Our EquityAnalytics department is always updating price targets and ratings on companies that we cover based on new information. Our price targets and ratings are thoroughly researched and use financial analysis tools to determine stock prices. Today we are updating the following companies from our coverage, Baidu (BIDU), Ford (F), Green Mountain Coffee Roasters (GMCR), NVR (NVR), Pulte Homes (PHM), Skechers (SKX).
The chart below shows new ratings, price targets, and buy/sell ranges vs. old ones:
Baidu: Maintain at Hold, Decrease PT From $136 to $130
We decreased our price target on Baidu slightly as the latest round of earnings did not impress us much. The company is in a great growth mode, and we cannot disagree with that. Yet, we believe that the market is pricing in that growth appropriately, and upside is limited given current growth models. One potential mover of the stock could be BIDU entering the mobile market like Google did. We are not pricing in a lot with this currently, and that would be the one place where we could see a lot of unexpected growth. At the same time, the Chinese marketplace is looking murky. Inflation costs are there, and this has weighed on the company's recent expectations. The growth of active paying customers is encouraging, but we believe the market is going to keep a discount on Chinese companies until the economic situation repairs itself.
Ford: Maintain at Hold, Increase PT from $12 to $13
The company's latest earnings came in slightly above expectations, but April sales diminished our upside expectations for the stock. The company saw a hit to its rising sales in April. The company, however, is limiting their shutdowns this summer for more production, which is a positive sign for the company. The company, despite its weakness, did perform ahead of our expectations, which were very low. The issue in Europe is not going away, and its hurting Ford a lot. What is also concerning is that the company is not seeing a ton of great growth in Asia (not as strong as before). We see a rocky road right now for Ford. Market is not pricing any growth at all for the company, and they do have more than the market is giving them credit for.
Green Mountain: Upgrade from Hold to Buy, Decrease PT from $78 to $42
A pretty sizeable overreaction this past quarter happened to GMCR on a stock that moves a lot. Yet, we still see value in GMCR. The company, which was once well overpriced is now underpriced. There are a few reasons we like GMCR. The growth concerns are now out on the table for them, but they are still going to grow sales by over 15% for the next few years, which is a growth model that many companies on the market do not have. Further, they now have a future PE on our model of under 8. There is a lot of uncertainty in the company, and that is scaring off traders. Investors should see this as an opportunity to get value and growth in one package. Our decline in PT was drastic, but it comes mostly from the capital expenditures staying weighted well above where we thought they should be reduced to create positive cash flow. Additionally, we slashed our estimates based on lowered guidance, but it was not terribly lower than originally estimated.
NVR: Downgrade from Buy to Hold, Increase PT from $636 to $865
NVR looking like one of the best residential construction companies right now, and we upped our PT a lot after the company put together a very strong quarter and looks well positioned. The company came in line with most of our expectations, but margin improvement was a welcome sight to see. The company saw improvement in new orders as well.
Pulte Homes: Upgrade from Hold to Buy, Increase PT from $9 to $13
Pulte continued the stretch of homebuilders reporting a nice Q1, and we upped our price targets for them. The company is looking like they are going to turn a profit in 2012 versus our 2013 projections. The company, additionally, had a positive 15% increase in new home orders. We are cautiously optimistic about this stock, and PHM is very undervalued still, which gives us the buy rating.
Skechers: Maintain at Sell, Increase PT from $9 to $14
We are not convinced on SKX after their latest quarter. The company is doing better than we expected, but we still do not believe that the stock has a ton of growth potential. Their toning inventory has been cleared out it appears for the most part, but we now wonder where the growth for this company comes from moving forward. The positives are that the company is cutting costs, improving margins, and managing inventory better. Further, they are moving on from Shape-Ups. Yet, they lack a shoe/image once again that we believe can sustain their image. Overall, we believe they are not a great option for an investment, and they need a product that can propel sales again in order for them to become attractive. Much too cyclical for our liking.
Disclosure: I am long GMCR.