Wednesday's analyst calls: BofA upgrades generator stock, ESPN Bet upside

Published Wed, Nov 15 20235:46 AM ESTUpdated Wed, Nov 15 20239:39 AM EST

(This is CNBC Pro's live coverage of Wednesday's analyst calls and Wall Street chatter. Please refresh every 20-30 minutes to view the latest posts.) Wednesday's batch of analyst research included an upgrade to a generator stock and a downgrade to a solar name. Bank of America raised its rating on Generac to neutral from underperform, saying the stock is "increasingly de-risked." Meanwhile, JPMorgan downgraded Canadian Solar to underweight, noting its near-term outlook is murky. Bar Elsewhere, Barclays maintained an overweight rating on Penn Entertainment due to a possible boost from the ESPN Bet launch. Morgan Stanley also reiterated DraftKings as overweight , noting its bull case was within reach. Check out the latest calls and chatter below. 9:39 a.m. ET: Barclays upgrades Wix, says it's 'worth stepping in here' Barclays is bullish on the website building service Wix , thanks to growth in its partners program, AI tools and margins. The firm upgraded the stock to overweight from equal weight on Wednesday and raised its price target to $130 from $105. That implies a 40% increase in its closing price from Tuesday. "We now view WIX as the favored OW name within our web tools coverage as in our view it has the most attractive risk/reward from here," Barclays analyst Trevor Young said. "Partners is scaling well; few competitors address this channel effectively. AI tools could help WIX take price in 2024. [There's] high conviction in 25% free cash flow margin by 2025, and we think that could be seen sooner … [It's] worth stepping in here." Young said the firm sees Partners, Wix's loyalty program, as an engine for the stock for the next few years. Additionally, Wix's use of AI could help differentiate its suite of web tools, which he said had been perceived as commoditized. AI tools could lead to price increases next year. Young also noted the company's strong growth and margins, a planned $500 million buyback and attractive valuation. "Our concerns on reaching 25% margin in 2025 have lessened given strong progression in 2023," he said. "We think WIX could see mid-20s margin in 2H24, and further upside in 2025 if they maintain cost discipline." — Tanaya Macheel 8:44 a.m. ET: Bank of America names Netflix a top pick Bank of America added Netflix it its "best investments" ideas list Wednesday and reiterated a buy rating on the streaming giant. Shares have added nearly 9% from the start of the month, building off of momentum from an earnings beat last month that also saw the company surpass subscriber growth expectations. JPMorgan is also growing more bullish on the stock, with analyst Doug Anmuth reiterating a buy rating and raising his price target in a Nov. 10 note to $510 per share, or roughly 14% upside from Tuesday's $448.65 close. — Brian Evans 8:43 a.m. ET: SolarEdge might have a product failure problem, Barclays says SolarEdge may have problem with its products failing which could have a negative impact on its market share, according to Barclays. Warranty accruals have increased as a percentage of the company's cost of goods sold, rising to 14.6% from 11% since the fourth quarter of 2022, according to the bank. And cash outflows for product replacements have more than doubled to $58 million from the low-to-mid $20 million range since the second quarter of 2022. This could be impacting the inverter manufacturer's gross margins, which are forecast to decline from 20.8% in the third quarter of 2023 to a range of 5% to 8% in the fourth quarter. It is possible product quality issues have played a role in SolarEdge losing market share since 2019, Barclays said. The installers probably do not want to deal with the reputational impact and red tape associated with replacing SolarEdge equipment. "This could be enough to incentivize them to switch products," wrote analyst Christine Cho. — Spencer Kimball 8:29 a.m. ET: Deutsche Bank lowers price target on buy-rated Disney Deutsche Bank is bullish on Disney's long-term growth but lowered its 2024 earnings estimates on the company. Analyst Bryan Kraft maintained his buy rating on the media conglomerate but lowered his price target by $5 to $115, which still suggests more than 26% upside for the stock. The price target cut reflects the firm's lowered forecast on Disney's entertainment sector, Kraft said, given the higher marketing costs needed to support the Disney+ international advertising tier launches and increased content amortization with its direct-to-consumer