Friday's analyst calls: Morgan Stanley top pick, solar double downgrade

Published Fri, Nov 10 20235:02 AM ESTUpdated Fri, Nov 10 20239:37 AM EST

(This is CNBC Pro's live coverage of Friday's analyst calls and Wall Street chatter. Please refresh every 20-30 minutes to view the latest posts.) Friday's early calls include an upgrade to a restaurant software stock and a big downgrade to a solar name. Baird upgraded Toast to outperform , noting there's strong upside ahead even after the company's disappointing third-quarter report this week. Meanwhile, Bank of America threw in the towel on FTC Solar , double downgrading it to underperform from buy. Morgan Stanley also named Palo Alto Networks a top pick. Check out the latest calls and chatter below. 8:49 a.m. ET: Wells Fargo downgrades Hawaiian Electric to underweight Shares of Hawaiian Electric are riding on how the Hawaii government targets the Maui wildfire relief front, according to Wells Fargo. The firm downgraded shares of the electric services company to underweight from equal weight, although it lifted its price target to $8.50 from $8. This implies that shares of Hawaiian Electric could plummet 39% from where they closed on Thursday afternoon. Hawaiian Electric stock has plunged more than 67% so far this year. The stock shed nearly 6% in premarket trading on Friday afternoon. "Our $8.50/sh PT, up from $8/sh, reflects a 33% chance that HE is not held liable for the Maui wildfires or HI financially guarantees the utility partially offset by lower peer multiples in our SOTP analysis due to the higher-for-longer interest rate environment. However, if HE is held liable, we believe liabilities are likely to exceed the utility's pre-wildfire equity value and netting the bank against parent debt results in $0 equity value," wrote analyst Jonathan Reeder. — Lisa Kailai Han 8:36 a.m. ET: Bank of America initiates Weatherford International at a buy rating There's a strong growth outlook ahead for Weatherford International , according to Bank of America. Shares of the oil services company have rallied 86% year to date, but analyst Saurabh Pant still sees more room to go. Pant initiated coverage of the oil services company at a buy rating, setting a price objective of $120. That's nearly 27% higher from the stock's Thursday closing price of $94.76. "We see upside from 1) continued revenue & margin expansion led by Int'l markets, 2) B/S optimization, 3) our expectation of WFRD initiating shareholder distributions in 2H24," the analyst wrote. Meanwhile, Weatherford's new CEO, Girish Saligram, has refocused the company on its core technology strength, making the company both lean and highly profitable, Pant added. — Lisa Kailai Han 8:34 a.m. ET: Gordon Haskett upgrades BJ's to buy, cites promising earnings revisions outlook Gordon Haskett upgraded BJ's stock to buy-rated from hold-rated on Friday, establishing a new price target of $80. That is 19% above where shares closed on Thursday. "Recall, we had downgraded the stock in May on concerns that management had established too high of an FY23 earnings bar (which they subsequently lowered in August), along with concerns that disinflation would weigh on comps," analyst Chuck Grom wrote. "With the stock more/less flat since that time and these concerns fairly well understood, we believe that getting more constructive against the aforementioned wall-of-worry would be both non-consensus, and more importantly add to our arsenal of more defensively postured retailers poised for upward earnings revisions and companies with turnaround potential in 2024," he added. Grom clarified that the upgrade isn't due to expectations that the warehouse club chain will blow its third-quarter earnings expectations out of the water. BJ's is slated to post its results on Nov. 17. Instead, he believes that earnings revisions look promising for both the fourth quarter and the full 2024 year for the company. — Lisa Kailai Han 8:33 a.m. ET: Wells Fargo upgrades Celldex Therapeutics, sees 'few catalysts for upside' Wells Fargo upgraded shares of Celldex Therapeutics to equal weight from underweight, simultaneously implementing a $27 price target. This implies a 4.7% upside from the stock's closing price of $25.78 on Thursday afternoon. Shares of the biotechnology firm are down 42% this year. CLDX YTD mountain CLDX in 2023 "Our Underweight thesis has largely played out in regard to barzo's Ph2, a cap raise, and competitive worries in CSU— this is largely price in," wrote analyst Derek Archila. "That said, there are few catalysts for