We're changing the price targets for 6 stocks in the Charitable Trust portfolio

Published Tue, May 3 20221:42 PM EDTUpdated Tue, May 3 20222:43 PM EDT

We're updating price targets in the portfolio to reflect recent earnings reports, comments from managements, and general market multiple compression in this rising interest environment. Today we're increasing two stocks price targets and decreasing four. Amazon (AMZN): After last week's disappointing earnings report, which showed that Amazon is having a tougher time managing expenses (both inflationary and controllable) than previously thought, we are reducing our price target to $3,200 . Boeing (BA): Due to last week's disappointing quarter and the continued uncertainty around the 737 Max program in China and the 787 program in the United States, we are lowering our price target to $210 . Salesforce (CRM): Though we remain believers in Salesforce, the price-to-sales multiple on the entire enterprise-software-as-a-service complex has been pushed down due to higher rates. Therefore, we are lowering our price target to $260 , which reflects roughly 8 times estimated 2022 sales. You know we are not big fans of stocks that trade on a price-to-sales multiples in this rising environment, but are owning Salesforce through this turbulent period because it is one of the highest-quality franchises within software. The stock also passed our alternative "Rule of 40" (up 20% revenue growth and more than 20% operating margins), making it deserving of a higher multiple. Devon Energy (DVN): We are increasing our price target to $72 , which represents roughly 5.5 times 2022 enterprise value to estimated adjusted EBITDA. We want to note that at this $72 share price, Devon shares would still offer an attractive annualized fixed-plus-variable dividend of about 7%. Eli Lilly (LLY): We are increasing our price target to $330 , which reflects roughly 39 times estimated adjusted 2022 earnings per share. Yes, this is an expensive multiple and it represents a significant premium to its large-cap drugmakers group. However, we believe it is justified. Eli Lilly is expected to deliver a roughly 15% earnings per share compound annual growth rate through 2026 based on the current consensus estimate. The company is one of the best growth stories in large-cap pharma because of the limited loss of exclusivity risk, an incredible pipeline (and estimates for its obesity drug tirzepatide just went up further), and management's track record of expanding margins. Wells Fargo (WFC): We are lowering our price target slightly to $60 , which reflects a modest 14.5 times consensus 2022 earnings per share estimate. We still like Wells Fargo as a multiyear restructuring story (expense reduction) and the bank is one of the biggest beneficiaries of rising interest rates. (Jim Cramer's Charitable Trust is long AMZN, BA, CRM, DVN, LLY, WFC. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

Amazon makes its own 53-foot cargo containers, shown here in 2021

Courtesy: Amazon