Wednesday's analyst calls: Ford downgrade; crypto mining stock gets a big upgrade

Published Wed, Jan 17 20245:42 AM ESTUpdated Wed, Jan 17 20248:38 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.) Early analyst calls on Wednesday included a downgrade to a legacy automaker and a rerating for a crypto mining stock that won big last year. UBS lowered its rating on Ford Motor, calling for slim gains ahead. BTIG, meanwhile, upgraded Marathon Digital, with the firm estimating major gains ahead. Check out the latest calls and chatter below. All times ET. 8:38 a.m.: Netflix is the 'king in streaming,' Bank of America says It's time to acknowledge that Netflix has "won" the streaming wars ahead of its latest earnings results, according to Bank of America Securities. Analyst Jessica Reif Ehrlich raised her price objective on the stock, and reiterated a buy rating, saying the streamer has outpaced the competition amid a tougher environment for media companies. "It is becoming increasingly clear that Netflix has won the 'streaming wars,'" analyst Jessica Reif Ehrlich wrote in a Wednesday note titled "Crowning the king in streaming." "Over the last 18 months, changing market dynamics, investor focus on profitability, and the various talent strikes have led several media companies to re-evaluate their streaming aspirations." "These changes (e.g., reducing content spend/output, increasing third-party licensing) have been a tacit acknowledgement that not all media companies will be able to achieve Netflix's global reach and scale in streaming," Ehrlich wrote. "Overall, we believe that this is a win-win for the industry and Netflix." The analyst raised her price target to $585 from $525 previously, implying more than 20% upside from Tuesday's closing price. Netflix shares are down 1% this year. Bank of America Securities was not the only firm bullish on Netflix. Wells Fargo, which has an overweight rating on the stock, raised its net adds estimate to 10.4 million from 9.5 million for the fourth quarter. KeyBanc Capital Markets also has an overweight rating on Netflix, and raised its price target to $545 from $525 per share. Netflix reports fourth-quarter earnings next week, on Jan. 23. — Sarah Min 8:35 a.m.: UBS stands by sell rating on Caterpillar due to 'overly optimistic' analyst expectations Caterpillar is due for some near-term pain, according to UBS. The bank reiterated its sell rating on the equipment manufacturer, simultaneously reducing its price target to $209 from $210 on the back of lower earnings and an unchanged multiple. This new price estimate implies a more than 27% decrease from the stock's Tuesday closing price of $287.23. UBS analyst Steven Fisher believes that Wall Street analyst estimates for oil and gas companies are "overly optimistic." While future growth and margin expansion have been seemingly priced into Caterpillar's current valuation, Fisher believes that margins will actually contract as analyst expectations are finally tempered. "Whereas consensus expects CAT's Oil & Gas revenue to grow 9% in 2024, we expect a 5% decline," he wrote. "As CAT trades on momentum, we expect the steps back for sales and margins in 2024 to depress investor enthusiasm and lead to multiple contraction, and see ~40% potential downside should this plays out." Shares of Caterpillar have slid 2.9% this year. — Lisa Kailai Han 8:16 a.m.: Wolfe Research upgrades Instacart on potential Uber merger A potential merger with Uber could lead beaten-down Instacart shares to outperform, according to Wolfe Research. Analyst Deepak Mathivanan upgraded shares to outperform from peer perform and assigned a $35 price target, which suggests shares could gain 46.6% since Tuesday's close. "We think the risk/reward is attractive at current levels and see several paths for shares to Outperform, including a potential merger with UBER – which is the crux of this report," Mathivan wrote in a Tuesday note. "We believe CART has many levers to improve monetization … furthermore, we think CART's current asset value is too cheap." The analyst believes that Instacart can improve its efficiency on logistics and advertising to attain "healthy revenue growth," leading margins to improve over the next several years. The potential merger with Uber, he added, could accelerate efforts in a $1 trillion grocery space and help Uber sustain long-term growth given that grocery is a key category for the company. "Financial synergies" on revenues and costs are significant while regulatory risks look minimal, given that Uber has less than 1% of current market share while Instacart has 18%, Mathivan added. — Pia Singh 8:07 a.m.: TD Cowen downgrades Fisker, says its growing pains continue to grow TD Cowen downgraded electric vehicle player Fisker to market perform from outperform, saying its growing pains continue to grow. "A shift in distribution strategy, continued delivery issues, missed timelines and an overall softening in the overall EV market have taken the luster off of this once shiny new vehicle manufacturer, in our view," the Wall Street firm said. The auto stock is down nearly 4% in premarket trading Wednesday. The