Monday's analyst calls: Big auto upgrade, a lithium downgrade and Nvidia optimism

Published Mon, Nov 6 20235:37 AM ESTUpdated Mon, Nov 6 20239:25 AM EST

(This is CNBC Pro's live coverage of Monday's analyst calls and Wall Street chatter. Please refresh every 20-30 minutes to view the latest post.) The new week kicked off with a downgrade to the world's largest lithium producer and an upgrade to one of the best-known car brands in the world. UBS lowered its rating on Albemarle to neutral from buy, slashing its price target by more than 40%. The bank cited uncertainty around the company heading into the new year. Meanwhile, Barclays raised Ferrari to overweight from equal weight following a strong third-quarter report. A slew of shops also initiated coverage of Birkenstock , while Bank of America said it was optimistic on Nvidia ahead of the company's quarterly report. Check out the latest calls and chatter below. 9:25 a.m. ET: Citi maintains buy rating on Boeing despite its reduced delivery outlook When Boeing reported its quarterly earnings about two weeks ago the company cut its delivery outlook for its 737 Max, saying it needs to work through production flaws it had detected. Citi is still bullish on the stock, however. It reiterated its buy rating on Monday and $271 price target, which implies nearly 39% upside from Boeing's closing price Friday. The firm said it's still optimistic on the aircraft maker based on: The aerospace cycle postpandemic; improving earnings visibility given announced production rate hikes; improving cash flow visibility as the company delivers inventoried aircraft and increases production, and valuation scenarios that provide a path to a $330 stock price — if Boeing achieves its longer-term targets and trades in line with peers. — Tanaya Macheel 9:03 a.m. ET: UBS reiterates Amazon as a top idea Amazon remains a top idea after its latest earnings results , UBS said. Analyst Lloyd Walmsley said he maintains a positive view on the internet stock after Amazon surpassed third-quarter expectations, with revenue specifically jumping 13% in the quarter. That comes after rising inflation and interest rates hurt the online retailer in 2022. "AMZN reported a solid quarter led by strong margin improvement in both NA retail, International retail and AWS segments, with acceleration in ad revenue and 4Q guide ahead of expectations," Walmsley said on Sunday. "Management's tone on the call was positive around continued retail margin expansion but disappointing on near-term AWS growth re-acceleration." The analyst's $180 price target, raised slightly from $178, is roughly 30% above where shares closed Friday. The stock is higher by 65% this year. "We identified AMZN shares as our top idea into the print and we maintain Amazon as our top idea across the Internet overall given the compelling 2.9x bull/bear skew by our analysis," Walmsley wrote. — Sarah Min 8:38 a.m. ET: Wells Fargo downgrades SolarEdge, slashes price target by more than half Wells Fargo downgraded SolarEdge Technologies after the Israeli solar product manufacturer reported soft fourth-quarter guidance as the company is saddled with inventory due to weak demand. The bank lowered SolarEdge to equal weight from overweight, slashing its price target to $82 per share from $190 per share to reflect lower inverter shipments, lower average selling prices and lower margins. SolarEdge has projected quarterly revenue guidance of $600 million to $700 million once the company works through its inventory, but Wells said there's downside to that guidance if demand stays flat. — Spencer Kimball 8:36 a.m. ET: Buy Booking Holdings on the dip, D.A. Davidson says D.A. Davidson said Booking Holdings was worth buying and named it to its list of top picks. Analyst Tom White upgraded the vacation booking stock to buy from neutral and said it earned a spot on the firm's "Best-of-Breed" list. White has a price target of $3,400 per share, implying an 18.9% upside from where the stock ended Friday's session. While the stock has climbed more than 41% this year, White said an approximately 7% retreat since the start of September has given investors a dip to buy in on. BKNG YTD mountain BKNG in 2023 "Today, we take advantage of the recent pullback in shares ... and the company's solid 3Q'23 performance and encouraging 2024 commentary last week to upgrade shares," White said. — Alex Harring 8:33 a.m. ET: Warner Bros Discovery is a stock 'investors want to own,' Wells Fargo says Warner Bros Discovery can benefit from a strong direct-to-consumer business compared to peers and robust free cash flow, according to Wells Fargo. The bank reiterated an overweight rating on the media conglomerate stock, accompanied by a $20 per share price target — which implies nearly 70% upside from Friday's $11.77 close. "We think