Apple Stock Should Climb, Despite Move by China. Plus, the Case for CME Group.

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These reports are compiled and edited by Barron’s, most recently published by investment and research firms. The reports are a sample of analysts’ thinking; They should not be considered Barron’s opinion or recommendations. Some of the issuers of the reports have provided or hope to provide investment-banking or other services to the companies.

Apple

• AAPL-Nasdaq

Best Score • $182.91 on September 7th

by Evercore ISI

Apple stock has been under pressure in recent days on the back of US/China geopolitical issues. Recently, the Chinese Communist Party ordered its workers not to use Apple iPhones (or other foreign devices) for work purposes. The headline is negative for Apple, but it’s unclear how much of an impact this would have, as party officials may have avoided using American products in the workplace long before the official ban (ie self-banning outside of political awareness).

China accounts for 19% of Apple’s revenue, so more meaningful restrictions could creep into the bottom line, but Evercore ISI’s China team feels that’s unlikely unless Apple starts moving supply chains out of China at a pace that troubles China. Apple in 2010 It has announced that it will support more than five million jobs in China in 2019, so it is difficult for CCP to take more material action against Apple without affecting Chinese jobs.

Net/Net: We think this is a controversial topic with a material impact on financial performance, as government officials are already removing Apple products. Maintain Outperform rating and $210 target.

CME group

• CME-Nasdaq

Buy • Price $202.43 on September 5th

At UBS

Following the release of CME Group’s August metrics, we are raising our third-quarter 2023 earnings-per-share estimate to $2.24 from $2.17 (versus $2.20 Street).

Average daily volume for August was above our expectations due to strong trading activity in interest-rate products and better-than-fear rates in equity products. Pricing was generally similar to our forecast, but the mix (a combination of lower interest rates and higher levels of equity complexity) lowered our overall estimate by 2%. Treasury bills at the Federal Reserve are tracking a 16% quarterly gain.

We are bullish on the stock as macro uncertainty is high and the stock is trading below its relative historical range to the S&P 500 index. Price target: $230.

Zscaler

• ZS-Nasdaq

Buy on September 5 • Price $162.74

by Mizuho Securities

Compatible with our checks, Zscaler [a cloud security company] It reported an excellent fiscal fourth quarter. Total billings growth of 38% year-over-year (34% excluding large deals) significantly exceeded our and Street’s 27% growth forecast. Revenues and OMS showed meaningful growth, and importantly, fiscal-2024 accounts and revenue guidance exceeded street expectations. Despite recent stock strength (up 16% since mid-August), we believe these results are adequate.

More broadly, we continue to believe that Zscaler is very well positioned for growth and that its unique cloud proxy security architecture will enable it to thrive in an increasingly digitally enabled world. We continue to expect significant improvements in monetization. We raise our price target to $185 from $168.

Canada Goose Holdings

• GOOS-Toronto

Better results • Price on September 5 C $21.92

by Raymond James

We initiate coverage on Canada Goose Holdings with an Outperform rating and a $26 ($19.25) price target. As a luxury performance outerwear brand, we see Canada Goose driving strong growth largely from new distribution as well as increases from adjacent product categories. We see Canada Goose less than double the footprint of the luxury competition. Category expansion is in its infancy and shows growth. We recognize the changing trends in North America, and China may be very upset, but the bigger picture suggests that the company has plenty of room to grow and grow profitability.

We have generated revenue of 19.5% in fiscal 2024 and 13% in fiscal 2025, making Canada Goose one of the fastest growing global brands. Valuation is attractive at 12.5 times price/earnings ratio (five-year average of 25 times).

Airbnb

• ABNB-Nasdaq

Advanced • Price $151.77 on September 6th

By AB Bernstein

New York City’s well-marked vacation rental regulations went into effect this week. The press called the new rules “ban”, but this is not exactly correct – if it is more than 30 days or for registered properties where the host is located, it remains legal to rent up to two groups. Where the property (would be difficult to implement) and the guests and the host have a “joint family”.

The immediate impact on Airbnb will be small. New York City accounts for less than 1% of revenue, and half stay longer (more than 30 nights).

Walmart

• WMT-NYSE

Buy • Price $161.47 on September 7th

By Jefferies

Walmart is reportedly lowering starting pay for some new hires. This move will help streamline the staffing structure in the store and allow for more staffing flexibility (ie, cashiers, online pickup, etc.). Net-net, we do not believe this change will have a material impact on Walmart’s payroll.

However, this news indicates that the tightness of the labor market is decreasing widely. We believe Walmart is seeing better availability of labor, which will give it the confidence to make changes. Price target: $190.

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