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AXA’s shares appear inexpensive and could get a shot of momentum when the French insurer and asset manager unveils a new five-year strategic plan next month.

The company (ticker: CS.France) may not disclose anything groundbreaking when it presents its new road map to investors on June 21, but with a new chief executive and renewed energy it will likely increase its earnings targets, which could give the stock a lift.

Its shares have been in the doldrums lately, along with the rest of the insurance industry, as low or negative interest rates make it increasingly difficult to generate returns, and because of the effects of market volatility.

AXA’s shares have outperformed the Stoxx Europe 600 index’s insurance sector in recent years, but they have tumbled 16% in 2016, while European insurers have retreated 13% on average. AXA closed Friday at 21.24 euros ($23.82) and trades for 8.8 times and 8.5 times estimated earnings for 2016 and 2017, respectively.

In contrast, Allianz (ALV.Germany) trades for 9.3 and 8.9 times earnings projections for this year and next— cheap, but not quite as cheap as AXA. The sector trades at a price/earnings multiple of 9.5 times, which means AXA shares are at a discount of about 10%.

American International Group (AIG) trades for 10 times next year’s projected earnings. At the same multiple, AXA’s shares would be worth €25, or an upside of close to 18%. On a sum-of-the-parts basis, AXA could be worth as much as €27.50, or about 30% more.

A generous dividend provides a plump cushion against any further weakness in the share price. AXA currently offers a yield of 5.2%, well above the Stoxx Europe 600 average of 3.8%. Paris-based AXA has American depositary receipts that trade in New York. Listed under the ticker AXAHY, they traded Friday afternoon at $23.69. Each ADR is equivalent to one ordinary share.

“AXA trades on an attractive valuation relative to its peer group from an earnings perspective,” says Neil Wilkinson, senior fund manager for European equities at Royal London Asset Management, which owns the stock. “Now that the previous strategic period has been completed…a potential boost to the stock comes in the form of its new targets,” he adds.

AXA’s new strategy will be guided by new leadership. Thomas Buberl, formerly head of the company’s operations in Germany, will succeed Henri de Castries, who has led AXA for almost 17 years, as chief executive.

Buberl has big shoes to fill. Under de Castries, AXA focused on developing its core businesses. It sold noncore activities, such as New York investment bank Donaldson Lufkin & Jenrette, and operations in markets where its position was weak. He expanded AXA’s footprint in emerging markets, particularly in Asia, and strengthened the balance sheet, delivering steady profits and consistent dividends along the way.

Today, AXA boasts 103 million clients and a presence in 64 countries. It has a robust Solvency II ratio of 205%. The ratio is intended to gauge its ability to withstand shocks.

In an interview with the Financial Times in March, Buberl made clear that he’s intent on pursuing AXA’s digital transformation, rather than making big acquisitions, which is good news for shareholders.

IN THE NEXT FIVE YEARS, AXA could deliver growth in earnings per share of at least 7% per annum, comprising 5% in organic growth and another 2% from acquisitions, according to Deutsche Bank analyst Oliver Steel. The company has spent €1.7 billion on bolt-on acquisitions in the past three years, not all of which are contributing fully. He estimates AXA is throwing off €1.2 billion a year in excess capital.

A key driver in the next few years will be the life and savings division, which accounts for almost 60% of earnings. The division could see revenue growth of 2.5% to 3% in 2017 and 2018, but earnings could grow at a faster clip due to a focus on higher-margin products, such as protection, rather than lower margins, capital-intensive guaranteed liabilities.

Digital investments, which make use of big data to tailor and price products, could help drive top-line growth above the rate of gross domestic product after 2018.

Low bond yields are a negative for margins, but the impact could be offset by more cost cutting. AXA has trimmed €1.9 billion in the past five years, and it could erase another €200 million this year, sufficient to mitigate lower returns.

Expectations are modest for the property and casualty division. Recent growth has come from price hikes, but they are now slowing. Deutsche Bank’s Steel sees P&C premium growth of 2% a year over the next three years.

