Chipotle (CMG)
Chipotle shares rose in premarket trading as investors anticipated an upcoming 50-for-1 stock split.
Chipotle Mexican Grill announced its largest stock split ever in March, splitting each current share into 50 new shares.
This means that when the market opens on June 26th, shareholders will own 50 times as many shares as they had at the close of trading on June 25th, but the price per share will be about 1/50th of what it was before.
Chief Financial and Chief Administrative Officer Jack Hartung said the move would help the company “reward our team members and give them a sense of ownership in the company.”
The company has had a strong year this year, up about 70% since November. TD Cowen raised its target price on Chipotle to $3,600 from $3,500 (£2,761.32), suggesting a 10% upside potential.
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Rowan Street Capital is also optimistic about the fast-food chain’s future.
“The best investment ideas are simple. We’ve written about Chipotle Mexican Grill before, which has turned out to be our best investment idea since launching the fund; the share price has risen 10x (roughly 47% annualized) since we first invested in it at the end of 2017,” the analysts wrote.
Autodesk (ADSK)
The Wall Street Journal reported on Sunday that activist firm Starboard Value has bought about $500 million in Autodesk stock and is pushing for reforms at the company.
Starboard has reportedly met with Autodesk executives in the past few weeks to voice its concerns and propose changes, including improving profit margins, changing the board of directors and overseeing a recent accounting investigation that has hurt the company’s stock price.
According to the WSJ, in private conversations with the company, Starboard criticized Autodesk for not disclosing the investigation and other important updates until the deadline for shareholders to nominate director candidates expired in late March.
The company is considering legal action to reopen Autodesk’s board nomination period and seek to postpone the design software maker’s annual shareholder meeting, currently scheduled for July 16, the report added.
Shopify (Shop)
Shopify Inc. shares rose on Friday after an analyst at Evercore ISI said the e-commerce company’s shares have fallen this year and now is the time to buy shares, but the stock is correcting as it remains in the red in pre-market trading.
Evercore upgraded SHOP shares to “outperform” and set a price target of $75. The decision comes after the stock price has fallen about 30% from its 52-week high.
Outperform for Evercore means that the stock is “expected to beat analysts’ forecasts for total revenue for the division.”
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The recent sell-off in the stock price offers an attractive entry point, the analysts wrote in a research note. Shopify’s shares are down 16% this year.
Rentokil (RTO.L)
Pest control and hygiene company Rentokil was one of the best-performing stocks on the FTSE 100 (^FTSE) this session, following a report from RBC Capital Markets.
Analysts updated their foreign exchange revenue guidance (-1% to -2%) and now expect first-half results to be in line with market expectations as US organic growth accelerates throughout the year.
The company’s shares also rose after activist investor Nelson Peltz acquired a “substantial” stake in the company and “reached out to discuss ideas and initiatives to enhance shareholder value.”
Rentokil is a volatile stock; the London Stock Exchange-listed company has struggled in recent years and its attempt to expand into the United States failed due to weak demand for its products.
Russ Mould, investment director at AJ Bell, said Peltz was likely to bring about a major restructuring at the company.
“[Rentokil] “The company has struggled both in terms of its share price and financial performance compared to its US peer Rollins & Co.,” he said.
“Given that the majority of Rentokil’s business is on the other side of the Atlantic, this could also include a move to move its primary listing to the US.”
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