WBD is the name investors want to own because it's cheap, has strong FCF and appears open to industry change," analyst Steven Cahall wrote in a Nov. 3 note. "Its DTC biz is less of a drag, and if it can show a better outlook, we think it has the most rerating upside from ~6x EV/EBITDA." — Brian Evans 8:30 a.m. ET: Barclays says spun out cereal stock WK Kellogg will likely struggle in coming years The next few years should be tough for WK Kellogg as the cereal maker adjusts to life as a spun out company, according to Barclays. Analyst Andrew Lazar initiated coverage of the stock at an underweight rating with an $11 price target. That means he thinks the stock has just 5.1% in upside over the next year. The stock has slid following its debut last month . WK Kellogg is the cereal business formerly under Kellogg, which is now known as Kellanova. "We do believe that the recently spun North America cereal business should ultimately benefit from singular focus on its long-standing, iconic brands, and could, in time, present an attractive value proposition to investors," Lazar said. But, "we view the next of couple of years as a likely challenging transition period for KLG." — Alex Harring 8:28 a.m. ET: Roblox could see big swing this week, Bank of America says Investors in Roblox should be prepared for heavy volatility around the video game company's quarterly report this week, according to Bank of America. Shares of Roblox fell nearly 22% on Aug. 9 after the company's second-quarter report. Bank of America analyst Omar Dessouky, who has a buy rating on the stock, said in a note to clients Monday that the move was still confusing and makes Wednesday's third-quarter report a potentially risky event. "We view these as hallmarks of an inefficient market; while remain firmly in the bull camp, we acknowledge that market inefficiency, and big moves post results could persist," the note said. There could be reasons for Roblox's stock to see a big upward swing this week. Bank of America expects the company to post year-over-year bookings growth of greater than 20%, higher than most Wall Street shops, according to the note. — Jesse Pound 8:17 a.m. ET: Barclays upgrades Park Hotels & Resorts, sees secular tailwinds ahead Park Hotels and Resorts has turned a corner, according to Barclays. Analyst Anthony Powell upgraded shares to overweight from equal weight following a strong quarterly earnings report on Wednesday. "Looking forward, we see structural tailwinds in Hawaii (return of Japanese travel, adding to strong US demand) and New York (reduction in supply, Airbnb regulation), renovation uplift in Orlando and Key West, and favorable group calendars in San Diego and Chicago, all of which should lead to better than peer group RevPAR growth in 2024 (we estimate 4.8%)," Powell said in a Monday note. The analyst raised his price target by $3 to $19, suggesting shares could jump 38% from Friday's close. PK YTD mountain PK in 2023 The company also resumed giving cash returns to shareholders with a dividend yield around 10%, which the analyst said is the highest among the 31 stocks in its REIT coverage. "PK's capital returns have always been a highlight to us, and the resumption of the generous dividend should garner attention among investors, especially with the shares trading at 9.4x 2024 EBITDA and a roughly 9.5% 2024 cap rate," said Powell. — Hakyung Kim 8:14 a.m. ET: Walmart poised to gain market share this holiday season, according to Jefferies Walmart should be a market share winner in the upcoming holiday shopping season, Jefferies said. Analyst Corey Tarlowe said the retail giant is likely to be the biggest market share gainer in the season. He pointed to a firm survey of more than 1,000 shoppers that showed 64% planned to make an in-store or online purchase at Walmart. Additionally, 16% of respondents say they plan to spend more at the retailer than they did last year. "Overall, we view WMT as best-positioned to drive share gains this Holiday season as the top shopping destination in our coverage," he said. The survey also showed off-price retailers such as TJX Companies and Burlington are expected to be popular shopping destinations this year. — Alex Harring 8:12 a.m. ET: Barclays upgrades Kontoor Brands Apparel company Kontoor Brands is a buying opportunity as its margins are set to recover, Barclays said. Analyst Paul Kearney upgraded shares to overweight from equal weight, saying the American denim company behind the Lee and Wrangler denim brands will benefit from lower product costs and improved inventory. He also expects Kontoor is set to gain market share in U.S. denim. "We are upgrading KTB to OW based on gross margin recovery in the intermediate term, wholesale channel normalization, and tangible market share gains within U.S. denim," Kearney wrote on