According to consensus estimates, AXA is forecast to have net income of €6.05 billion, or €2.42 per share, in 2016. In 2017, net income is projected to rise to €6.12 billion, or €2.50 a share. AXA is a cheap insurance policy in these challenging market conditions.

Warren Buffett’s name makes regular appearances in the pages of Barron’s, but our weekly Tech Trader column tends to be a Buffett-free zone.

That’s no disrespect to the Oracle of Omaha. Buffett, of course, has famously avoided technology during his long run of success, preferring businesses he can easily understand. The exception, a few years back, was an $11 billion bet on International Business Machines (ticker: IBM), which hasn’t exactly panned out.

Last week, Buffett’s Berkshire Hathaway (BRK.A) made another exception, disclosing a $900 million position in Apple (AAPL). Apple investors, looking for any glimmer of hope these days, bid the stock up 3.7% on the news. Apple finished the week up 5.2%, at $95.22, still 28% off its 2015 high. Buffett made it clear that the investment wasn’t his, but rather one of his portfolio managers, whom he didn’t name.

For an investor seeking a simple business, Berkshire’s Apple buy comes at a curious time. Apple has spent years getting increasingly complex, following the paring down that accompanied Steve Jobs’ 1997 return. Retail, music, and mobile proved screaming successes. But the company has struggled for several years with television, and questions still surround the Apple Watch. Even the possibility of an Apple car is a stunning complication for the business.

Financially speaking, Apple faces an array of decisions, thanks to its swelling balance sheet. Dividend payments came to $11.6 billion last year on top of $36 billion for buybacks, swamping its record-high $8.1 billion spent on research and development. Tim Cook’s job is vastly more complicated than Steve Jobs’ ever was. Investors, in trying to evaluate the stock, face a similar dilemma.

The popular bullish case for Apple centers on the Holy Grail of services and the hope that Apple’s massive user base will pay off in a big way. Barron’s made a persuasive case on that basis last month, arguing that Apple shares could be ready to rally

THE SERVICES ARGUMENT MAKES complete sense, but the execution has proved challenging. Take the recent example of Apple Music. Two weeks ago, Apple admitted that some iTunes music was being deleted from users’ Macs. The company cited an issue within iTunes, but the user complaints began with the launch of Apple Music last summer, and that’s unlikely to be a coincidence. Apple has allowed iTunes and Apple Music to exist side by side, but the business models are inherently in conflict: pay-as-you-go owned content versus an all-you-can-eat monthly fee. It’s confusing to use both on the same phone, and it presents a serious marketing problem for Apple. One service undermines the other.

The rest of the music world is moving in a clear direction, toward the rental/streaming model, and rumors have begun to swirl that iTunes might be on the chopping block.

The problem for Apple is that others have a head start in streaming, putting the company in the unusual position of underdog. Last year, this column suggested that Apple Music would be the ultimate test of Apple’s ecosystem. At last count, Apple Music had 13 million subscribers, not bad for a startup, but less impressive for a company with a billion active devices. Spotify has 30 million paid subscribers, many of whom use the service on iPhones.

Whereas iTunes devotees once had to buy iPods and iPhones, Spotify users can move their catalogs between phones, tablets, and desktops, regardless of platform. The cloud has made music and other services platform-agnostic, meaning Apple can no longer fall back on its hardware or software preeminence.

Here’s something to consider: Instead of charging $3 a month for iCloud storage and $10 a month for Apple Music, what if Apple’s new iPhone Upgrade Program, a monthly installment plan that includes a new iPhone every year, also came bundled with iCloud and Apple Music? Apple Music would be a “free” perk, the same way Amazon’s streaming video content is included in the e-commerce giant’s two-day shipping program. Any lost service revenue could be offset by increased iPhone sales, which attacks the key bear case for Apple: the lengthening replacement cycle for iPhones.

ANOTHER SEASON OF EARNINGS is essentially in the rear-view mirror, and it’s one most tech executives would like to forget. All but six of the 67 tech companies in the Standard & Poor’s 500 index have reported first-quarter results, generating an overall earnings decline of 4.4% from a year earlier, according to Thomson Reuters. Analysts now expect tech earnings to fall 6.2% in the current quarter. Just six weeks ago, Wall Street was expecting 1.4% growth.

