Wall Street's top analyst calls for the week of October 20, 2024

Key Concepts

Analyst Calls: Recommendations and price targets issued by financial analysts for publicly traded companies.
Price Target: The price at which an analyst believes a stock will trade in the future, typically within 12 months.
Rating: An analyst's recommendation on a stock, such as "Buy," "Outperform," "Neutral," "Underperform," or "Sell."
Earnings Expectations: The profit a company is projected to make in a given period.
Gross Merchandise Value (GMV): The total value of merchandise sold through a marketplace or platform over a given period.
Direct-to-Consumer (DTC): Selling products directly to end consumers, bypassing intermediaries.
AI (Artificial Intelligence): Technology that enables machines to perform tasks that typically require human intelligence.
Robo Taxi: Autonomous vehicles designed for ride-sharing services.
Catalyst: An event or factor that is expected to trigger a significant change in a stock's price.
Valuation: The process of determining the current worth of an asset or company.
Pipeline: In the context of pharmaceuticals, the range of drug candidates a company is developing.
Cash Break-Even: The point at which a company's cash inflows equal its cash outflows.
Adtech (Advertising Technology): Technologies used to automate the buying, selling, and delivery of digital advertising.
E-commerce Advertising: Advertising placed on e-commerce platforms.
EPS (Earnings Per Share): A company's profit divided by the number of outstanding shares.
Consensus: The average expectation of analysts regarding a company's financial performance.
Year-over-Year (YoY): A comparison of a metric from the current period to the same period in the previous year.
Casual Dining: Restaurants that offer a mid-range dining experience, typically with table service.

Analyst Calls on Wall Street: Intel, Deckers, eBay

Intel

Main Topic: Positive analyst sentiment following Q3 earnings beat and AI-driven demand.
Key Points:
- Intel's stock experienced its biggest intraday jump since April 2024.
- Five financial firms (Roth Capital Partners, Benchmark, Melius, Barclays, and Truis) raised their price targets.
- Benchmark set one of the highest price targets at $50 per share.
- The positive outlook is attributed to Intel beating Q3 earnings expectations and accelerating demand, particularly due to AI.

Deckers Outdoor (Hoka, UGGs)

Main Topic: Price target cuts due to a weak 2026 sales forecast.
Key Points:
- Raymond James and Telsey Advisory Group lowered their price targets.
- Reasons cited include slower growth for the Hoka brand and a lack of a robust direct-to-consumer (DTC) channel.
- The company is also facing margin pressure from tariffs and promotions.
- The stock is trading at its lowest point since 2023.

eBay

Main Topic: Upgrade based on product improvements and potential for increased Gross Merchandise Value (GMV).
Key Points:
- Citizens upgraded eBay to "Outperform" from "Market Perform."
- The analyst highlighted product improvements leading to a "significantly better consumer experience," especially in fast-growing categories like watches, sneakers, and parts/accessories.
- This is expected to drive up GMV in 2026.
- Steeple raised its price target to $89, close to the average 12-month target of approximately $92.

Analyst Calls on Wall Street: Tesla, Zion, Madna

Tesla

Main Topic: Mixed Q3 results but continued analyst optimism driven by AI and robo taxi potential.
Key Points:
- Shares are under pressure after reporting mixed third-quarter results.
- Morgan Stanley's Adam Jonas maintains an "Outperform" rating with a $410 price target.
- Jonas identifies the robo taxi push as the next significant catalyst.
- He referred to Tesla as a "forgotten AI stock," emphasizing its long-term potential in robotics and autonomous technology.
- Supporting Evidence/Argument: Jonas believes Tesla could remove safety drivers from its robo taxi fleet in Austin as early as the next quarter, a move he considers a "really big moment for transportation."
- A pivotal November 6 shareholder vote is also seen as a potential sentiment shifter.

Zion's Bank Corp.

Main Topic: Upgrade to "Neutral" as credit fears are deemed "overdone."
Key Points:
- Bank of America upgraded the regional lender from "Underperform" to "Neutral."
- The firm believes credit fears are "overdone."
- Supporting Evidence/Argument: The recent fraud-related loan writedown is viewed as a one-off event, not a systemic issue.
- The stock is trading approximately 20% below historical valuations, suggesting room for a rebound.
- Bank of America raised its price target to $62 per share.

Madna

Main Topic: Price target cut due to a failed vaccine trial, but upside potential remains from the cancer pipeline.
Key Points:
- UBS reduced its price target to $40 from $70.
- This follows the failure of Madna's CMV vaccine in a key late-stage trial, leading to the discontinuation of that program.
- Key Argument/Perspective: Analysts still see upside from Madna's cancer pipeline.
- The company is expected to reach cash break-even by 2028 through cost trimming.
- UBS maintains a "Buy" rating despite the lower price target.
- The stock has declined nearly 40% year-to-date.

Analyst Calls on Wall Street: Netflix, 3M, AppLeven

Netflix

Main Topic: Stock decline due to missed estimates, but analyst ratings remain positive due to long-term ad and tech strength.
Key Points:
- Shares are down about 8% following missed revenue and profit estimates.
- A tax issue in Brazil negatively impacted margins.
- Key Argument/Perspective: Analysts are not abandoning the stock, with firms like Bank of America and Morgan Stanley reiterating "Buy" and "Outperform" ratings.
- The long-term strength in Netflix's advertising business and technology is a key driver for these ratings.
- Wedbush trimmed its price target to $1400 from $1500 but maintained an "Outperform" rating, implying roughly 13% upside.