Monday. "Additionally, KTB has the right levers to pull for long-term growth through category, channel, and geography." Kontoor Brands shares are higher by more than 20% this year. The analyst's $59 price target, raised from $47, is 22% above where the stock closed Friday. The stock rose 1.9% in Monday premarket trading. Broadly speaking, analysts have a buy rating on the stock, with an average $53 price target, according to the CNBC analyst consensus tool. — Sarah Min 8:11 a.m. ET: Deutsche Bank downgrades BJ's Wholesale Club Deutsche Bank downgraded BJ's Wholesale Club to hold from buy on Monday, ahead of the retailer's earnings Nov. 17. "We commend management for top-line execution with grocery share gains, but see limited upside to 2024 estimates or the multiple to provide the next leg for the stock at current valuation," analyst Krisztina Katai wrote in a note to clients. She lowered her same-store sales estimate to 0.8% from 1.5%, lower than the Street's estimate of 1%. However, Katai still sees upside to merchandise margins and expects BJ's gas business to provide a benefit to earnings per share. She anticipates management will maintain its annual EPS guidance, but sees risk to fourth-quarter same-store sales. Katai lowered her price target to $71 from $79, suggesting about 3% upside from Friday's close. — Michelle Fox 8:04 a.m. ET: Raymond James downgrades Outback-parent Bloomin' Brands One of the most bullish analysts on Bloomin' Brands is cooling on the stock. Raymond James analyst Brian Vaccaro downgraded the restaurant stock to outperform from strong buy, citing signs of weakness at the company's biggest brand. "We continue to see value in the shares from current depressed valuation levels (P/E 9x, EV/EBITDA ~5x), and potential catalysts with activist Starboard stirring. However, this is offset by Outback's continued traffic underperformance," Vaccaro said in a note to clients. Jeffrey Smith's Starboard Value owns 8.3 million shares of Bloomin' Brands, according to a September securities filing. The U.S. arm of Outback Steakhouse had a 1.1% decline in comparable sales in the most recent quarter, according to Bloomin' Brands. Vaccaro trimmed his price target on the company to $28 per share from $35. The majority of analysts who cover the stock have a hold rating on Blooming Brands, with an average price target of $28 per share, according to FactSet. — Jesse Pound 7:54 a.m. ET: Bank of America raises price target on U.S. Bancorp Investors have a chance to buy U.S. Bancorp at a compelling price-to-earnings multiple, according to Bank of America. Analyst Ebrahim Poonawala reiterated his buy rating on Monday while upping his price target by $4 to $44. With his new target, Poonawala is forecasting a 24% rally from Friday's close in the next year. Poonawala said the stock is currently cheap, trading at a price-to-earnings multiple that's in line with super-regional peers despite having "superior" growth potential. "Negative sentiment on bank stocks and what was up to recently an idiosyncratic regulatory overhang on USB have created a compelling risk/reward to own what is arguably among the best run financials franchises in the US," he told clients. Shares rose 1.1% in Monday premarket trading. But the stock has underperformed in 2023, dropping 18.6% since the year began. — Alex Harring 7:43 a.m. ET: Mizuho upgrades Acadia Pharmaceuticals, says stock can rally 45% after already outperforming Mizuho got off the sidelines on Acadia Pharmaceuticals , citing improving fundamentals. Analyst Uy Ear upgraded shares to buy from neutral and hiked his price target by $15 to $35. Ear's new target indicated an upside potential of 45.4% from where the stock ended Friday. Shares climbed 3.5% before the bell on Monday, a day after Ear's upgrade. The stock has soared more than 51% in 2023, outperforming the broader market. Ear said he's bullish on Daybue, a treatment for Rett syndrome, and raised his 2030 sales forecast to around $1.1 billion from $838 million. Meanwhile, he said there should be positive data coming out of a schizophrenia trial in early 2024. But Ear did note that a patent case against a generic manufacturer could catalyze limited downside, listing a $3 per share hit as a worst-case scenario. — Alex Harring 7:29 a.m. ET: Lower interest rates can help Bank of America, KBW says Bank of America could get a boost as bond yields recede, according to KBW. Analyst David Konrad upgraded shares of the well-known bank to market perform from underperform. The upgrade is tied in part to a pullback in interest rates after some U.S. Treasury yields recently hit multiyear highs. "We believe the lower rates may drive favorable positioning in the stock," Konrad said. Konrad also raised his price target by $1 to $30. His new target implies shares could rise 5.6% in