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Broker wrap: Electronic Arts, Apple, Uranium Energy, Autoliv

Car production
Recent Passive Safety growth has been disappointing,

Car safety systems firm Autoliv Inc (NYSE:ALV) has been upgraded to ‘buy’ from ‘hold’ by broker Jefferies.

The recent slow-down in growth, plus caution on global production and an earnings hit from the Zenuity joint venture have all weighed on sentiment, overshadowing continued strength in orders.

Much of the bad news is now out there, though, the broker argues, and improving growth should help reverse the recent derating, the broker argues.

“The recent increase in investment was driven by increased orders and ALV now expects to to exceed the $12bn revenue target for 2019; implying further upside to consensus expectations,” the autos team from Jefferies said.

“We do acknowledge ALV's weak operating leverage in the recent past, but see credibility in the need for higher investment due to increased order intake. We expect operating leverage to improve from 2018 as the orders translate into sales along with a decline in the investment rate; ironically at a period when we see limited operating leverage for its peers,” the broker added, as it lifted its price target to US$119 from US$108.

Autoliv's shares currently trade at around US$103.

Eight Capital continues to recommend Uranium Energy Corp (NYSEMKT:UEC) as a ‘buy’ following the company’s acquisition of the Reno Creek project.

The broker increased its 12-month share price target to US$3.00 from US$2.70 on the back of the acquisition, which will see Uranium Energy take over Reno Creek Holdings Inc.

The acquisition gives Uranium Energy control of the Reno Creek in-situ recovery project located in the Power River Basin in Wyoming.

Reno Creek hosts an NI 43-101 measured and indicated resource of 27.47 million tons grading 0.041% U3O8 (triuranium oxide) yielding 21.98 million lbs U3O8 at a grade-thickness cut-off of 0.20, the broker noted.

Eight Capital said the acquisition strengthens UEC’s pipeline of low-cost in-situ recovery uranium projects.

Broker Wedbush has cranked up its price target for Electronic Arts Inc. (NASDAQ:EA) after the video game maker posted a solid set of fourth quarter results.

EA also impressed analyst with its guidance for the coming year (FY18) after guiding for earnings per share of US$4.10 on revenues of US$5.1bn.

“The guidance is impressive given that EA shifted a new title previously expected this year from its BioWare studio into FY19,” said Wedbush analyst Michael Pachter.

Much of the growth the company and Wall Street are penciling in for the coming year will come from its high-profile titles, including the Star Wars games, Pacheter added.

“We expect significant growth for the foreseeable future driven by cost discipline, digital sales growth, and evergreen franchises including Battlefield, the Star Wars games, and several sports titles.”

Pachter and Wedbush reiterated their ‘outperform’ rating for EA and hiked its price target to US$116 from US$95 previously.

Apple PLC (NASDAQ:AAPL) have shares dipped today, snapping a two-day rise after its market capitalization surpassed US$800bn for the first time on Monday.

Apple became the first company to see its market capitalization pass US$800bn after Drexel Hamilton raised its target price to US$202 a share from US$185, giving the company an estimated US$1trn valuation.

Yet, Drexel Hamilton analyst, Brian White, thinks Apple is the most “under-appreciated stocks in the world" with a “very, very depressed valuation” at 11 times excluding cash.

However, he expects that to change as investors begin to recognize the company’s growth potential.

In an interview with Bloomberg about the target price hike, White said there were four things to look forward to at Apple – the release of the iPhone8 in September, valuation growth, new innovations and an increase in capital returns.

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