The investment firm MoffettNathanson issued a Buy rating for Walt Disney (DIS) on March 5, with the stock trading at $112.87. Disney CEO Bob Iger’s remarks at Morgan Stanley’s Tech, Media, & Telecom conference highlighted positive developments for the company. Iger indicated that Disney is surpassing its $8 billion free-cash-flow guidance for fiscal 2024, attributing this improvement to lower content spend and stronger performance in its Parks segment. As a result, MoffettNathanson raised its full-year free-cash-flow estimate to $8.5 billion, or $4.65 per share.
Regarding Disney’s Parks segment, Iger mentioned that Parks/Experiences for the fiscal second quarter is expected to achieve low- to midteen Ebit growth, despite facing challenging comparisons. MoffettNathanson adjusted its projections accordingly, increasing the total Parks second-quarter revenue growth estimate to 9% (from 5% prior) and Ebit growth to 13% (from 5% prior). These developments reflect favorable trends in U.S. demand, controlled costs, and ongoing international momentum.
UBS issued a Buy rating for Ulta Beauty (ULTA) on March 4, with the stock trading at $546.54. The analysis suggests that Ulta is positioned for another strong year in 2024 following a successful fourth quarter, which capitalized on the strength in the beauty category.
UBS anticipates that Ulta’s stock will continue to appreciate over the next few quarters for several reasons:
- Ulta has demonstrated its ability to navigate through a volatile demand environment effectively.
- The company is expected to maintain its margins despite slower top-line growth compared to fiscal year 2023.
- Improvement in flow-through is anticipated in fiscal year 2025 and beyond as Ulta concludes one of the largest investment cycles in its history.
Overall, UBS is optimistic about Ulta’s prospects and believes the stock will continue to perform well in the coming quarters.
BofA Securities revised its rating on Old Dominion Freight Line (ODFL) from Buy to Neutral on March 6, with the stock trading at $430.08. They cite limited upside to their price objective due to the stock’s elevated multiple and lower-than-expected volume growth. Although they raised their price objective to $446 from $443, based on 35.5 times their 2024 EPS estimate, they believe the stock has reached its fair value given the current circumstances. Despite this, BofA Securities remains positive on leading carriers like Old Dominion due to potential earnings leverage as demand returns.
J.P. Morgan issued an Overweight rating for Sweetgreen (SG) on March 5, with the stock trading at $17.83. Sweetgreen, founded in 2007 in Washington, D.C., operates a chain of 225 stores offering salads and grain bowls, with a long-term target of reaching 1,000 stores. The company’s IPO in November 2021 faced initial volatility, but J.P. Morgan believes Sweetgreen has adjusted its strategy by focusing on higher-returning unit growth, developing a loyalty program, and introducing new menu items. The investment in Spyce Kitchen, a robotic assembly, is expected to drive store economics and allow for annual 15% unit growth. J.P. Morgan sets the price target at $20.
Wedbush reiterated an Outperform rating for Williams-Sonoma (WSM) on March 7, with the stock trading at $239.71. Despite a weakening in home furnishings demand at the end of fiscal year 2023, Wedbush believes the industry is poised for improvement in the second half of 2024. Third-party data suggests Williams-Sonoma is stemming market share losses, positioning it for performance in line with the industry in 2024. Wedbush anticipates at least 75 basis points of operating margin expansion in 2024, translating to $15.71 of EPS. Despite strong year-to-date performance, Williams-Sonoma remains Wedbush’s top pick in home furnishings retail, with a price target of $280.