Here are the biggest calls on Wall Street This Week:
Meta Platforms upgraded to Buy at Arete
Arete upgraded Meta Platforms (META) to Buy from Neutral with a price target of $735, up from $614. The firm cites Meta’s “flexible” cost base, subscription growth, and internal AI progress for the upgrade. Meta’s high-margin subscription business should help the company’s margins recover amid if “aggressive” AI data center spend, the analyst tells investors in a research note. Arete believes the company could become a “neocloud with excess compute.”
Microsoft initiated with an Outperform at Citizens
Citizens initiated coverage of Microsoft (MSFT) with an Outperform rating and $550 price target. The shares are down 7% year-to-date as many investors worry about Microsoft’s dependency on third-party AI models, the analyst tells investors in a research note. The firm sees an “attractive opportunity for capital appreciation at these levels for several reasons.” Citizens believes Microsoft CEO Satya Nadella has laid out a “compelling and differentiated vision of AI sovereignty.” Microsoft is building an end-to-end AI tech stack with three layers, adds the firm. It believes Microsoft has a “very attractive financial profile with revenue growth accelerating.”
IBM initiated with an Overweight at Barclays
Barclays initiated coverage of IBM (IBM) with an Overweight rating and $350 price target. IBM has created a “stable growth engine around its very defensible software portfolio,” the firm tells investors in a research note. Barclays believes this creates “solid” future growth and better margins going forward. In addition, quantum computing represents a “very interesting option value” with IBM being an early leader, contends the firm.
CoreWeave initiated with an Outperform at BNP Paribas
BNP Paribas initiated coverage of CoreWeave (CRWV) with an Outperform rating and $192 price target. The firm views CoreWeave as one of the most “strategically important” companies within the AI infrastructure ecosystem. CoreWeave has established itself as a preferred partner for many of the leading AI companies and has “a differentiated” software and cloud stack, BNP tells investors in a research note.
Zscaler upgraded to Buy at Guggenheim
Guggenheim upgraded Zscaler (ZS) to Buy from Neutral with a $214 price target. While this is a “trust me story,” the valuation here presents an opportunity to buy a category leader of a still nascent and hyper growth market, the firm tells investors in a research note. Zscaler’s relevance is likely to grow in the era of AI, especially with the C-level executives it intends to do business with that believe in Zero Trust security, Guggenheim adds.
Intuit downgraded to Sell at Goldman Sachs
Goldman Sachs downgraded Intuit (INTU) to Sell from Neutral with a price target of $276, down from $519. The firm believes consensus estimates numbers are likely too high for the next three years, and that Intuit may have to revise its long-term growth targets lower. Downward estimate revisions will likely weigh on the stock over the next several quarters before the market adjusts to an updated growth algorithm of 5%-10% sales growth for Intuit, the analyst tells investors in a research note. Goldman believes Intuit is entering a period of heightened competition in tax.
Lululemon downgraded to Underperform at BNP Paribas
BNP Paribas downgraded Lululemon (LULU) to Underperform from Neutral with an $88 price target. Fundamentals come back into focus after last night’s Q1 results and “disappointing” guidance, the firm tells investors.
Bernstein downgrades five in packaged food on inflation, MAHA risk
Bernstein downgraded Campbell’s (CPB), Conagra Brands (CAG), General Mills (GIS), and Kraft Heinz (KHC) to Underperform from Market Perform. These traditional packaged food companies are more heavily exposed to “sustained” oil inflation, which is likely to lead to an acceleration in freight, agriculture, and packaging prices, the firm tells investors in a research note. Bernstein says the companies also face Supplemental Nutrition Assistance Program benefit reductions, health and wellness trends driven by GLP-1 drugs and the “Make America Healthy Again” agenda, a “strained” consumer environment, and legal risks. “Times remain troubled for the traditional, center-of-store packaged food companies, and we unfortunately don’t see it getting easier anytime soon,” contends the firm.
Fulcrum Therapeutics double downgraded to Underweight at JPMorgan
JPMorgan double downgraded Fulcrum Therapeutics (FULC) to Underweight from Overweight without a price target citing the discontinuation of the company’s lead asset pociredir in sickle cell disease. As the company undergoes a strategic review, the shares will be a relative underperformer, the firm tells investors in a research note.
Brown-Forman resumed with an Underweight at Morgan Stanley
Morgan Stanley resumed coverage of Brown-Forman (BF.B; BF.A) with an Underweight rating and $23 price target. U.S. and global spirits demand remains weak amid both structural and cyclical headwinds, says the analyst, who sees a continued challenging topline outlook and increasing cost/margin pressures.
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