Siegenthaler expects rising interest rates to raise Schwab’s net interest margins to around 2.52% in 2024. He also likes the way the company uses its bank to “more efficiently manage its client sweep and allow the broker to generate higher returns on its client cash balances.” Downside risks include growth challenges, more competition and added regulation on payments for order flow.
EPAM Systems
EPAM Systems Inc. (NYSE: EPAM) provides a software development platform and engineering services to customers worldwide. BofA analyst Jason Kupferberg rates the stock a Buy with a price objective of $400. At Friday’s closing price of around $302, the upside potential to Kupferberg’s price target was about 33%.
In recent comments about the company, BofA was impressed by its ability to cut by half its headcount in Russia, Ukraine and Belarus and to ramp hiring in Latin America and India. EPAM has beaten consensus revenue estimates for the past 15 consecutive quarters and fallen short of sales estimates in just two of the past 40. The primary risks for the company are volatility in revenue from its largest clients, competition for engineering talent, geopolitical volatility, cyclical demand and regulatory uncertainty.
Exelon
Since Exelon Corp. (NYSE: EXC) spun off its unregulated Constellation Energy business into a separate company, BofA analyst Paul Zimbardo feels that the remaining regulated business is “attractively valued and defensively positioned.” He rates the stock a Buy and has a price target of $54. At Friday’s closing price of around $46, the upside potential to Zimbardo’s price target was 17.4%.
A favorable proposed decision in an Illinois investigation could be settled for repayments to Commonwealth Edison customers of $31.3 million. Both Illinois and Maryland are considering performance-based rates based on utility performance, and BofA noted, “Exelon has a track record of solid operational performance and we would view the creation of performance incentives favorably, enhancing confidence in earnings per share trajectory at the top-end of the 6-8% guidance range.”
Kroger
Kroger Co. (NYSE: KR) is the largest U.S.-based grocery store by market cap, and BofA analyst Robert Ohmes has a Buy rating on the stock with a price objective of $75. At Friday’s closing price of around $48, the upside potential was 56.3%. Ohmes sees “upside to guidance” based on the company’s cost savings target for 2023, “a customer shift from digital back to stores, enhanced digital personalization targeting value sensitive customers” and other initiatives.
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