The common lament that emerged in earnings commentary was the slowdown in enterprise spending. Intel (INTC), Juniper Networks (JNPR), Seagate Technology (STX), Oracle (ORCL), EMC (EMC), and others all talked about reduced macro demand. The weakness was expected to weigh heavily on Cisco Systems (CSCO), as well.

Instead, the one-time tech bellwether reported better-than-expected results last week, driving its shares up 5% on the week, to $27.97. In interviews with Barron’s, CEO Chuck Robbins and CFO Kelly Kramer acknowledged some of the same macro weakness discussed by peers, but they said it was offset by Cisco’s focus on specific customer priorities, particularly in security, where the company’s revenue jumped 17% in the fiscal third quarter, to $482 million. “I think we’re seeing the benefit of being in the right spaces,” Kramer says.

Historically, Cisco has provided network, e-mail, and Web security. More recently, it’s added cloud and malware protection. Granted, security remains a small part of Cisco’s total revenue, which was $12 billion for the quarter. “Security is one of our absolute top priorities. It has been and it will remain so,” says Robbins, noting that it will be a focus of organic investments and strategic mergers and acquisitions.

The company is also talking more about its attempts to move toward subscriptions. For its WebEx conferencing service, that’s a natural option, similar to the new subscription models used by Adobe Systems (ADBE) and Microsoft (MSFT); it’s more complicated for Cisco’s legacy switches and routers. Still, Robbins spoke of the possibility of offering service contracts, in which the equipment becomes part of a monthly subscription fee. “It’s really a financing issue,” he says. “We’ve been pretty active with Cisco Capital, so it’s relatively easy for us to structure those deals.”

Subscriptions, of course, could smooth out revenue and lessen the impact of enterprise spending lulls, like the one that dominated the last month of earnings reports.

--> Boeing's Stock could fall 15% to $108, as aircraft demand weakens, depressing earnings. Shares peaked at $158 and new fetch at $128

Boeing turns 100 this year and has much to celebrate, from steadily growing air traffic to humming production lines. The first few years of its second century could prove turbulent, however, for the aerospace giant and its shareholders.

Sales of wide-body planes have been falling for the past two years, likely because of a supply glut. There are also signs that airlines and leasing companies are using planes longer and delaying orders for new aircraft. Among other things, analysts note, low oil prices have reduced the imperative to buy updated, more fuel-efficient models. Reduced orders and deliveries could cause Boeing’s earnings growth to slow.

Fears of a slowdown haven’t been lost on Wall Street, where Boeing’s stock (ticker: BA) historically has reflected the industry’s cyclical nature. Shares peaked in February 2015 and have slid 19% since, to a recent $128, on a rash of disappointing news. Boeing disclosed in January that it would deliver fewer planes this year than last year’s record 762. The company also said it would reduce production of its 777 wide-body plane, eliminate 4,000 jobs, and earn less in 2016 than analysts had been expecting. Adding to investors’ unease is a reported Securities and Exchange Commission investigation into the aircraft maker’s accounting.

Some analysts think Boeing’s shares have further to fall. Shares currently trade for 14 times next year’s consensus profit forecast of $9.47 a share. If Boeing earns only $9 a share, as some skeptics believe, its price/earnings ratio could fall to 12, in line with multiples accorded other slow-growing industrial companies. That implies a stock price of $108.

Boeing generates two-thirds of its revenue from commercial aircraft and most of the rest from its defense business, which isn’t expected to show gains in the near term. The company’s growth engine is the narrow-body 737 plane, which carries 85 to 215 passengers and appeals to budget carriers, among others. With more than 4,000 unfilled orders, the 737 accounted for 76% of Boeing’s backlog of 5,795 planes at year-end, and two-thirds of last year’s deliveries. Boeing also makes the 747 jumbo jet; the 767 mid- to long-range jet; the wide-body 777; and the 787 Dreamliner, whose composite frame helps reduce fuel costs by 20%.

