Western Alliance Stock Is Positioned to Outperform Peers

The continuous operational updates over the past two months, coupled with yesterday’s brief dive into core-deposit segment trends, gives us solace that Western will weather the storm, and we find it to be notably better positioned than most peer banks.

We continue to believe that Western’s recent master-class performance of not only timely market updates but also flawless execution of a carefully planned operational playbook positions shareholders well for continued outperformance in today’s volatile economic landscape.

Target price: $60.

YETI Holdings
YETI-NYSE

Buy • Price $40.67 on May 17

by Jefferies

We hosted Matt Reintjes, CEO, and Mike McMullen, chief financial officer, for a fireside chat at our Virtual Outdoor Summit on May 16. Following our discussion with management, we continue to believe that YETI {the maker of durable coolers and drinkware] is a strong brand with many pathways to drive growth, including innovation, international expansion, and business-to-business.

We are confident in the company’s ability to capture share and drive healthy margin and cash flow moving forward…Management believes that the recent entrants are helping to expand the market and bring more awareness to hydration, which is a net positive for YETI.

Target price: $57.

Expedia Group
EXPE-Nasdaq

Buy • Price $92.23 on May 16

by Gordon Haskett Research Advisors

We see an attractive risk/reward dynamic, with investors failing to appreciate Expedia Group’s solid fundamentals and tailwinds that should come with the completion of the tech stack migration and loyalty program launch.

As such, we’re upgrading Expedia to Buy from Hold. In summary, we think that

1) concern about management’s ability to successfully complete the tech stack migration and short-lived headwinds are overblown;

2) Expedia will more than offset a slowdown in vacation rentals through its traditional lodging offerings;

3) the upcoming launch of One Key will drive share gains in the U.S. in the near-term and internationally over coming years; and

4) Expedia’s valuation discount is overdone, with the company expected to see fundamentals that are relatively in line with online travel peers.

Our $130 price target equates to 6.5 times our estimated 2024 adjusted Ebitda, a modest discount to the peer group.

MercadoLibre
MELI-Nasdaq

Buy • Price $1,275 on May 17

by BTIG

Final reports by the Brazilian e-commerce platforms confirm that MercadoLibre gained enormous market share in Latin America’s largest market. There is no shortage of positive ways to slice the data. Mercado’s first-quarter 2023 local currency gross-merchandise volume growth of 28% in Brazil was 42 percentage points better than the rest of the industry, which fell 14%.

The 42-point spread improved on last quarter’s already impressive spread of 28 points (Mercado up 22% versus industry down 6%).

In terms of market share, Mercado gained 930 basis points year over year and 860 points quarter over quarter, both new highs going back to 2016, when our market share data begins. Mercado’s Brazil share is now comparable to Amazon.com’s share in the U.S. and Alibaba’s in China.

The good news is that e-commerce still has good growth prospects by virtue of the low e-commerce penetration rate in Brazil.

At 10% penetration versus 15% in the U.S., we estimate that e-commerce would have to grow 45% just to reach U.S.-level penetration.

Target price $1,600.

NVIDIA
NVDA-Nasdaq

Buy • Price $301.78 on May 18

by Oppenheimer

Nvidia reports on Wednesday, May 24. We see upside to print and outlook. Data center business is expected to be up through the year as cloud vendors scale out artificial-intelligence infrastructure.

ChatGPT has sparked a sense of urgency that some are calling “AI’s iPhone moment.” Artificial-intelligence models continue to grow and proliferate.

Nvidia’s full stack hardware/software platform remains the cornerstone of an expanding artificial-intelligence ecosystem. Gaming channel inventory has normalized and is poised for accelerated growth into the second half.

Nvidia’s artificial-intelligence-led structural growth thesis is intact. Data center, high-performance gaming, and autos are a triple play for sustained growth.

We reiterate our Outperform rating with a new $350 price target (up from $300).

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