Notable analyst calls this week: Roku, Baidu and Newmont among top picks
Aug. 24, 2024 2:31 PM ET
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The S&P500 ( SP500) closed in the green on Friday, with the week seeing Fed chief Jerome Powell hint at the start of interest rate cuts, saying “time has come for policy to adjust.”
For the week, the Nasdaq ( COMP:IND) fell 1.4%, while Dow ( DJI) lost 0.5%.
Wall Street had a slew of upgrades and downgrades from analysts. Here are some of the major calls for the week:
Roku upgraded by Guggenheim on future revenue acceleration
Guggenheim Securities upgraded Roku ( ROKU) to Buy from Neutral, expecting "key initiatives to drive revenue acceleration".
"This expected progress should further bolster confidence in ROKU as a unique top-line acceleration story in 2025," the analysts said, adding that the brokerage expects investor enthusiasm for the ROKU story to grow into the third quarter earnings in November.
Chinese cos Baidu, Bilibili in spotlight after quarterly results
Following second quarter results, Baidu ( BIDU) was in focus after Bernstein analyst Boris Van downgraded the company to Market Perform from Outperform and cut PT to $97 from $130 on worries over its search business.
Bilibili ( BILI) also shared the limelight as Nomura Securities and Barclays upgraded the Chinese tech firm. Barclays, which upgraded the stock to Overweight from Equal Weight and raised PT by $5 to $19, said that the company delivered much better-than-expected Q2 results.
Similarly, Nomura cited Bilibili’s "vibrant" community and strong user loyalty as a reason for upgrading rating to Buy from Neutral and put an $18 PT on the stock.
Piper Sandler moves to sidelines on Dutch Bros, Shake Shack
Piper Sandler downgraded Dutch Bros ( BROS), Shake Shack ( SHAK), and Sweetgreen ( SG) to Neutral from Overweight, citing traffic trends deceleration and lack of pricing power to compete with food-at-home trends (“FAH”).
Piper analyst Brian Mullan noted that inflation trends between FAH and food-away-from-home (“FAFH) show FAFH inflation has been running in excess of FAH by ~300 basis points or more for 14 consecutive months, leaving fast casual dining with little room for even incremental menu pricing adjustments.
Morgan Stanley downgrades HP as PC market recovery already priced in
HP ( HPQ) was downgraded to Equal-weight from Overweight by Morgan Stanley, as the investment firm sees little upside to its valuation and the PC market recovery is already mostly priced in.
The brokerage, which kept its PT on HP remains unchanged at $37, is finding PC demand during the second half of 2024 slightly weaker than expected.
Scotiabank positive on Newmont; AngloGold Ashanti gets a downgrade
Scotiabank upgraded Newmont ( NEM) to Sector Outperform from Sector Perform with a $59 price target, saying that the company will show operational improvement and thus margin expansion in H2 2024.
However, the brokerage downgraded AngloGold Ashanti ( AU) to Sector Underperform from Sector Perform with a $30 PT due to strong stock price appreciation.
The firm still raises its 2024-25 gold price forecast to $2,300/oz from $2,200 previously.
JPM downgrades Peloton on challenged future growth
Peloton Interactive ( PTON) got a downgrade from J.P. Morgan, even after the company broke a nine-quarter streak of declining revenue and narrowed its quarterly loss, both of which were better than Wall Street’s expectations.
JPM downgraded it from Overweight to Neutral, citing limited visibility and a challenging path to growth. Analyst Douglas Anmuth noted the FY25 revenue outlook was softer than expected as it factors in Y/Y declines in hardware sales, macro headwinds and pullback in marketing spend, among others.
Needham forecast two more years of revenue declines for Peloton and kept its Hold rating, while Morgan Stanley said it remains uncertain at what point the subscriber base will be reset and whether the company can drive revenue and profitability simultaneously, keeping it at Equal Weight rating.
Northland Capital positive on Palantir’s enterprise AI market
Palantir ( PLTR) was initiated at Market Perform by Northland Capital, as it considers the Denver-based big data firm a leader in the enterprise artificial intelligence market. The firm set a PT of $35 on the stock.
"Initial work, however, has been fragmented and experimental. Palantir's AI operating system, powered by their Ontology software, overcomes myriad roadblocks to adoption and is igniting AI use across the enterprise landscape," noted analyst Michael Latimore.
Other than the companies mentioned above, there were other analysts’ actions including MoffettNathanson starting coverage of Apple ( AAPL) with a Neutral rating, citing a challenging AI upgrade cycle, mainly outside the U.S., where a combination of regulatory hurdles and geopolitical considerations are likely to restrain Apple's AI roll-out and adoption. The brokerage set a $211 price target for the stock. Loop Capital also reiterated Buy rating, due to stronger-than-expected iPhone shipments.
Piper Sandler upgraded Chewy ( CHWY) to Overweight from Neutral, saying the online pet retailer appears to be at a profitability inflection point aided by both gross margin expansion and SG&A leverage. The brokerage also boosted PT to $35 from $22. |