offerings. Momentum in international parks and cruises, as well as new attractions next year, could provide upside to the stock especially if macroeconomic conditions don't weigh on the company, the analyst added. "The company has turned a corner, shifting from four consecutive quarters of flat to down OI growth, to solidly positive OI growth in F4Q that should continue in F2024 and F2025," Kraft said. — Pia Singh 8:19 a.m. ET: V.F. Corp could see a 'profit inflection' ahead, JPMorgan says The outlook for V.F. Corp — the apparel company behind The North Face and Vans — is rosier than it has been, according to JPMorgan. Analyst Matthew Boss upgraded shares to neutral from underweight, saying Wednesday the company could see a bump in profits that's bolstered by the chief executive's focus on cost savings. "We see a profit inflection over the next 12-18 months supported by CEO Darrell's cost savings program and self-help gross margin drivers, in addition to a focus on deleveraging the balance sheet, supporting a more balanced risk/reward," Boss wrote. The apparel stock has underperformed this year as V.F. Corporation struggled with macro challenges including higher supply chain costs and promotional activity. It's down more than 40%. But the analyst's December 2024 price target of $19 implies the stock could jump more than 20% from Tuesday's close. Shares are up more than 3% in Wednesday premarket trading. — Sarah Min 7:44 a.m. ET: ESPN Bet launch provides upside for Penn, Barclays says Tuesday's launch of ESPN Bet presents a catalyst for gambling stock Penn Entertainment to rebound, according to Barclays. Analyst Brandt Montour said in a note to clients Tuesday night that new online sportsbook checked enough boxes on its first day and has a path to further improvement. "Bottom line, we think the 'good enough' quality of this app, combined with a ramping ESPN-led marketing campaign and trial promos, will be enough to garner a solid boost to market share, a chunk of which will likely be temporary. More important for us is how fast ESPN and PENN can roll-out media/content integration (ultimately ESPN BET's best shot at true product differentiation), but we thought today's launch was a solid first step," the note said. Penn doesn't need ESPN Bet to be a home run because its stock price doesn't "reflect even moderate success of ESPN BET," the note said. Montour has an overweight rating on Penn, with a price target of $32 per share. That is roughly 33% above where the stock closed Tuesday. Penn's stock is down about 19% year to date. — Jesse Pound 7:02 a.m. ET: Guggenheim expects limited upside from Saleforce's third-quarter results Guggenheim thinks a lack of upside to Salesforce's third-quarter revenue could hinder forward guidance. "Based on the numerical setup, we believe F3Q24 consensus subscription (+11.9%) and total revenue (+11.2%) growth present limited upside as it implies 10% New ACV growth, which seems like a stretch given our survey results and channel checks," analyst John DiFucci said. The analyst added that Salesforce will still find success growing profit, albeit over the long-term. "We believe CRM can continue to increase profit metrics over time, perhaps not every quarter, but there's probably still a lot of room to wring inefficiencies out of this model," he said. The cloud-based software firm will report quarterly results on Nov. 30 after the bell. Shares have added more than 66% this year. Analysts polled by FactSet forecast an adjusted $2.06 per share on $8.71 billion in revenue. — Brian Evans 6:50 a.m. ET: Cantor Fitzgerald downgrades Bristol-Myers Squibb Cantor Fitzgerald thinks its time to move to the sidelines on Bristol-Myers Squibb . The firm downgraded the pharmaceutical stock to neutral from overweight and lowered its price target to $55 per share from $68. Cantor's forecast implies roughly 9% upside from Tuesday's $50.52 close. "We've been hoping things would turn around for a while now, but the new launch thesis just hasn't materialized - and there's no line of sight to restoring investor confidence in the new product launches/pipeline," analyst Olivia Brayer said. The analyst added that the slate of product launches could improve and underpin upside for the stock, but that is more likely to materialize over the long-term. Bristol-Myers Squibb has slipped nearly 30% year to date. — Brian Evans 6:48 a.m. ET: Bank of America upgrades Generac to neutral, says stock looks 'increasingly de-risked' Bank of America feels comfortable letting up on some if its cautiousness toward Generac . The bank upgraded shares of the