Since 2000, Boeing has expanded aggressively beyond the U.S. and Europe, taking advantage of a travel boom in emerging markets. Its backlog has surged 68% since 2010. Revenue has risen 50% in the same span, to last year’s $96 billion. Boeing earned $5.2 billion, or $7.72 a share, in 2015, and analysts see earnings rising to $8.50 a share this year.

Boeing is upgrading both the 737 and 777, adding new and more-efficient engines. Although the 737 faces substantial competition from Europe’s Airbus Group (AIR.France) and from Bombardier (BBD.A.Canada), a smaller Canadian company, demand is expected to remain strong. Current 737 orders will keep factories busy until at least 2022, even if the company doesn’t sell more planes.

The 777 and 787, whose cash flow is crucial to Boeing’s growth, are at greater risk, however. “Boeing and Airbus are on a path toward overproduction,” said Michael Ciarmoli, an analyst at KeyBanc Capital Markets.

Delta Air Lines (DAL) announced last week that it is delaying delivery of four wide-body Airbus planes to wait for “international market improvement.”

Boeing employs program accounting, which requires management to estimate the number of planes it expects to produce over a particular period. Costs are charged against the production program, not against individual planes or contracts. This accounting method helps the company avoid a sharp hit to earnings early in the program, but can lead to subsequent write-downs if projections don’t pan out.

The 787 could be vulnerable to write-downs, some analysts say, because initial costs were high and sales have slowed. To meet its initial accounting estimates, Boeing will have to sell an additional 146 planes, which could be difficult at a time when demand appears weak. The company says it expects to sell more than 146.

Leasing rates for various 787 models fell by 5%-13% earlier this year, according to Wells Fargo, citing data from Ascend Flightglobal Consultancy. And Airbus, whose profit margins have benefited from the cheap euro, launched a plane “very specifically designed to put more pricing pressure on Boeing’s 787,” says Ken Herbert, an analyst at Canaccord Genuity.

AS FOR THE 777, Boeing is working on an upgraded version, the 777X. It pinned 777 production cuts, announced in January, on the need to prepare for the transition. But some analysts blame the reduced production—to seven planes per month from 8.3—on a lack of orders, and say things could get worse. Boeing claims it has to sell 40 to 50 more 777 planes a year to keep assembly lines running at full strength before the 777X is ready to go into full production. So far this year, it has sold 12.

Noah Poponak, an analyst at Goldman Sachs, estimates that the 777 accounts for about 30% of Boeing’s commercial-unit operating profit before research and development, indicative of its importance to the company, and he expects further production cuts. Through 2020, he wrote in a recent client note, 111 leases on 777s will expire, offering “a source of young and relatively cheap 777s that might otherwise have been retired by lessors.”

Filling the 50 slots open in the 777 program in 2017 and 2018 years “would be uncommon, even in a strong environment,” he noted. Poponak projects that slumping sales for the 777 and other models will cause earnings to decline. He has a price target of $101.

Boeing executives weren’t available for comment, but a spokesman wrote in response to Barron’s queries that the company expects wide-body sales to “pick up again,” as more than 300 wide-body planes soon will hit retirement age. Into the next decade, the spokesman wrote, the “requirement to replace those older airplanes will grow substantially.”

Separately, in response to a question about the SEC probe, Boeing directed Barron’s to prior comments by CEO Dennis Muilenburg, who said “we are very confident in our financials.”

AT THE MOMENT , however, plane retirements are trending down. Indeed, 25% fewer planes were retired in the past 12 months than in the prior 12-month period, according to data analyzed by Canaccord Genuity. “If airlines commit to these older aircraft, eventually it could put pressure on the backlogs of Boeing and Airbus,” says Canaccord’s Herbert.

At the same time, evidence is growing that Boeing’s newer, more fuel-efficient planes don’t hold the same appeal, with oil at $48 a barrel, that they did a few years back, when crude topped $100. “The economics of new aircraft don’t work in the current environment,” says an aircraft-leasing executive.

Bullish analysts and investors argue that Boeing’s backlog insulates it from current market swings, and the company’s considerable free cash flow—an estimated $7.4 billion in 2016—will enable management to reward investors for years to come. Boeing has committed to returning all of its free cash to shareholders, and bought back 4% of its shares in the first quarter alone. The company currently pays a dividend of $4.36 a share, for a yield of 3.4%. Moreover, air traffic is on the upswing globally, and canceled and deferred orders have been well below average in the past year.

