Monday's analyst calls: 30% upside for GM, Carvana upgrade, Throw in towel on this EV play

Published Mon, Dec 4 20236:04 AM ESTUpdated Mon, Dec 4 20238:38 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 posts.) So far Monday morning there is a big auto stock upgrade and a big beverage downgrade, among other calls. Check out the latest calls below: 8:37 a.m. ET: Bank of America upgrades Oneok, says market is underappreciating 'deal synergies' Bank of America upgraded shares on Oneok to a buy from neutral rating, saying that the market is underappreciating the midtsream service provider's "deal synergies" and the uptick in free cash flows resulting from its merger with Magellan Midstream Partners. "OKE now owns both NGL and refined products pipe systems with pricing power and high FCF conversion," wrote analyst Neel Mitra. "We think the combination adds a conservative $750mm of annualized cost ($150mm) and commercial synergies ($600mm) through YE26, $2.2bn of nominal cash tax savings through '27, and a lower OKE cost of capital with MMP's lower beta, demand-pull refined products system." The firm also expects the company to increase its dividend by 5% annually and accumulate $5 billion in free-cash flow dividends through 2027 as it hits its 2024 target leverage ratio. "We expect the dividend growth will attract income investors, as OKE has not meaningfully increased its dividend since '20," he said. Mitra lifted the firm's price target to $83 from $72 a share, reflecting about 19% upside from Friday's close — Samantha Subin 8:35 a.m.: Keybanc downgrades United Rentals after 41% year-to-date rally Lofty expectations could be the downfall of United Rentals , according to Keybanc Capital Markets. The firm downgraded shares of the equipment rental company to sector weight from overweight. Shares of United Rentals have rallied 41% just this year alone, which could create difficult future expectations for the stock, said analyst Ken Newman. "Although larger nonresidential construction starts tracked by our Breaking Ground dataset have demonstrated impressive resilience through 2023 against extremely tough prior-year comps, we think it could be difficult to maintain that positive trend into 2024, particularly as forward-looking nonresidential indicators have begun to show sharp decelerations in recent months," he wrote. Any growth expectations may already be reflected in the stock's out-year multiples, he added. Additionally, Newman said that plateauing spot rates provide yet another limit on forward margin expansion. "We think NT buy-side expectations for rental revenue growth remain high, and we think the combination of moderating rental rates, normalizing used equipment sales, and the potential for further deceleration in overall project activity could limit out-year gross margin and multiple expansion," he wrote. Newman clarified that he would need to observe clearer acceleration in earnings and margins growth before becoming bullish on the stock once again. — Lisa Kailai Han 8:21 a.m. ET: Wells Fargo upgrades CyberArk Software, sees 24% upside ahead CyberArk Software is poised to capitalize on recent data breach activity and the changing competitive landscape, Wells Fargo said in a note Monday. The bank upgraded the stock to overweight from equal weight and upped its price target to $250 from $166, suggesting 24% upside from Friday's close. Recent high-profile breaches have highlighted the importance of privileged controls and CyberArk Software is the "clear leader" in the privileged access management (PAM) market, analyst Andrew Nowinski wrote in a note to clients. The cybersecurity company is also seeing strong demand in its non-PAM solutions, he said."We believe CyberArk is one of the few companies that can maintain 40%+ SaaS growth while expanding OM to mid-teens," Nowinski said. Shares are up 55% year to date. —Michelle Fox 8:07 a.m. ET: Truist upgrades CNX Resources Truist upgraded shares of CNX Resources , saying that the natural gas company's new division could provide a much-needed catalyst for shares. "We expect investor sentiment to remain depressed over the next few months in the gas space, and anticipate the company's strong hedging profile to insulate the name, while still providing investors exposure to longer-term gas asset upside," wrote analyst Bertrand Donnes in a Sunday note. According to the firm, the natural gas company's New Tech line could serve as a non-gas related catalyst that helps investors ride out a gloomy period for sentiment as prices decline. "With few concrete details unveiled for CNX's New Tech line, we think the company will be able to continue to shift focus towards the incremental FCF in '24 along with our expectation for even higher levels in '25+," he wrote. Along with the upgrade, Donnes lifted the price target to $27 from $20 a share, representing 28% upside from Friday's close. — Samantha Subin 7:48 a.m. ET: Evercore ISI downgrades Fisker: 'Time to throw in the towel' Fisker faces a highly precarious year ahead on execution, brand risk and capital dilution after reducing its production guidance again, according to Evercore ISI. Analyst Chris McNally downgraded the electric vehicle maker to in line from outperform, and slashed the stock price target by $4 to $2, which implies 26% upside from Fisker's last closing price of $1.58. FSR YTD mountain Fisker YTD The downgrade is due to Fisker slashing its production guidance to 10,000 vehicles from 13,000 to 17,000 vehicles just three weeks ago."We know when it's time (way overdue) to throw in the towel," McNally wrote.