upside and competitor headwinds still exist." Archila added that he expects the stock to trade rangebound within the medium term, as he finds it difficult to see a significant upside path. — Lisa Kailai Han 7:39 a.m. ET: ATM maker is 'too cheap to ignore,' D.A. Davidson says D.A. Davidson turned bullish on Diebold Nixdorf , saying the financial technology stock is too good of a deal to be overlooked. Analyst Matt Summerville upgraded the stock to buy from neutral and raised his price target by $4 to $29. Summerville's new target implies an upside of 16%. Summerville called the ATM and point-of-sale machine maker "too cheap to ignore," while noting it had strong business fundamentals. He also raised 2023 and 2024 forecasts for the company, citing a strong backlog. — Alex Harring 7:38 a.m. ET: Bank of America downgrades CommScope due to uncertainty ahead Bank of America downgraded shares of CommScope to neutral from buy, citing a lack of clarity on how the network infrastructure provider plans to deal with its maturing debt and weakening business conditions. Analyst Tal Liani accompanied this move by with a price objective reduction to $1.75 from $2.24. This updated forecast still signifies a potential upside of 11% from the stock's Thursday close of $1.57. "The underlying trends have worsened substantially and the debt reduction actions remain uncertain," Liani wrote, adding that he remains "puzzled" why the company has not acted yet and that risks will expand as the runway shortens. The analyst also noted that despite CommScope raising its 2023 free cash flow guidance to $325 million from $300 million, the company's net sales are likely to be hit as underlying business fundamentals worsen. — Lisa Kailai Han 7:25 a.m. ET: Morgan Stanley lists Palo Alto Networks as a 'top pick' Morgan Stanley stood by its bullish outlook for Palo Alto Networks , naming the stock a "top pick." Analyst Hamza Fodderwala's price target of $304 implies a 25% potential upside. Palo Alto Networks has rallied close to 74% so far this year. PANW YTD mountain PANW in 2023 The analyst expects a "modest topline beat and raise" for the company's upcoming fiscal first-quarter earnings, on the back of durable demand and growing upsell momentum, he said. Palo Alto's broader platform transformation should help it mitigate a meaningful slowdown in firewall demand, which contributed to weaker-than-expected results from competitors Fortinet and Check Point. "We expect PANW to pull further away from the pack and sustain durable high-teens billings growth. Our latest checks largely support a positive view, with partners citing durable demand as customers consolidate on the broader PANW platform," Fodderwala wrote. — Lisa Kailai Han 7:14 a.m. ET: Macquarie downgrades Unity to neutral, slashes target price Unity's third-quarter earnings beat isn't enough to justify the video game software development company's "near total lack of visibility," according to Macquarie. The bank downgraded Unity stock to neutral from outperform, also slashing its target price to $20 from $55. This updated forecast implies a 20.7% downside from the stock's Thursday closing price of $25.24. Shares of Unity plunged nearly 15% in premarket trading on Friday morning. The company did not provide any financial guidance for investors for the fourth quarter. "We believe in Unity's two businesses but there are too many uncertainties on its ultimate strategy and financials to recommend the stock at this point," wrote analyst Tim Nollen. "We therefore have to assume revenue in Q4 and 2024 may be lackluster." — Lisa Kailai Han 6:50 a.m. ET: Investors should buy the dip on shares of Wynn Resorts, Deutsche Bank says Now is the good time for investors to buy shares of Wynn Resorts on the stock's post-earnings pullback, according to Deutsche Bank Analyst Carlo Santarelli stood by his buy rating on the casino chain, although he decreased his target price for the stock to $124 from $140. This updated target still implies a nearly 37% upside for the stock. Shares of Wynn Resorts have rallied close to 10% since the start of the year. However, the stock slid 2.4% during Thursday's trading session, shedding an additional 4.7% before Friday's opening bell. Santarelli believes this reaction to be unwarranted. "In addition to the results, which, when fully sanitized for luck and one-timers, were easily ahead of Consensus, management noted that the development of the UAE project remains on track, and is likely to open 2-3 years before any incremental competition emerges, if it does, while