Three Upcoming Stock Splits & One Recent Example (CMG, SONY, LRCX)

The world of stock splits encourages a lot of debate around value, affordability, potential share price movement, and perception. It can be as much of a psychological play as anything else, yet remains a tool in the kit of boards that get's more use than others.

Nvidia (NASDAQ:NVDA), are perhaps the most high profile stock split of late, with the recent completion of a 10-for-1 split on 7th June causing quite the furore in the build up. If you missed the Nvidia split but are curious about upcoming names scheduled to split their stock, we have a short-list for you to run the rule over.

Sony Group (NYSE: SONY), Chipotle Mexican Grill (NYSE: CMG), and Lam Research (NASDAQ: LRCX) are three such stocks that have announced scheduled splits recently. Seen as a move that traditionally makes shares more accessible to individual investors by lowering the price per share, we take a look at the analyst forecasts and outlook to assess where the value may be.

Sony Group's Entertainment Empire Expanding

Another high-profile split was announced when Sony Group confirmed a 5-for-1 forward split on May 14th. The split-adjusted price will be reflected in the markets from October 8, 2024.

Macquarie upgraded their Sony stock rating from Neutral to Buy, but kept in tact an unchanged price target of $94.84 (15,000 Yen).

Oppenheimer, forecasts a 26% increase in Sony's stock, with a price target set at $108. Sony's broad portfolio spanning electronics, gaming, and entertainment, combined with strategic plans for expansion, spur the bullish outlook among analysts.

Lam Research's Chip Equipment Momentum

Likewise, Lam Research, a company that manufactures equipment for semiconductor production, approved a 10-for-1 forward split on May 21st, with the adjustment in trading price expected by October 3, 2024. The firm also announced a $10bn share buyback plan at the same time, in a clear nod to investors about the value they intend to give back. Having added 38.6% to the LRCX stock price year to date, analysts have been quick to weight in with upgrades.

• Barclays upgraded their price target on Lam Research to $900 from $865, but remain Equal Weight on the stock.
• Berenberg raised to $1,150 from $960 whilst maintaining a Buy rating.
• Raymond James raise to $1,060 from $950, holding an Outperform rating.

These upgrades have largely been fuelled by the ongoing global demand for semiconductor manufacturing tools, Ai computing, secular growth from Gen AI, and aggressive government subsidies around the world.

Chipotle Stock Heating Up

Since announcing the 50-for-1 split on March 19th, Chipotle stock price has added more than 17%. Now sitting over $3250 per share, there is certainly some argument for affordability after the split.

Shareholders recently approved an increase in the number of authorized Chipotle shares in a meeting that will allow the company to complete the split as planned on June 25th.

CMG has had a swathe of price target upgrades in recent weeks as the share price continues to grow, and one notable new initiation of coverage. Goldman Sachs kick off their coverage of the firm with a price target of $3730, and a solid Buy rating.

The Recent Example: Nvidia

On June 7th, Nvidia completed a significant 10-for-1 forward stock split. Nvidia shares are no simple example, as the sentiment behind the firm has been very strong in recent years. Regardless of this, an increase of 36.5% in the price of the stock from the announced date of May 22nd is mightily impressive. With previous Nvidia splits not going quite so well, sentiment has certainly played its part.

Bank of America Securities, sees a particularly bright future for Nvidia, setting a Street-high price target of $1,500 for the company. This projection implies a generous 29% upside within the next year.

Arya's optimism reflects Nvidia's position in the semiconductor industry, especially considering their innovations in graphics processing units (GPUs) and accelerated computing.

Enhancing Shareholder Value: Share Repurchase Programs

In efforts to enhance shareholder value, both Lam Research and Sony Group have announced share repurchase plans. Such programs often buoy investor confidence by signalling that a company believes its stock is undervalued and is willing to reinvest its own capital into buying back shares.

With their splits now announced, these stocks might just be more attractive to a broader base of investors seeking substantial returns but as always, investors detailed analysis will be required before making investment decisions.