Shares of Jack in the Box, Adobe and FireEye have reached valuations that could be attractive for investors, according to several analysts.
CNBC combed through company research to find analysts from different industries singling out stocks in their coverage universes. Other names cited this week as compelling to investors include IHS Markit and Conduent.
Fast-food chain Jack in the Box is improving same-store sales with an increasingly aggressive value promotion, said Gordon Haskett analyst Jeff Farmer. “We’re upgrading JACK to Buy from Hold with the stock’s valuation discount bumping up against multi-year highs, offering a compelling risk/reward profile,” Farmer wrote this week in a note to clients.
“We expect JACK’s begrudging adoption of an increasingly aggressive promotional value strategy to drive an improved absolute and relative same store sales performance in coming quarters,” Farmer said.
Shares of Jack in the Box were little changed Thursday, at $80.37.
Software maker Adobeis another stock analysts called out with bullish comments.
“We continue to believe Adobe remains one of the best positioned growth stories in software and the risk/reward remains attractive at current levels,” said Evercore ISI analyst Kirk Materne. His firm attended Adobe’s Digital Marketing Summit earlier this week and came away impressed by the company’s message.
Last week Adobe also reported strong fiscal first-quarter earnings but issued a weak second-quarter outlook. The stock is down 0.35 percent, to $261.88.
In a recent note, analysts at J.P. Morgan upgraded FireEye to overweight from neutral. J.P. Morgan analyst Sterling Auty said that while shares of the cybersecurity firm have lagged others in its coverage by 23 percent, “increased billings will make it an, “attractive risk/reward profile.”
The stock is down 0.06 percent in early trading, to $16.48.
Here’s what else analysts think has an attractive risk/reward:
Gordon Haskett- Jack in the Box, buy rating
“We’re upgrading JACK to Buy from Hold with the stock’s valuation discount (to the franchise peer group) bumping up against multi-year highs, offering a compelling risk/reward profile given that the company (1) is at a potential same store sales inflection point (adopting an increasingly aggressive value-focused SSS strategy) and (2) has a low fundamental expectations bar with Street estimates for both EBITDA (FY2021 and FY2022) and free cash flow sitting well below JACK’s long-term guidance levels.”
Evercore ISI- Adobe Systems, outperform rating
“Overall, the explosion of creative content and the need for enterprises to transform their business processes for a digital economy is creating an expanding opportunity for Adobe and while shares are lacking a catalyst at these levels, we continue to believe that Adobe remains one of the best positioned growth stories in software and the risk/reward remains attractive at current levels.”
J.P. Morgan – FireEye, overweight rating
“The year to date performance for FEYE’s stock has been 23% below our overall coverage, and the stock is now trading at 3.7x our FY19 revenue estimates. We believe this represents an attractive risk reward profile in light of our belief that billings will accelerate through the course of 2019. The 10% billings growth in the December quarter, we believe, reflects the true growth opportunity for FEYE and the 6-7% revenue guide for FY19 is more a factor of accounting treatment of the appliance revenue that is becoming a much smaller part of the overall story. In addition, new packaging and enterprise on demand offering could provide a lift to growth.”
SunTrust- IHS Markit, buy rating
“Bull-Bear analysis reveals compelling risk-reward. Strong risk/reward, given defensive characteristics. We reiterate our Buy and $62 PT (17.5x C19E EBITDA) following a mixed 1Q19. Despite weak 1Q CMS results and soft Ipreo commentary, we assert IHS will deliver mid-single % organic rev growth and ~100 bps of normalized EBITDA margin expansion this year. These results, and disciplined capital allocation – with a focus on debt paydown and buybacks ($500m targeted F2H19) – should at least support INFO’s valuation, in our view.”
Needham- Conduent, buy rating
“Bull-Bear Analysis Reveals Compelling Risk-Reward. CNDT has been one of the most controversial names in our coverage group. The company is exiting a busy FY18/early FY19 during which it divested $1 billion in non-core revenue, significantly reduced leverage, and settled its lawsuit with the State of Texas. In our view, the current debate revolves largely around how the company will emerge from these events and what the core revenue growth, EBITDA margin profile, and EPS power of the business will be. Following significant work around the core business, we remain in the bullish camp on CNDT and view the stock as our top value/contrarian idea for 2019. We reiterate our BUY rating and $20 target.”