3M

Main Topic: Upgrade to "Equal Weight" as growth expectations are calibrated and turnaround efforts show progress.
Key Points:
- Shares are up about 1% after Morgan Stanley upgraded the stock to "Equal Weight" from "Underweight."
- Key Argument/Perspective: Analyst Christopher Snider believes growth expectations are now "well calibrated" across Wall Street.
- The company's turnaround efforts are beginning to take hold, following its earnings report.
- Snider raised his price target to $160 from $130, indicating confidence in new management's execution of growth and margin plans.

AppLeven

Main Topic: Initiation of coverage with a "Buy" rating and price target, citing best-in-class adtech and e-commerce potential.
Key Points:
- Georgia Bank initiated coverage with a "Buy" rating and a $75 price target.
- Key Argument/Perspective: Analyst Ben Black describes AppLeven's adtech as "best-in-class."
- The company's expansion into e-commerce advertising is expected to unlock significant growth.
- This could lead to exceeding Wall Street estimates through 2027, even with modest market penetration.

Analyst Calls on Wall Street: Meta, Starbucks, Reddit

Starbucks

Main Topic: "Neutral" rating maintained with a trimmed price target, awaiting sales improvement and a clear turnaround timeline.
Key Points:
- UBS is maintaining a "Neutral" rating and has trimmed its price target to $94 from $100.
- The firm is waiting for sales to "perk up."
- Data/Research Findings: UBS expects flat US theme store sales this quarter and operating margins around 10%.
- This is due to ongoing investments in labor and marketing related to its "green apron service model."
- The key question for the upcoming call will be management's ability to outline a timeline for a turnaround in US traffic and transactions.

Main Topic: Stock higher after being added to a positive catalyst watch, with strong growth and monetization plans.
Key Points:
- Shares are trading higher after City added Reddit to its "positive 90-day catalyst watch."
- City maintained a "Buy" rating and raised its price target to $250 from $220.
- Key Argument/Perspective: Analyst Ron Josie is optimistic about Reddit's growth and monetization strategies.
- Partnerships with Google and Anthropic are boosting both traffic and revenue.
- Data/Research Findings: City expects third-quarter earnings on October 30th to significantly exceed expectations.
- AI integrations, such as "Reddit Answers," are expected to keep daily user growth above 20% through year-end.

Analyst Calls on Wall Street: Lululemon, Snowflake, Darden

Lululemon

Main Topic: Stock moving higher after an upgrade, with valuation pricing in negative news and a credit card perk.
Key Points:
- BNP Paribas upgraded Lululemon's stock rating to "Neutral" from "Underperform."
- Key Argument/Perspective: The firm believes the current valuation is "pricing in a lot of bad news," and negative catalysts are less clear.
- The stock has already declined more than 50% year-to-date.
- Real-world Application: American Express announced that its Platinum card members will receive a $75 credit to Lululemon each quarter, which analysts believe could drive foot traffic.

Snowflake

Main Topic: Price target raised due to ample room for growth and positioning for AI demand.
Key Points:
- Wedbush raised its price target on Snowflake to $270 from $250.
- Key Argument/Perspective: Analyst Dan Ives believes the company has "ample room to accelerate growth."
- Snowflake is well-positioned to capitalize on elevated demand for AI use cases over the next 12 to 18 months.

Darden Restaurants (Olive Garden's Parent Company)

Main Topic: Upgrade to "Buy" from "Neutral" based on improved value proposition and reduced exposure to lower-income consumers.
Key Points:
- Goldman Sachs upgraded Darden Restaurants to "Buy" from "Neutral."
- Key Argument/Perspective: The analyst cited improvements in the company's value proposition in casual dining.
- Darden has less exposure to lower-income consumers, who are currently pulling back and under pressure.

Synthesis/Conclusion

The analyzed analyst calls reveal a dynamic market landscape with distinct trends impacting various sectors. Technology companies like Intel and Meta are benefiting from AI-driven demand and innovation, leading to positive analyst sentiment and price target increases. Conversely, companies like Deckers Outdoor are facing headwinds due to slower brand growth and channel challenges, resulting in price target reductions. Tesla's future prospects are heavily tied to its ambitious robo taxi and AI initiatives, with analysts like Adam Jonas seeing significant untapped potential. Regional lenders like Zion's Bank Corp. are seeing credit fears subside, leading to upgrades. In the pharmaceutical sector, Madna's stock is impacted by a failed trial, but its cancer pipeline offers a potential upside. Netflix, despite short-term revenue and profit misses, retains analyst confidence due to its long-term ad and technology strengths. 3M is showing signs of a turnaround, with analysts recognizing calibrated growth expectations and effective management execution. AppLeven's adtech capabilities and e-commerce push are seen as significant growth drivers. Starbucks faces challenges in sales and traffic, with investors awaiting a clear turnaround strategy. Reddit's growth and monetization plans, bolstered by AI integrations and strategic partnerships, are driving positive analyst outlooks. Finally, Lululemon's valuation is seen as attractive after significant declines, with potential catalysts from strategic partnerships. Darden Restaurants is favored due to its strong value proposition and reduced exposure to economically sensitive consumer segments. Overall, the market is characterized by a focus on AI, evolving consumer spending patterns, and the execution of strategic growth initiatives by individual companies.