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 in our coverage: Big Lots (BIG), Costco Wholesale Corporation (COST), China Dangdang (DANG), Intuit (INTU), Jack In The Box Inc. (JACK), Oracle (ORCL), Polo Ralph Lauren (RL), Sociedad Qumica y Minera de Chile S.A. (SQM), Target (TGT), Toll Brother (TOL).
The chart below shows new ratings, price targets, and buy/sell ranges vs. old ones:
Big Lots: Upgrade from Hold to Buy, Decrease PT from $53 to $50
We believe that Big Lots has been discounted enough at this point that is attractive to purchase. The company reported some weak earnings and lower guidance in its latest earnings report and seems to have lost its footing somewhat, but we believe the market is over discounting right now. For one, BIG has a large premium that should be attached to it, as it is a definite buyout candidate.
We believe that the company's move into Canada will provide strong top-line growth in 2013 and better bottom-line growth in 2013 into 2014. With the company now pricing a future P/E at around 10 according to our models, we believe this stock is now at a nice Value place to start accruing shares. Additionally, we like having some shares at all times for potential buyouts.
Costco: Maintain at Hold, Increase PT from $99 to $104
Costco is one of those companies that could be a potential suitor for Big Lots, which would allow it to move some of its wholesale goods that do not sell as well to a store like Big Lots for closeout pricing. Right now, we believe COST is a solid investment, but this is not a place where we want to really be adding shares, as its value seems pretty fair priced.
The company remains in a solid position to continue to grow as it owns a strong market share and has created a nice economic moat with its membership-style approach. Recent results, though, have been a bit weak with currency exchanges. We have upped our estimates moving forward, but we believe those currency issues will be around for some time.
China Dangdang: Maintain at Hold, Decrease PT from $9 to $6
China Dangdang is pretty fairly priced at this point, and we do not see a ton of upside in the near term, as the company continues to struggle to turn a profit. With a lot of potential growth available, it's just a waiting game with China Dangdang. Eventually, it may turn the corner and produce a solid profit. Right now, however, it is losing more money each quarter and that made us reduce our expectations. We now do not see profitability until at least 2014.
Intuit: Downgrade from Buy to Hold, Decrease PT from $80 to $68
We greatly decreased our expectations on Intuit after the company decreased expectations for the year. First off, the company decreased expectations in its latest report. We were high on Intuit, and that decrease made us bring our expectations down a bit. Further, we are concerned with its ability to grow as unemployment is stalling. The company was looking great as new jobs were being added, showing good health for small/medium-sized businesses. With that stalling, we are concerned about the prospects for Intuit. We believe Intuit will be pretty flat for the rest of the year, and the market is pricing it pretty well at this point.
Jack In The Box: Maintain at Hold, Increase PT from $24 to $31
The prospects for Jack In The Box seem to be getting a lot better, and it looks like a great stock to add on any weakness in the near term. We have been waiting for the company to turn the corner, and it appears to have done that. The growth of Qdoba has been a great help to the company moving back into growth of profits as well as its enfranchisement of stores project that has gone well. Commodity prices seem to be flattening, and the company is seeing a regrowth of openings of its flagship store as well. It looks well positioned, and we are just waiting for a bit of weakness to add positions.
Oracle: Upgrade from Hold to Buy, Decrease PT from $36 to $35
We think now is a fantastic time to get involved with Oracle. Oracle had been dogged for most of the year as it was supposedly behind the other tech companies in the cloud network and it was was losing its footing with its enterprise software. We disagree, and we believe the latest report was very strong for the company. We believe that its current lineup is getting a nice upgrade, with hardware looking to improve after its Sun Microsystems acquisition, as well as its Exalytics software that we believe is going to be a large growth driver.
Polo Ralph Lauren: Maintain at Hold, Decrease PT from $175 to $165
Polo Ralph Lauren is looking like a Hold at this point after we downgraded its PT based on recent weakness. The company's latest report was disappointing for us, and we cut estimates. The company did double its dividend, and it does have good growth prospects in China. Yet, it is seeing most likely a decline in its wholesale business, which is a key component of the company's overall business. Further, the company does not seem to have a favorable attitude about being able to quell the European storm, and we see that as being an issue for the second half of the year. We believe that RL has a lot of potential and is a solid investment, but we are not looking to add at this time.
Target: Maintain at Hold, Increase PT from $58 to $64
We upped our price target on Target, as we believe the company is looking more solid after some early year weakness. We are a fan of some of the company's moves like growth in Canada, P-Fresh line, as well as see potential growth outside of the USA as well. Yet, we also like other discount stores better. The issue for Target is that it is not a discount store, and it seems to have lost some of its mojo as a unique cheaper store that was there when it broke onto the scene as it vied to steal customers from Wal-Mart (WMT). The company continues to have to stay with fashion trends to attract that crucial part of its business, and we believe it is fairly priced at this point.
Toll Brothers: Downgrade from Hold to Sell, Increase PT from $24 to $28
Toll Brothers had a decent report, but it is still not making a profit of significance. We believe it is now well overvalued for its current situation. Look to Sell at these levels and rebuy on a move lower.
Disclosure: I am long PNRA.