- - Spencer Kimball 7:22 a.m. ET: Morgan Stanley rearranges bank ratings, shifts U.S. bank outlook Morgan Stanley is shifting its view on two key U.S. bank stocks heading into the new year. The firm upgraded shares of East West Bancorp in a Monday note, and raised its price target to $76 per share from $66, equating to about 16% upside. Morgan Stanley dimmed its view on Citizens Financial , downgrading the stock to equal weight from overweight but maintained its $31 per share price target, implying roughly 9% upside. East West Bancorp stock has ticked down 0.3% from the start of the year, while shares of Citizens have slipped nearly 28%. Analyst Manan Gosalia labeled East West Bancorp as a "high-quality bank at an enticing discount," and noted its "capital strength and differentiated customer base creates the foundation for operational outperformance in light of a wide range of banking industry headwinds in 2024." The analyst underpinned the downgrade on Citizens stock to pressure to the bank's net interest margin in the short-term, which could decline further if interest rates remain elevated for longer. — Brian Evans 7:15 a.m. ET: Piper Sandler names Nvidia top pick, highlights attractive multiple and valuation Piper Sandler says Nvidia is the premier A.I. stock play. The firm made the chipmaker its top large cap pick on Monday, and reiterated an overweight rating alongside a $620 per share price target. Piper Sandler's forecast implies nearly 33% upside from Friday's $467.65. Nvidia stock has climbed 22% from the start of the year. Analyst Harsh Kumar highlighted Nvidia's competitive edge over peers thanks to both strong software offerings and its artificial intelligence exposure that will grow the company's "already large TAM [total addressable market]." "Given the dominance of NVDA in its core hardware competencies there is no better company to manage the infrastructure software layer," Kumar said. The analyst noted that the emergence of a new China chipset could drive revenue beginning in the forthcoming April quarter from $2.5 billion to $3 billion per quarter. -- Brian Evans 6:22 a.m. ET: Wells Fargo downgrades Lululemon Wells Fargo is moving to the sidelines on athleisure brand Lululemon after a strong year due to a more muted growth outlook. The firm downgraded the retailer to equal weight from overweight on Monday and removed the stock from its top picks list, but maintained its $445 per share price target. Wells' forecast implies about 5% downside from from Friday's $466.61 close. Lululemon stock is up about 46% from the start of the year. Analyst Ike Boruchow says previous positive catalysts, including a normalization of inventory and overseas growth, have already played out meaningfully. Instead, the analyst added, "laggard names with 'easy' productivity/margin stories and depressed valuations into 2024 are the stories to own." "[We] are taking our chips off of the table following a solid run YTD," Boruchow said. — Brian Evans 6:18 a.m. ET: Carvana upgraded by JPMorgan Carvan (CVNA) was upgraded to neutral from underweight by JPMorgan's Rajat Gupta, citing progress made on cutting costs and improving productivity. "The known unknowns around the CVNA story are better appreciated by investors today in our view and it is possible CVNA can execute its way through this uncertain macro and used car industry phase in a way that limits downside to near- and medium-term estimates," stated the Monday note. Still, JPMorgan believes most investors will "remain on the sidelines" until the used car market recovers and Carvana can improve its cash flow generated per unit. As business boomed during the pandemic, Carvana became a Wall Street darling with the stock soaring. Then the shares lost 97% of their value last year. The stock is up 9% in the last month, coinciding with a rebound in the overall market. The analyst raised his price target from $25 to $40, which represents 14% upside. —John Melloy 6:00 a.m. ET: Deutsche Bank downgrades Anheuser-Busch as stock is already 'fairly valued' Deutsche Bank says the valuation of Bud Light maker Anheuser-Busch InBev has little room to expand further. The firm downgraded the beer behemoth to hold from buy in a Monday note, and lowered its price target on European listed shares to €58 from €61, or about 0.4% downside from Friday's €58.25 close. Shares have added roughly 4% from the start of the year. "We continue to see ABI's broadly EM focused sales exposure as attractive combined with the company's market leading market share positions," analyst Mitch Collett said. "However, with the shares trading on a CY24 P/E of 17.3x (an 18% discount to European Staples but a 3% premium to European Beverages) and offering a FCF yield of 5.6% we see the shares as broadly fairly valued for now." Bud's U.S. shares were slightly lower in premarket trading. —Brian Evans 5:40 a.m. ET: GM upgraded by Mizuho Securities Mizuho Securities thinks General Motors stock has reached a bottom and is poised for growth as the company turns a corner after settling a pay dispute with the United Auto Workers union. The firm upgraded the legacy automaker to buy from neutral in a Sunday note, and raised its target price to $42 per share from $38. Mizuho's forecast implies nearly 30% upside from Friday's $32.36 close. GM YTD mountain GM YTD GM stock has slipped roughly 4% from the start of the year. "We have noted earlier that GM offers the broadest portfolio in North America, with a full range of SUVs, Pickups, Commercial Vehicles, Vans and EVs with a key focus on the higher growth SUV and Pickup Truck market in N.A.," analyst Vijay Rakesh said. Rakesh also pointed to key catalysts for GM's potential stock turnaround, including a "refreshed" electric vehicle strategy, a pause in the company's Cruise segment investments as well as plans for a $10 billion in stock buybacks. Rakesh also noted the UAW cost dispute has largely abated and the planned wage increases will be offset by about $2 billion in cost reductions elsewhere. —Brian Evans