A busy week of earnings season and lots of news developments have us revising some of the price targets and ratings on the stocks in the Club’s portfolio. AAPL YTD mountain Apple YTD performance Apple (AAPL): We’re raising our price target to $185 per share from $175 in response to the strong quarter Thursday evening. Even in a tough macro environment, Apple was able to deliver record March quarter iPhone and Services sales while also growing its installed base to new highs. Inflation may have crunched the profits of many, but Apple’s gross margins expanded in the quarter and the next quarter’s outlook signaled upside as well. One of the big drivers of Apple’s improving gross margins is its Services business, which continues to thrive as Apple attaches more and more features to its devices. To top it all off, Apple increased its dividend and announced a $90 billion increase to its share repurchase authorization. LLY YTD mountain Eli Lilly YTD performance Eli Lilly (LLY): We’re increasing our price target on Eli Lilly again, this time to $460 per share from $430. Our new price target is in reaction to the positive Alzheimer’s drug trial data that was much better than what we expected. With the stage set for the possibility of full approval by the end of the year, Eli Lilly has made good on the development of two of the most valuable pipeline projects in company history. The other project, of course, is Mounjaro — the new type-2 diabetes treatment also being reviewed as a weight loss drug. We continue to believe Mounjaro has the potential of being one of the best-selling drugs of all time. EL YTD mountain Estee Lauder YTD performance Estee Lauder (EL): We’re lowering our price target on Estee Lauder to $260 per share from $300 following its disappointing earnings report , where management not only missed expectations but slashed the rest of its fiscal year outlook due to a slower-than-expected recovery in its travel retail business. It was shocking to see a company of this quality miss. We went back and looked at every quarter under CEO Fabrizio Freda and found only two times he’s missed the number – the Covid-challenged June 2020 quarter and this one. After this past week’s reset, we do not think this happens again. While Travel Retail has been slower to recover and it will take time for inventory to normalize, what we found encouraging was the growth in the rest of the business. Estee Lauder’s ex-travel retail in Asia grew 10%, and Mainland China sales grew low single digits organically with market share gains. Again, the last remaining piece of the recovery puzzle is travel retail, and it will require a little more patience. But we are confident this business will come back as international travel by Chinese consumers rebounds, and for that, we think the stock is a buy down here. HAL YTD mountain Halliburton YTD performance Halliburton (HAL): We are lowering our price target on this North American-focused oil services giant to $40 per share from $48. We still think the stock is cheap, but we want to be more conservative with our price target after listening to the Coterra Energy (CTRA) post-earnings conference call Friday. CEO Tom Jorden said service costs “appear to have crested” and have started to trend down. This is probably happening less on the oil side and more around natural gas, of which activity has softened due lower prices. Halliburton has already responded to market conditions by moving three fleets to oil basins from gas basins to meet customer demand, but it’s something to monitor going forward. SBUX YTD mountain Starbucks YTD performance Starbucks (SBUX): We’re bumping up our price target to $125 per share from $120 and upgrading our rating to a 1 following the stock’s pullback in reaction to the recent earnings result . Starbucks delivered a strong quarter, beating expectations on sales, margins, and adjusted earnings per share with North American comparable sales up double digits and China was an upside surprise with comps inflecting up 3% compared to guidance of a decline. So why did the stock fall 9% the next day? Shares were hot into the print in anticipation of a beat and raise. When management simply reiterated its full-year outlook, calling for more moderated growth despite the strong quarter, investors were disappointed and dumped the stock. We think this is the opportunity to get in and potentially buy back what we recently sold higher . Our take on the disappointing guide is that this is management being conservative. CEO Laxman Narasimhan just succeeded Howard Schultz as CEO in April, and we think the unchanged guide was all about Narasimhan keeping expectations low — and high achievable — so that he can beat and raise in the future. (Jim Cramer’s Charitable Trust is long AAPL, LLY, EL, HAL, CTRA, SBUX. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . 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The world’s biggest iPhone factory, located in China and run by Foxconn, faced disruptions in 2022. That is likely to filter through to Apple’s December quarter results. Meanwhile, analysts questioned demand for the iPhone 14 from Chinese consumers.
Nic Coury | Bloomberg | Getty Images
A busy week of earnings season and lots of news developments have us revising some of the price targets and ratings on the stocks in the Club’s portfolio.
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