Tuesday's analyst calls: Bank of America sees Nvidia going to $650, battery stock downgrade

Published Tue, Nov 14 20235:35 AM ESTUpdated Wed, Nov 15 20235:44 AM EST

(This is CNBC Pro's live coverage of Tuesday's analyst calls and Wall Street chatter. Please refresh every 20-30 minutes to view the latest posts.) Tuesday started with Nvidia getting more praise from one analyst, and a battery stock downgrade. Bank of America reiterated its buy rating on Nvidia, citing the announcement of new artificial intelligence products. Meanwhile, Morgan Stanley downgraded Freyr Battery, citing a tough environment for the lithium-ion battery maker. Check out the latest calls and chatter below. 9:28 a.m. ET: Wells slashes Plug Power price target: 'Plug the funding gap' Plug Power will face a $2.5 billion funding gap by 2025 as the hydrogen fuel cell maker burns through cash, Wells Fargo warned. Wells deeply cut its price target for Plug Power to $4 per share from $7 per share prior. The company's cash burn rate was $400 million in the third quarter, according to Wells. Plug's cash burn should slow to $250 million per quarter on lower capital expenditures, but this only gives the company three quarters at most before it has to raise external funding. Wells maintained its equal weight rating on Plug, noting that the company does stand to benefit from robust growth as the hydrogen economy expands. UBS slashed its price target for Plug by nearly 70% to $5.00 from $15.50 prior on spending concerns. The investment bank maintained its buy rating due to international and domestic policy support for clean hydrogen development. "PLUG continues to spend beyond its means and we have seen cash balances dip by $1.7Bn," analyst Manav Gupta wrote. In our view, it would help if management came up with a strong plan to lower cash burn, manage inventory in a better way and how to get to positive gross margin," Gupta wrote. 8:49 a.m. ET: Post-Covid, here are some of the new habits that stuck and what it means for spending The Covid pandemic changed everyone's routine overnight, but years out we're starting to see which habits were brought on merely by circumstances and which ones stuck for the long haul. In a research note, Wolfe Research's Stephanie Roth said 25% of our work days are spent at home so that tech equipment people purchased three years ago may need to be replaced soon. We're also still spending less on dry cleaning and public transportation. "The rise of the day trader helps account for the surge in ETFs at the expense of mutual fund fees," she wrote. Finally, spending has increased on plants, boats, motorcycles, toys and hobby items. "We've all found one COVID hobby we actually like, whether it's boating, biking or gardening," she said. — Christina Cheddar-Berk 8:48 a.m. ET: Barclays upgrades three fertilizer stocks on more favorable potash view Mosaic and Nutrien were double upgraded to overweight from underweight at Barclays owing to the bank's improved outlook for potash prices (especially versus nitrogen). Israel's ICL (also traded in U.S.) was upgraded to overweight from equal weight. Mosaic's price target rose 5% to $42, Nutrien's by 6% to $68 and ICL's was cut 7% to $6.50. More negatively, CF Industries was cut to underweight from equal weight (price target unchanged at $85), and Corteva to equal weight from overweight (target slashed 24% to $50 from $66). "Overall, we see more relative upside in companies with exposure to Potash, as we move into a new ag season," analyst Benjamin Theurer wrote Tuesday. The moves also came "in anticipation of a likely lower corn crop in Brazil and an expected switch in the North American planting back to soy and out of corn." — Scott Schnipper 8:29 a.m. ET: Roth MKM initiates Marvell Technology at buy Semiconductor company Marvell Technology is poised to benefit from the demands created by artificial intelligence, according to Roth MKM. "We believe MRVL's infrastructure market position is also levered to high-performance AI data center infrastructure demand. Along with stronger processing and memory requirements, these advanced data center architectures also require higher bandwidth connectivity, higher performance storage, and improved security," analyst Suji Desilva said in a note to clients. Desilva initiated coverage of Marvell with a buy rating, pointing out that the company is already seeing strong growth from its AI-related businesses. "In its most recent quarter, MRVL's cloud AI (+20% q/q) sub-segment saw above-average growth and the company is on track to exceed its previously guided $800M AI revenue run-rate," the