the Boston project is delayed ~3 months, due to environmental challenges," the analyst wrote. — Lisa Kailai Han 6:42 a.m. ET: JPMorgan downgrades Enviva following the stock's 78% plunge on Thursday Things are likely to continue looking rough for Enviva in the near future, according to JPMorgan. The bank downgraded shares of the wood pellet producer to underweight from neutral and removed its price target for the stock. Shares of Enviva have plunged more than 98% so far this year. On Thursday, the company reported third-quarter earnings results that came well below analyst expectations, also withdrawing its guidance for the full year of 2023. Upon the news, Enviva stock plummeted nearly 78% during the day's trading session. "Despite consistent messaging down playing the spot market's importance to achieving FY23 guidance/medium-term targets and the company placing outsized focus on internal operational improvements, the YTD spot market deterioration has proven too severe for cost reductions to offset and, more importantly, shed additional light on the large 4Q22 transaction that is set to cost EVA hundreds of millions, should the company be unsuccessful in contract renegotiation efforts and spot prices remaining at lower levels," wrote analyst Drew Chamberlain. — Lisa Kailai Han 6:19 a.m. ET: JPMorgan reiterates overweight rating for Netflix, lifts price target JPMorgan is standing by its overweight rating on shares of Netflix , lifting its price target to $510 from $480. Shares of the streaming company are up more than 47% in 2023. Analyst Doug Anmuth's updated price target of $510 could mean that there's still 17% room for the stock to go. Anmuth attributed his bullishness to Netflix's "ability to accelerate revenue growth in 2024, expand margins, & drive multi-year FCF growth," he wrote in a Friday note. Specifically, Anmuth highlighted paid sharing as the driver behind two straight quarters of strong subscriber growth, and anticipates Netflix to reap those benefits for several more quarters. However, he believes that the company's focus will soon turn to "building Ad tier scale through a combination of adjustments to plans & pricing, bundles w/ISPs & devices, & strategic marketing." "After NFLX begins targeted price increases in the US, UK, & FR in 4Q, we look for the company to expand those efforts to other markets in '24, ultimately returning to a more regular pricing cadence," he wrote. The analyst added that Netflix is also due to have a strong slate of content for its fourth quarter. — Lisa Kailai Han 6:12 a.m. ET: Stifel upgrades Henry Schein, highlights 'compelling' valuation Henry Schein has a rosy outlook ahead, according to Stifel. The firm upgraded shares of the healthcare distributor to buy from neutral. Analyst Jonathan Block's price target of $70 signifies a 13% upside from the stock's Thursday closing price of $62.16. Henry Schein stock has fallen 22% since the start of the year. HSIC YTD mountain HSIC in 2023 "Across a handful of metrics the stock is trading at trough valuation, and we believe several multi-year headwinds — such as the pace of practice consolidation and loss of market share to pure online providers — are abating," Block wrote. The analyst noted that a near-term resolution to the firm's ongoing cybersecurity incident would only have a "modest impact" on market share. "This may allow 2024 EPS estimates to look close to 2023's current guidance (~$5.27 midpoint) and if correct, valuation appears compelling," Block added. "In short, while 2023 results are an unknown, diligence suggests the cybersecurity impact may prove transitory, past structural headwinds are easing, and the business transformation (to higher-margin products) continues." — Lisa Kailai Han 6:09 a.m. ET: Near-term headwinds will pressure shares of Freyr, BTIG says BTIG downgraded shares of Freyr to neutral from its previous buy rating following the company's disastrous third-quarter earnings call. Shares of the battery manufacturer were down nearly 40% during Thursday's trading session after the company missed its earnings estimates. Analyst Gregory Lewis explained that because Freyr still counts as a pre-revenue company, near-term stock drivers remain project execution and the ability to bring a commercial product to market. FREY 1D mountain FREY falls "The key takeaway from the call was the delay to the full commissioning of the CQP plant (came online this summer) which is critical to FREY's ability to scale a commercial battery cell. The delay to the commissioning process is on the casting and