the next year. That would mark a reprieve for the stock, which has fallen more than 14% so far in 2023. BAC YTD mountain BAC in 2023 — Alex Harring 7:19 a.m. ET: Buy Confluent as data becomes increasingly important with AI, RBC says RBC Capital Markets sees an opportunity for Confluent as data plays key role in generative artificial intelligence. Analyst Matthew Hedberg initiated coverage of the data stock at an outperform rating with a $22 target price for shares. Hedberg's price target implies shares could climb 23.9% over the next year from Friday's close. "We believe having access to real-time data will be more important in a GenAI world and think that Confluent, which acts as the plumbing layer for data, is in a good position to aid the growing cloud application ecosystem," he said. Hedberg added that Confluent's focuses on data streaming and processing should help the company be profitable in the long term. Shares advanced 1.4% in Monday premarket trading. The stock has struggled in 2023, losing more than 20% on a year-to-date basis. — Alex Harring 7:08 a.m. ET: What Citi is looking for in Disney earnings Analyst Jason Bazinet kept his buy rating on Disney but cut his price target by $10 to $110 ahead of the industry titan's fiscal fourth-quarter report on Wednesday. Still, Bazinet's new target implies shares can climb 29.3% over the next year. Part of the focus on 2024 will be Disney+, as the company has previously said the streaming service should be profitable by the end of the fiscal year. Bazinet said that target will likely be reiterated when Disney reports earnings. — Alex Harring 6:54 a.m. ET: Jefferies sees Amazon as positioned to 'win' holiday shopping season amid broader strength in e-commerce While data analyzed by Jefferies showed American holiday shopping should increase at a slower clip this year, the firm sees e-commerce as a standout area. Analyst Brent Thill said third-party data shows U.S. holiday sales growth should cool to 4% in 2023, down from 6% a year prior. But e-commerce sales specifically should grow 9% this year, up from 7% in 2022. Firm data also bodes well for online shopping, Thill said. The data shows 38% plan to spend more online this year, while just 11% plan to shell out less. As e-commerce bucks the trend, Thill recommended Amazon shares. "We see AMZN as well positioned to win this holiday," he said, adding that the company has "unmatched assortment, fast delivery and broad consumer reach." — Alex Harring 6:53 a.m. ET: BofA double downgrades Paramount due to dearth of sales opportunities Bank of America double-downgraded Paramount Global to underperform from buy, citing a lack of notable opportunities to sell parts of the business in the near term. In addition to the downgrade, analyst Jessica Reif Ehrlich slashed her price target on the stock to $9 from $32. Reif Ehrlich's new price target reflects downside potential of 34.6%. "Our prior bullish thesis and valuation methodology was predicated on PARA's inherent asset value in a potential sale," she told clients Monday. "Despite receiving credible bids for several different assets ... it does not appear any significant asset sales are on the horizon." Shares slid 5.1% in Monday premarket trading. The stock has underperformed in 2023, losing about 18.5% year to date. PARA 1D mountain PARA falls — Alex Harring 6:37 a.m. ET: Export restrictions and 2025 will be central to Nvidia's earnings report, Bank of America says Bank of America is optimistic heading into Nvidia earnings and said investors will be focused on two key themes that can help decide the direction of the stock going forward. Analyst Vivek Arya said the company should beat quarterly expectations and improve its outlook for future performance when reporting later this month. It has already been a banner year for the company, as the artificial intelligence craze has helped propel shares up more than 200% in 2023. Beyond that, Arya said investors will look for insights into how U.S. restrictions on the shipping of advanced artificial intelligence products to China has impacted the businesses. They will also be watching for any 2025 expectations more broadly to see if the booming demand experienced in 2023 can remain. The analyst has a buy rating on Nvidia and a price target of $650 per share. That forecast implies upside of more than 44%. — Alex Harring 6:19 a.m. ET: Barclays upgrades Dominion Energy after strong earnings Dominion Energy's days of underperforming may soon be behind it — and investors should buy in now, according to Barclays. Analyst Nicholas Campanella upgraded the stock to overweight from equal weight and raised his price target by $2 to $47. Campanella's price target reflects a 7.8% upside over Friday's close. Campanella called the company's third-quarter earnings call last week a "positive inflection point." He specifically pointed to the fact that earnings per share revisions are likely going to hit a bottom in the next quarter. That comes amid a difficult year for the stock. Shares have tumbled nearly 29% since 2023 began, while the S & P 500's utilities sector has lost just around 12.5% in the same period. D YTD mountain D in 2023 "D is currently in the 8th inning of a wider restructuring story which has driven ... underperformance vs. UTY peers," Campanella said, adding that it has been a "painful review" for the company. Despite the recent challenges, Campanella said Dominion's execution on a gas distribution sale and progress toward finding an equity partner for a key project can help the company repay debt while keeping its dividend. — Alex Harring 6:10 a.m. ET: Wall Street firms initiate Birkenstock shares The Wall Street initiations are rolling in for Birkenstock nearly a month after the iconic clog shoemaker went public. Banks such as Citi, Goldman Sachs and JPMorgan initiated the stock with buy-equivalent rating. "Birkenstock is a one-of-a-kind brand that sells (using a scarcity model) comfort footwear that is also ergonomically as intended by nature to provide the correct support for the foot," said Citi's Paul Lejuez. "BIRK is one of the fastest growing companies in retail and has industry leading EBIT margins." Baird also initiated the stock with an outperform rating, referencing the movie "Happy Feet." "Birkenstock is an iconic brand with a storied history that has endured though decades/generations of fashion cycles," Baird analyst Mark Altschwager said. "The company is unlocking the potential of the brand through disciplined channel management, compelling product innovation, and investments in production capacity, together supporting growth even in a weaker macro spending backdrop." But not everyone was ready to name the stock a buy. Morgan Stanley analyst Edouard Aubin, for example, gave Birkenstock an equal-weight rating. "Birkenstock's equity story possesses a number of attractions from a financial standpoint," Aubin said. "However, we see these as largely priced in." Shares added 1.2% before the bell on Monday. — Alex Harring 5:37 a.m. ET: Barclays upgrades Ferrari, says there's a buying opportunity in the luxury automaker Barclays has turned more bullish on Ferrari , saying there's finally an opportunity to buy into the carmaker. Analyst Henning Cosman upgraded the stock to overweight from equal weight.. It has already been a strong year for the stock, with U.S. shares up more than 54% in 2023. RACE YTD mountain RACE year to date Cosman called the company's third-quarter earnings report last week "very strong," though he noted full-year guidance was left "undemanding" despite being raised. He added that commentary around pricing, mix, the personalization business and order book pffered positive signals for performance between 2024 and 2026. Ultimately, he said investors should "take the plunge" and buy the stock off earnings. "Like many, we have always liked Ferrari for its impressive execution, unique earnings visibility and strong insulation from macro factors thanks to its UHNWI target audience," Cosman said, using the acronym for ultra-high-net-worth individuals. "However, also like many, we were hoping for a better entry point, as factors like its EURO STOXX 50 inclusion, a priced-in guidance increase and all-time low discount to Hermes ... all made Ferrari's valuation seem pretty full. We are pivoting from this view today." — Alex Harring 5:37 a.m. ET: UBS downgrades beat-down lithium stock Albemarle as demand slides UBS is moving to sidelines on Albemarle as the firm said it saw increased uncertainty for the chemical stock. Analyst Joshua Spector downgraded the stock to neutral from buy and slashed his price target to $140 from $253. Still, Spector's new target still implies an upside of 9.4% over Friday's closing, underscoring how much shares have struggled in 2023 with the stock down about 41% year to date. "We see a greater risk to lithium volume growth and more downside earnings risk to 2024," Spector told clients on Monday. ALB YTD mountain ALB in 2023 Spector pointed to the fact that the price of lithium, one of Albemarle's main focus areas, has turned down in recent weeks after beginning to move positive as one reason for concern. Others include less optimistic growth expectations for the electric vehicle market and worse spodumene prices. After the stock's selloff this year, Spector said the stock could be undervalued if prices rise if there's a more normalized environment in 2025. But he said he'd need more visibility into demand, pricing and capital expenditure trends to get more optimistic. — Alex Harring Correction: A previous version misstated the timing of Nvidia's next earnings report.