note said. Desilva set a price target of $60 per share for Marvell, which is 12% above where the stock closed Monday. — Jesse Pound 8:27 a.m. ET: Tesla a leader in AI, which could expand its self-driving business, says Goldman Sachs Tesla is well positioned to be a leader in artificial intelligence, which could help expand its full self-driving (FSD) business for its own fleet of vehicles, according to Goldman Sachs. "While we believe that it's too early to ascribe material market cap to AI licensing/services businesses (either selling/licensing FSD to other auto OEMs or providing Dojo as an AI training tool for other companies) given the high degree of competition … these businesses could be a source of upside depending on how well Tesla executes," analyst Mark Delaney said in a note Monday. He reiterated his neutral rating and $235 price target, which implies 5% upside from Monday's close. "We believe the market opportunity would be large," Delaney said. An upside case for FSD could be $50 billion to $100 billion a year of revenue from Tesla's fleet by 2030, up from Goldman's calculations of $1 billion to $3 billion right now, he added. Overall, the total addressable market for the automotive software and services industry could be $1 trillion long term, he predicted. Shares of Tesla are up more than 80% year to date. — Michelle Fox 8:26 a.m. ET: Expect 'modest downside risks' from Target ahead of third quarter results, Bank of America says Target's third-quarter results could show the retail giant continuing to contend with macroeconomic challenges and higher food inflation, according to Bank of America. "We see modest downside risk to our same-store sales forecast of -5% given moderating Food at Home inflation, potential ticket pressure from TGT's Affordable Joy initiative, slower-than expected traffic recovery, and other macro challenges impacting discretionary spending (e.g. student loan payments, inflation, interest rates, etc.)," analyst Robert Ohmes said in a Tuesday note. Target will report third-quarter results on Wednesday before the opening bell. Analysts polled by FactSet forecast an adjusted $1.47 per share for the quarter on $25.28 billion in revenue. — Brian Evans 7:56 a.m. ET: Wells Fargo sees more AI upside for Microsoft The artificial intelligence-fueled boom for Microsoft is far from done, according to Wells Fargo. Analyst Michael Turrin said in a note to clients that Microsoft's Ignite event on Wednesday should give new details about Microsoft's AI projects. "We're anticipating a series of AI related product announcements (100+ expected) to come from Ignite, MSFT's annual IT conference. Most prominently is MSFT's suggested efforts around building AI chips, 'Project Athena', which could reduce reliance on NVDA for GPU capacity and potentially unlock further margin opp LT," the note said. Turrin raised his price target to $425 from $410. The new target is nearly 16% above where the stock closed Monday. Shares of Microsoft are up more than 50% year to date. The stock has also found new momentum after struggling in the late summer and is up nearly 12% over the past month. MSFT YTD mountain MSFT in 2023 — Jesse Pound 7:36 a.m. ET: Morgan Stanley initiates Abivax at equal weight Biotech company Abivax has promising upside potential — but investors may want to wait until more "de-risking" occurs, according to Morgan Stanley. Analyst Vikram Purohit initiated coverage on Abivax with an equal weight rating. His price target of $15 implies shares gaining more than 10% from where they closed on Monday. "Pipeline program obefazimod has a novel MOA and has generated encouraging PhII data in UC, but we would expect shares to remain range bound until further de-risking occurs through data updates in 2025," Purohit said in a Tuesday note. Obefazimoid is a treatment for inflammatory bowel disorders, which Purohit believes could become a commercially viable therapy for ulcerative colitis in 2025 if its Phase III trends well. "Abivax's mgt. team brings relevant experience to the field of IBD drug development, and we are encouraged by the proactive steps being taken by the company to help manage placebo responses and trial variability issues that can complicate late-stage IBD trial outcomes," Purohit said. Furthermore, the company's upcoming pipeline diversification in 2024 and 2025 could present tailwinds for shares, he added. The stock began publicly trading on Oct. 20 with an IPO price of $11.60. Shares last closed at $10.50, which represents a 9.5% decline from its listing price. — Hakyung Kim 7:32 a.m. ET: 'Choppy' near-term for