unit cell assembly equipment which is now being targeted for sometime in 2024," Lewis wrote. The analyst added that another hit to the company came in the form of a pause to its Giga Arctic buildout, due to a lack of funding from Norway and the European Union. The initial buildout of the battery factory had a targeted start date in 2025. — Lisa Kailai Han 5:40 a.m. ET: Stephens initiates 'iconic brand' Portillo's at overweight, sees 35% upside A year-to-date sell-off makes for an attractive entry point for shares of Portillo's , according to Stephens analyst Joshua Long. Long initiated coverage of the stock at an overweight rating, accompanied by a $20 price target. This implies nearly 35% potential upside from the stock's Thursday close of $14.85. Shares of the fast-casual chain are down 9% since the start of the year. "PTLO shares have underperformed the market this year but held up decently given the widespread pressures facing the broader restaurant industry on account of slowing traffic trends into year-end and concerns around the resiliency of the consumer in the face of a cloudy macro backdrop," Long wrote. "We are looking through this near-term noise towards what we believe is a compelling entry point into a high-quality growth story positioned to execute against national expansion plans." The analyst added that while the "iconic brand" has already been generating "industry-leading sales volumes," the company seems to be early on its growth trajectory. Long thinks that Portillo's has the potential to grow its unit count by more than 10 times over the next several decades. — Lisa Kailai Han 5:34 a.m. ET: RBC downgrades Plug Power, cites 'unprecedented challenges' RBC Capital Markets downgraded shares of Plug Power to sector perform from outperform due to a series of "unprecedented challenges" that caused a shortage in third-quarter hydrogen supply. The firm accompanied the downgrade by slashing its price target to $5 from $12. That is 15% below where shares closed on Thursday. Shares were down more than 29% in the premarket. The move comes after Plug Power posted a wider-than-expected loss for the third quarter along with disappointing revenue. PLUG 1D mountain PLUG falls "Mgmt expressed confidence in executing a liquidity transaction near-term and continues to see a path for margin improvement through next year. However, at this time we think it prudent to move to the sidelines and await execution of these events and until we see more material progress on initiatives to reduce the cash burn and improve margins," wrote analyst Chris Dendrinos. Dendrinos noted that while management expects "line of sight for relief," this is not likely to be felt in the near term. As a result, the analyst lowered his 2023 revenue forecast to $1.05 billion and expects another quarter of negative gross margins at -15%. — Lisa Kailai Han 5:02 a.m. ET: Toast gets upgrade from Baird Baird analyst David Koning raised his rating on Toast to outperform, citing in part an attractive valuation. "We like big market share gainers ... we like restaurants, we like fintech, and we like Toast at 4x 2024E revenue," Koning said. "While the stock was a bit burnt to a crisp on Q3 earnings, we appreciate the strong growth profile." The restaurant software stock is down more than 20% this week on the back of disappointing third-quarter results. Fourth-quarter guidance was also lackluster. TOST mountain 2023-11-03 TOST this week Still, Baird sees upside ahead. Koning has a price target of $18 per share, implying upside of nearly 30% over the next 12 months. — Fred Imbert 5:02 a.m. ET: Bank of America downgrades FTC Solar Bank of America lowered its rating on FTC Solar to underperform from buy and slashed its price target to 20 cents per share from $4. The new target implies downside of 55% from Thursday's close. The downgrade comes after the company announced its CEO and CFO had transitioned out of their roles, which raises credibility questions for analyst Julien Dumoulin-Smith. "Lack of clarity on a revenue recovery and standing liquidity issues ($5mm available in cash drawdown at next period end) layer on real financial risk. FTC will need to renegotiate its credit facility in early 2024 which could come with less favorable terms," Dumoulin-Smith said. FTC Solar also announced weaker-than-expected guidance for the fourth quarter on Thursday. Solar stocks have had a rough year broadly. The Invesco Solar ETF (TAN) has fallen 43% in that time. FTC Solar shares are down a whopping 83%. FTCI YTD mountain FTCI in 2023 — Fred Imbert