But that doesn’t mean the backlog is bullet-proof. In addition to oversupply issues and pricing pressures, Boeing is vulnerable to a further downturn in emerging markets. Herbert estimates that between 30% to 35% of the backlog is in Asia, with the bulk of that in China, where economic growth has decelerated. “If things turn significantly worse from a macro standpoint, that backlog can evaporate fairly quickly,” he says.

Boeing deserves to celebrate a century of innovation and growth. But its near-term flight path might not be smooth.

PayPal (PYPL): Hedge funds like Omega Advisors, Pennant Capital, Coatue Management, and Lone Pine Capital all bought PYPL shares during the first quarter. Now an independent publicly traded company for a few quarters, more funds have had a chance to digest PayPal’s results on a standalone basis. The mobile payments company recently was spun-off from eBay (EBAY). PYPL was featured in the equity analysis section of the Q3 2015 issue of the newsletter if you want to play catch up on the thesis.

Baxalta (BXLT): Funds such as Paulson & Co, Third Point, Farallon Capital, and Lone Pine Capital all disclosed brand new stakes in Baxalta during the quarter. This is a risk arbitrage play as the company received a takeover offer from Shire (SHPG).

Gaming & Leisure Properties (GLPI): Hound Partners, Third Point, JANA Partners, and Omega Advisors all built new stakes in GLPI during Q1. GLPI is basically a real estate company that acquires and leases back gaming properties to casino companies. GLPI recently acquired the real estate assets of Pinnacle Entertainment (PNK). During Q1, shares of Gaming & Leisure surged from $25 to $30 and have since headed even higher to $33.

Facebook (FB): Andreas Halvorsen’s Viking Global bought a massive $2.29 billion stake in the quarter, making it its top position. Other managers that initiated FB positions include the likes of Appaloosa Management and Paulson & Co. The company has really been firing on all cylinders by monetizing mobile, rolling out ads on its Instagram app, and further developing its WhatsApp messaging service and Oculus virtual reality platform. The company has garnered more incremental dollars from advertisers due to its massive audience and targeting.

Liberty Global (LBTYA): Paulson & Co, Greenlight Capital, Glenview Capital, Coatue Management, and Berkshire Hathaway all added to their pre-existing positions during Q1. The company is a collection of cable assets across Europe. Liberty recently announced a joint venture with Vodafone (VOD) in the Dutch market that will combine LBTYA’s broadband with VOD’s wireless operations in order to better compete with rivals. Shares of LBTYA have also been under arbitrage pressure as the company recently acquired Cable & Wireless (CWC.LN) to boost its operations in Latin America. (Liberty Gobal also has a separate tracking stock for its Latin American assets with the tickers LILA / LILAK.)

Alphabet (GOOGL): This is the third straight quarter that Alphabet has been accumulated by prominent funds. The only difference this time around is that they favored GOOGL shares versus the GOOG share class they previously had been buying. Coatue Management, Glenview Capital, Lone Pine Capital, and Viking Global all boosted their holdings. New CFO Ruth Porat has taken many ‘Wall Street friendly’ steps in terms of capital allocation and transparency to better help the company show investors just how much its Google cash cow is generating. A reminder: Alphabet is the new name for the holding company that owns Google, YouTube, and all of their other ‘moonshot’ businesses like self-driving cars that are now run as separate entities.

EMC (EMC): This is a risk arbitrage play as privately held Dell submitted a takeover for EMC. Funds such as Greenlight Capital, Farallon Capital, and Baupost Group all boosted their exposure to the name during the quarter. This is a large takeover and EMC also owns VMWare (VMW). If the deal completes, then Dell would control VMW operationally via 87% of voting rights but only own around a 28% interest. The deal is supposed to close before October of this year but first EMC shareholders must vote in June and it must pass various regulatory approvals as well.