Dick's Sporting Goods, says Morgan Stanley Morgan Stanley is lowering its estimates on Dick's Sporting Goods ahead of the company's third-quarter earnings announcement on Nov. 21. The firm reduced its price target by $5 to $145, which implies more than 31% upside from Monday's close, while retaining its overweight rating. It also expects the sports retailer to post a slight earnings per share miss. The "[near-term] stock path looks choppy given continued margin reversion and potentially weaker demand in '24; [long-term] we believe sales/margins can hold above '19," analyst Simeon Gutman said in a Monday note. To be sure, Gutman added that the company is still in a favorable position due to its category dominance and healthy balance sheet. — Hakyung Kim 6:50 a.m. ET: Stifel says buy Vistagen Therapeutics Biotechnology company Vistagen Therapeutics could have a large market opportunity on its hands, according to Stifel. Analyst Paul Matteis initiated coverage on the company with a buy rating and $12 price target. That suggests shares could more than triple in value from Monday's close. "We think the risk/reward here is highly upside-biased into the fasedienol PALISADE-3/4 studies in social anxiety disorder (SAD), reading out in 2025," Matteis said in a Monday note. Fasedienol is a neurosteroid in clinical development for Social Anxiety Disorder. While the analyst noted that studies for anxiety treatments are difficult to execute — with Vistagen already having had a setback in one of its two smaller studies — only one of its two additional anxiety studies has to succeed for it to gain approval. "More broadly, SAD is a very large market opportunity, and at the current VTGN valuation (a discount to many CNS peers), we think the risk/reward has an upside skew ahead of two additional trial readouts in 2025," said Matteis. Shares jumped 2.5% Tuesday before the bell. The stock, however, remains negative 11.6% year to date. — Hakyung Kim 6:36 a.m. ET: JPMorgan downgrades BeautyHealth BeautyHealth will likely have limited upside in the coming quarters amid a rocky period, according to JPMorgan. JPMorgan downgraded shares to underweight from neutral and withdrew its prior price target of $10 on shares. "Even better than expected commentary on underlying market trends won't be enough to offset a significant story as a new management team steps in to lead the company and near-term domestic challenges weigh on results for at least the next 3-6 months," analyst Allen Gong wrote in a Tuesday note. Shares have plummeted more than 54% following its third-quarter earnings announcement Monday after the bell. The company lowered its full-year guidance and posted greater-than-expected impact from challenges with its HydraFacial Syndeo device in the U.S. market, according to Gong. "We see these dynamics significantly limiting upside for the coming quarters with an uncertain outlook after that now that 2025E targets have been cleared, a setup that will likely mean investors won't revisit this name until this period of upheaval is past us," said Gong. — Hakyung Kim 6:28 a.m. ET: Deutsche Bank upgrades Take-Two Interactive Take-Two's risk-reward profile has become more favorable, according to Deutsche Bank. Take-Two recently announced that Rockstar, one of its publishing labels, will release the first trailer for the next Grand Theft Auto title in December. "We believe a major product announcement, such as the highly anticipated trailer for GTA 6, is likely to drive positive investor sentiment and should serve as a catalyst for the stock," analyst Benjamin Soff wrote in a Tuesday note. The firm upgraded the video game company to buy from hold. It also increased its price target by $20 to $175, implying shares could rise 12.9% from Monday's close. "Additionally, as we move into the back half of FY24 and FY25, we would expect to receive initial announcements for other major releases from Take-Two's robust development pipeline (which includes 14 core immersive titles across FY25 and FY26)," Soff said. While management noted it expects slightly lower numbers from net bookings in 2025, Soff said the company's development process and pipeline remains on track. "In light of these announcements, we are now more confident capitalizing our multi- year forecast at a higher multiple based on increased clarity surrounding the magnitude and timing [of] Take-Two's long-term growth opportunity," Soff said. Shares added more than 2% Tuesday before the bell. The stock has surged 44.1% in 2023. — Hakyung Kim 6:02 a.m. ET: Bernstein upgrades Kraft Heinz, says pullback has been 