (REGN)
Regeneron Pharmaceuticals is a biotech company focused on developing therapies to treat metabolic disorders, inflammatory diseases, cancer and respiratory conditions. Regeneron shares are up 195% over the past 10 years to $1,007.96. The company has not split its stock once since going public at $22 per share back in 1991. Analyst Sel Hardy says Regeneron is attractively valued, and he projects 6.7% revenue growth in 2025. While one of its products, Eylea, faces biosimilar competition, Hardy says Regeneron has successfully diversified away from Eylea to reduce risk. CFRA has a “buy” rating and $1,185 price target for REGN stock.
ServiceNow Inc. (NOW)
ServiceNow provides cloud-based applications used to manage and automate workplace processes and workflows. In the past 10 years, ServiceNow shares are up 1,505%. That gain has brought its share price up to $918.87. Despite its rising share price, ServiceNow has never implemented a stock split. Analyst Janice Quek says artificial intelligence applications and use cases will be strong growth drivers for ServiceNow in the next several years. In fact, she projects 20.6% revenue growth for ServiceNow in 2025. CFRA has a “strong buy” rating and $984 price target for NOW stock.
Eli Lilly & Co. (LLY)
Eli Lilly produces brand-name prescription drugs to treat a wide range of medical conditions, including diabetes, cancer and neurological disorders. Lilly has issued four stock splits, but its most recent split happened back in 1997. The stock is up 1,380% in the past 10 years to $916.42. Hardy says Eli Lilly’s market share gains will likely slow in the next year, but late-stage therapies will keep its growth story going in the long term. He anticipates speedy sales growth for Alzheimer’s disease treatment Kisunla. CFRA has a “buy” rating and $1,085 price target for LLY stock.
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8 Companies That Could Issue the Next Stock Split originally appeared on usnews.com