Pfizer (PFE): Funds like Paulson & Co, Appaloosa Management, and JANA Partners bought more shares in the open market during Q1. However, it’s hard to know for sure whether they’ll keep them. This is because this was an event-driven and transformational play as PFE and Allergan (AGN) were set to merge. However, the US government implemented rules to discourage tax inversions, which made the PFE/AGN, deal unlikely to go through. As such, the companies went their separate ways.

Apple (AAPL): Once upon a time, this stock graced the ‘consensus buy’ list but those days are now long gone and the company finds itself on the other side of the spectrum. Hedge funds that liquidated their AAPL positions include Appaloosa, Coatue, Tiger Management, and Carl Icahn. That last name is probably the most notable as he built a massive stake in the company in 2013 but had become increasingly worried about China and the company’s exposure there which caused him to exit his stake. The company’s first quarter results showed a year-over-year slowdown in revenue for the first time since 2003 as its flagship iPhone product has started to saturate the market.

Valeant Pharmaceuticals (VRX): Like Apple, this was once a company that was being heavily accumulated by hedge funds but now finds itself being dumped en masse. Coatue, JANA, Lone Pine, and Viking Global all exited their stakes. To oversimplify: the company was attacked by Hillary Clinton for its drug pricing practices, short sellers flagged its use of specialty pharmacies, and investors began to worry about its massive debt load. Over the course of the past few quarters, VRX has fallen off a cliff, diving from $260 to current levels of $27.

American International Group (AIG): This has been a successful investment for numerous managers, but none more than Bruce Berkowitz’s Fairholme Capital. They built up a stake during the financial crisis but finally sold their last shares of common stock in Q1. As the company has rebounded from the financial brink, other funds that sold out include Glenview, Hound, and JANA.

Williams Companies (WMB) and Energy Transfer (ETE): These two stocks are grouped together because the reason funds were selling is the same. Williams and Energy Transfer were set to merge but the deal has become doubtful as ETE seems to be looking for ways to exit. As oil prices cascaded lower over the past year, so did shares of each. Funds that threw in the towel on WMB include Coatue, JANA, Lone Pine, and Perry Capital. Managers that dumped ETE shares include Coatue, JANA, Perry, and Viking.

Allergan (AGN): This has been one of the more crowded hedge fund trades in recent memory. Funds such as JANA, Pennant, Omega, Farallon, Blue Ridge, Viking, Third Point, and Paulson all reduced their exposure to the name. This stock could possibly appear on this list next quarter as well considering that the company’s merger with Pfizer (PFE) was recently called off, eliminating the primary catalyst some had invested under. That said, AGN has now shifted from a risk arbitrage stock to a capital deployment optionality story. It should soon close on the massive sale of its generics business to Teva Pharmaceuticals (TEVA), which will substantially deleverage its balance sheet. AGN has recently announced a $10 billion buyback as well.

Charter Communications (CHTR): Shares of this cable company have steadily risen from $160 to now well over $230 as news hit that the company’s takeover of Time Warner Cable (TWC) has been approved by the FCC and other regulators. Funds that trimmed their stakes in the first quarter include Glenview, Farallon, Coatue, Blue Ridge, and Lone Pine.

TransDigm Group (TDG): This is probably a case of profit taking as this has been a longstanding position for

numerous hedge funds. Just pull up a chart of TDG and you’ll basically see a straight upward march from the bottom left of the chart to the upper right. Funds that took some profits include Hound, Pennant, Maverick, Viking Global, and Lone Pine. This is an aerospace roll-up that’s been executed nicely by CEO Nick Howley though the company is quite levered.

Mastercard (MA): This is likely another case of profit taking given that MA has also been a longstanding holding for many of these managers and shares have been climbing higher ever since its IPO years ago. Blue Ridge, Tiger Global, Berkshire Hathaway, and Lone Pine all reduced their position size in this payment processing company.

Cover story: Profile of BX strategist Byron Wien, who for the past few months has been bearish on the U.S. stock market, which he thinks may have a down year in 2016, after which investors will be lucky to get a 5-7% annual return; Wien thinks the global economy will grow at just 2% this year, and is cautiously optimistic on China and worried about Japan.