'overdone' Bernstein upgraded Kraft Heinz shares, saying it is better-positioned compared to its food peers in an anti-obesity drug backdrop. U.S. food companies have broadly struggled in 2023, with the sector down 21% year to date. Companies with higher exposure to GLP-1 weight loss drugs have performed the worst in the sector, the firm noted. Analyst Alexia Howard upgraded Kraft Heinz shares to outperform from market perform. She has a price target of $40 on shares, which suggests 20.3% upside potential from where shares closed on Monday. Howard cited the company's "cheap valuation, fair relative positioning in a GLP-1 world given its protein-forward portfolio in the U.S., and an improved business model implemented under [CEO] Miguel Patricio." "With its multiple at an all-time low and a portfolio that is better positioned relative to peers in a GLP-1 world, we see the risk-reward as attractive over the next 12 months," added Howard. Shares gained 1.6% Tuesday during premarket trading. The stock remains down more than 18% year to date. — Hakyung Kim 5:41 a.m. ET: Roth MKM initiates AMD with a buy rating Chipmaker Advanced Micro Devices is a "strong investment opportunity," according to Roth MKM. The firm initiated the stock with a buy rating and $125 price target, which suggests 7% upside from Monday's close. AMD has rallied 80.3% in 2023 amid surging demand for AI chips. "We believe AMD's differentiated portfolio of high- performance compute/networking processors and accelerators represents a strong investment opportunity," analyst Suji Desilva wrote in a Monday note. Desilva cited AMD's growing market share in the cloud server and enterprise markets, as well as strong leverage in AI infrastructure growth. He added that AMD will likely benefit from the cyclical client PC recovery. "While overall consumer demand has remained muted, we nonetheless expect these segments to exhibit a recovery progression over the next several quarters. Accordingly, we expect AMD to report steadily recovering revenue in its client and gaming segment," Desilva said. — Hakyung Kim 5:35 a.m. ET: Morgan Stanley downgrades Freyr Battery Morgan Stanley isn't sure if shares of Freyr Battery can be bounce back amid broader pressures on the battery storage market. "3Q brings a narrative change in FREY's outlook with new risks to tech, strategy and funding that's been appropriately discounted by the stock market. While cash burn is manageable, the stock should trade at discount to cash value until FREY shows progress on its sample cell campaign," analyst Adam Jonas wrote in a Monday note. Jonas downgraded shares to equal weight from overweight. He also slashed his price target to $2 from $13, which suggests 14.3% upside from Monday's close. Investment in Freyr's Norwegian gigafactory Giga Arctic has been paused, and the company seems to be prioritizing U.S. production — which eliminates "some of the most attractive aspects of the original FREY thesis as a 'clean' battery manufacturer," said Jonas. The company's 24M technology customer qualification plant is also seeing many delays, which has contributed to a worsening funding outlook, the analyst added. "There may be a number of factors that ultimately dictate the ability of FREY to raise new capital to commission giga-scale facilities. In our view, the most important of these is execution of the CQP itself. If they can't make cells in an automated way, it may be difficult for FREY to find funding," said Jonas. Shares were trading 2.3% lower Tuesday before the bell. The stock is down nearly 80% year to date. — Hakyung Kim 5:35 a.m. ET: Bank of America reiterates buy rating on Nvidia Bank of America reiterated Nvidia as buy and maintained a price target of $650 per share after the company announced an upgraded version of one of its key AI products. "Importantly, H200 is compatible with its predecessor H100 installations, enabling faster time to market. We view the latter point as critical, as hyperscalers do not need to invest to reconfigure their existing hardware platform, incentivizing customers to remain key partners of NVDA," wrote analyst Vivek Arya. The upgrade "simplicity only adds to the competitive portfolio NVDA holds, which coincides with 1) a leading AI networking platform supporting both Infiniband/Ethernet connections, and 2) a leading software stack, which has already shown abilities to upgrade performance of GPUs already deployed. Nvidia is coming off its ninth straight day of gains, its longest winning streak since March. If the stock rises Wednesday, it would tie a winning run not seen since 2016. — Fred Imbert