backup power company to neutral from underperform in a Wednesday note and increased its price target to $110 per share from $76. BofA's forecast implies about 0.3% upside from Tuesday's $109.62 close. "Unlike our resi components coverage, which is experiencing contracting end customer demand against elevated channel inventories, GNRC is farther along in its channel destock cycle," analyst Julien Dumoulin-Smith said. "With greater visibility into its channel, we argue GNRC is relatively better positioned than many product businesses in our coverage. After a refreshed look at the business, we see fewer lingering risks into 2024 than previously understood." Generac shares have lagged this year, rising just 9% in that time. GNRC YTD mountain GNRC in 2023 — Brian Evans 6:13 a.m. ET: Wells Fargo initiates Warner Music Group stock at equal weight, says more clarity is needed Wells Fargo said Warner Music Group investors need more clarity on the company's tech investments. The firm initiated coverage of the record label conglomerate stock with an equal weight rating and a $35 per share price target, or roughly 6% above Tuesday's close. Shares have slipped more than 5% in 2023. "We think the new leadership will focus on tech investments to drive efficiency/effectiveness to reverse recent share losses, which could limit NT margin expansion but could also accel LT growth," analyst Omar Mejias said. "It's very much a tech way of approaching the business (vs. say more A & R), adding risk and reward. Given the newness of the team we prefer to take a wait-and-see approach, but could quickly become supporters of the initiatives if they look to be proving out." — Brian Evans 5:50 a.m. ET: JPMorgan downgrades Canadian Solar, says near-term looks 'less favorable' JPMorgan said the short-term outlook for solar module stock Canadian Solar will be choppy, and it's unclear when shares will start growing again. The bank downgraded the Canadian Solar to underweight from neutral in a Wednesday note and lowered its price target to $22 per share from $32. JPMorgan's forecast implies roughly 2% upside from Tuesday's $21.59 close. Shares have slipped more than 30% this year. "While the solar industry clears channel inventory over the coming quarters in certain markets (Europe, US), we expect other areas of the value chain which have relatively more pricing power (e.g. trackers, inverters) to recover sooner than modules, leading us to a relatively less favorable view towards CSIQ near-term," analyst Mark Strouse said. The analyst added that higher interest rates could remain a headwind to channel inventory as well as steeper competition. "Over time, we expect CSIQ to continue to gain market share, but we believe risk-reward is unfavorable until near-term visibility improves," he said. — Brian Evans 5:45 a.m. ET: Morgan Stanley reiterates DraftKings as overweight, says bull case possible Morgan Stanley analyst Stephen Grambling reaffirmed his overweight rating on DraftKings a day after the sports betting company held an investor day in which it issued bullish long-term targets. "DKNG's Investor Day outlined EBITDA targets above consensus, with details affirming our more positive view," Grambling wrote. "Importantly, the outlook was built off of several assumptions that could prove conservative or provide flexibility to reinvest: structural hold, market share, and promos." The analyst noted that the guidance given confirms his bull case for the stock, which consists of a $70 price target. That forecast implies upside of 89%. DraftKings shares have been on fire this year, surging 225%. DKNG YTD mountain DKNG in 2023 — Fred Imbert 5:45 a.m. ET: Barclays initiates American Express as buy, lauds long-term growth outlook American Express will find long-term success as the company appeals to millennials and Gen Z, according to Barclays. The bank initiated coverage of the credit card giant with an overweight rating and a $184 per share price target — which implies more than 17% upside from Tuesday's close. "We view AXP as the best card issuer and we are positive on the longer-term growth prospects around the company's penetration of the Millennial and Gen Z cohorts," analyst Terry Ma said. "Bears will argue that revenue growth has been decelerating and NII is becoming a bigger contributor to AXP's algorithm. But revenue growth has stabilized over the last two quarters and credit performance remains below pre-pandemic levels." American Express shares have lagged the broader market this year, rising just 6.2% versus the S & P 500's 17% jump. AXP YTD mountain AXP in 2023 — Brian Evans