3 Portfolio Stocks Bumped Higher This Morning. Here's Why
Let's see why these three holdings climbed after the open.
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While the larger stock market is little changed this morning, the Portfolio’s shares in Marvell MRVL, Dutch Bros BROS, and ServiceNow NOW are moving nicely higher. Let’s discuss the driving forces behind each of those moves.
Marvell’s New Stock Buyback Plan
Exiting August, Marvell had around $2 billion remaining under its share repurchase program, but that was upsized today with the company announcing its board authorized a new $5 billion program. On top of that, Marvell shared that it entered an accelerated share repurchase agreement to repurchase $1 billion of its common stock.
We see that as a vote of confidence by the company in its prospects and reinforces our bullish stance on this One rated holding.
RBC Becomes More Confident in Dutch Bros
You’ve seen Dutch Bros shares move steadily lower in recent weeks, with management relatively invisible. We shared our frustration with this lack of communication as the shares retreated. It seems the management, however, is getting the message as it recently concluded investor meetings with RBC Capital. In a research note out this morning, RBC shared what it learned from those meetings when it comes to the company’s macro resiliency, food rollout, competition, pricing, marketing, and potential for new formats.
The bottom line was RBC came away with higher confidence in the durability of underlying comps growth and the growth potential at Dutch Bros. This likely means management reviewed its plan to expand the company’s footprint to 2,029 by 2029. Based on the recent shop count of 1,049, the math tells us Dutch Bros will be accelerating the pace of new shop openings relative to the last several quarters. That expansion has been at the heart of our decision to own BROS shares in the Portfolio, and it could accelerate should the Fed continue to move monetary policy into less restrictive territory over the coming months.
We recently added to the Portfolio’s position BROS shares, and we see RBC’s comments reaffirming that decision.
Morgan Stanley Upgrades ServiceNow
One-rated ServiceNow picked up a fresh upgrade to Overweight from Equal weight over at Morgan Stanley, which included a bump up in the company's price target to $1,250 from $1,040. The gist behind the upgrade is that Morgan Stanley sees ServiceNow being well-positioned to deliver generative AI capabilities, which you know has been part of our thesis behind NOW shares.
We’ve seen many across Wall Street deliver catch-up price target increases of late, and we see this move by Morgan Stanley as part of that, but it also reflects rising AI adoption. We continue to see that driving a positive mix shift inside ServiceNow, and that keeps us bullish on the shares.
At the time of publication, the Pro Portfolio was long NOW, MRVL and BROS.
