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10/13/15 04:00:18 PM

Scholastic Corporation, General Electric Company, Panera Bread Company

Scholastic Corporation(SCHL) : Oppenheimer initiated coverage of Scholastic Corp (NASDAQ: SCHL) with an Outperform rating on Monday. The firm set a $50 price target on the stock. Shares of Scholastic Corp were up more than 4 percent on Tuesday. In a report issued Monday, Oppenheimer analysts Ian Zaffino and Richard Faulkner initiated coverage of Scholastic Corp with an Outperform rating and $50 price target, arguing that the company offers a "catalyst-rich investment opportunity," supported by a cash-rich balance sheet, an impending real estate monetization plan, and a robust free cash flow profile. According to the note, the company boasts an alluring ~10 percent unlevered FY17E FCF yield and has a strong, mid-single-digit revenue growth profile. The analysts think it can return roughly $400 million (almost 30 percent of its market cap) of cash over the upcoming 12 months using existing cash ($8 per share), income from its potential real estate monetization (about $7 per share) and free cash flow. Related Link: Can You Count On Children's Media In The Digital Age? Below are a few points central to Oppenheimer's thesis: Scholastic Corp is a leader in the school book market, one of the strongest markets left in the print industry The company "enjoys a stable revenue stream in children's books, owing to its entrenched position in schools, strong distribution network and 'sticky' customer base." The Education segment could drive substantial growth as school curriculums expand beyond textbooks. The analysts believe the company could sell three stories of its 557 Broadway headquarters in Manhattan for more than $350 million, resulting in almost $250 million or $7.31 per share in after-tax proceeds. The balance sheet is overcapitalized. This means considerable capital returns are likely, especially given Scholastic's track record.

General Electric Company(GE) : William Blair upgraded General Electric Company (NYSE: GE) from Market Perform to Outperform on Monday. The firm set a 12-month price target for the stock of $32.00. Shares of General Electric are slightly down on Tuesday trading. In a report issued Monday, William Blair analysts Nicholas Heymann, Brendan Shea and Ross Sparenblek upgraded General Electric to Outperform, noting that, as the company's much discussed transformation to the global leader in base infrastructure takes form, a different kind of industrial growth company is emerging and, at the time, few seem to understand its potential. The firm sees sources for further upside potential in earnings from the Alstom Energy purchase and GE's data analytics business. Looking Ahead But, even though the Outperform rating is based on the company's near-term upside potential, the experts believe the stock could double in price, to about $60, by 2020. They added that, while the target may sound "preposterous," they believe "GE's ability to potentially double its EPS, ROE, and ROTC from 2015 to 2020" makes it highly feasible. Related Link: Social Media Beat: The Three Gs -- GE, Google And Gilead Now, GE seems to be "approaching the inflection point in its transformation where internal company actions rather than external factors will increasingly govern the speed and ability with which GE completes its transition into the premier base infrastructure company in the world," the analysts believe. Overall, GE's great growth potential comprises four elements: 1. A conservative financial structure and base growth expectations. 2. A well-funded share repurchase program. 3. The "low-risk" acquisition of Alstom Energy. 4. GE Digital, especially in the field of industrial data analytics. Disclosure: Javier Hasse holds no positions in any of the securities mentioned above. Image Credit: By Momoneymoproblemz (Own work) [CC BY-SA 3.0], via Wikimedia Commons

Panera Bread Company(PNRA) : Piper Jaffray reiterated an Overweight rating and $225 price target on Panera Bread Co (NASDAQ: PNRA) on Monday. Analysts Nicole Miller Regan and Joshua C. Long argued that they "remain encouraged by both short- and long-term efforts." Shares of Panera are down roughly 0.5 percent on Tuesday trading. In a report issued Monday, Piper Jaffray analysts Nicole Miller Regan and Joshua C. Long reiterated an Overweight rating and $225 price target on shares of Panera. The firm also reiterated a 3 percent same-store sales growth estimate for the third quarter of the year and expect to see an overall solid quarter at the company. In fact, they believe the same-store trends' stability should help the stock price remain stable as well. Upside Ahead For Panera The experts assured they feel "encouraged by continued positive comp trends near-term." Long term, they said, "The model is most powerful in terms of brand modernization efforts that provide a sales lift/leverage and from ancillary earnings benefits from early stage CPG and digital ordering efforts." Related Link: Piper Jaffray 'Remains Buyers' Of Panera Bread On Digital Sales, Channel Checks Moreover, they think the aforementioned initiatives will engender cash flow for capital deployment - via share repurchases now and perhaps by way of a dividend at some time in the future. In time, they see the share repurchase program supporting double the earnings power outlook. Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.


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