stock has shed 44% in January alone, following a 76% loss in 2023. TD Cowen noted that the most recent pain point for Fisker has been the news of a possible regulatory probe stemming from complaints associated with the Ocean's braking system. — Yun Li 8:05 a.m.: Bank of America says Dutch Bros. can jump more than 70% Coffee chain Dutch Bros. could be poised for a makeover under its new CEO that makes investors big winners, according to Bank of America. Analyst Sara Senatore said in a note to clients that the company is a key idea for 2024 in the restaurant sector, in part because of a recent CEO change. "We believe that arrival of new management at companies with strong – but arguably undermanaged -- brands can create significant value. We expect the marketing, real estate and operational strategies brought to bear by CEO Christine Barone and her new team (CMO, COO, CFO) will serve as catalysts for accelerating same store sales." Barone joined Dutch Bros. in 2023, and previously worked at True Food Kitchen and Starbucks. Bank of America has a price target of $48 per share for Dutch Bros., which is more than 70% above where the stock closed on Tuesday. — Jesse Pound 7:50 a.m.: Morgan Stanley receives KBW downgrade KBW thinks Morgan Stanley's wealth management segment will take time to meaningfully add to the stock's growth and will remain a drag in the near-term. The firm downgraded the investment bank to market perform from outperform and lowered its target price from $91 per share from $102. KBW's forecast implies about 6% upside moving forward from Tuesday's $85.97 close. While analyst David Konrad noted Morgan Stanley notched a "solid quarter" from Tuesday's results, the firm's wealth management business will "likely take time to translate into potential growth in equities AUM." "Although we believe ultimately this liquidity will move into equities and drive improved margins and growth, it is expected to take time and management expects mid-20% WM pretax margins near term," the analyst added. "As a result, the stock has fewer catalysts near term until there is a firm line of sight to 30% margins and a 20% ROTCE [return on tangible common equity]." — Brian Evans 7:44 a.m.: Deutsche Bank downgrades Rivian over risk to 2024 expectations Rivian still has more questions than answers in 2024, according to Deutsche Bank. The firm downgraded the electric vehicle maker to hold from buy in a Wednesday note, and lowered its price target to $19 per share from $20. Deutsche's forecast implies roughly 7% upside from Tuesday's $17.82 close. "We think there could be downside risk to 2024 expectations around Rivian's volume and gross margin, and while the planned R2 unveil could help sentiment, there remains many other questions post the announcement including timing of capital needs, production ramp, and profitability," analyst Emmanuel Rosner said. "We expect 2024 volume guidance of just 65k units, amid prolonged factory shutdowns and slow ramp up," the analyst added. Rivian stock has pulled back more than 24% this year. — Brian Evans 7:14 a.m.: D.A. Davidson downgrades Teladoc Health over growth concerns D.A. Davidson said "stalls in growth" in Teladoc Health's main business segments are pushing the firm to the sidelines on the stock. Davidson downgraded the virtual health care stock to neutral from buy and lowered its price target to $22 per share from $33. Davidson's forecast implies nearly 9% upside from Tuesday's $20.19 close. Teladoc's two largest core businesses are comprised of Health Integrated Care and BetterHelp. "The company is the definitive leader in facilitating a diverse group of virtual health services, with the scale to provide them on a global stage," analyst Gil Luria said. "We're given pause, for now, by stalls in growth amongst the two core business drivers as Teladoc manages the platform built from large acquisitions." "We are, however, impressed with the [free cash flow] accretion and see upside to shares should it sustainably grow," the analyst added. "All considered, we like the market and the category-leader pieces of the thesis, but are balanced towards growth and execution for now." Teladoc has slipped more than 6% this year. Shares have fallen for three years in a row. TDOC 5Y mountain TDOC 5-year chart — Brian Evans 6:48 a.m.: UBS upgrades Visteon as near-term headwinds are priced in UBS thinks Wall Street's concerns surrounding a slower electric vehicle penetration are overdone for Visteon . The firm upgraded automotive electronic equipment supplier stock to buy from neutral on Monday, and increased its price target to $145 per share from $143. UBS' forecast implies nearly 26% upside from Tuesday's $115.46 close. "We understand investor concerns over VC's 2026 $5.5bn sales target amid a slowdown in BEV penetration. While we don't believe that target is achievable, we think expectations have gotten too bearish," analyst Joseph Spak said. "We believe the market is pricing in 2026 sales closer to $4.3bn." "Resetting 2026 could remove an overhang and allow the market to focus on a still attractive growth story," Spak added. Visteon stock has slipped roughly 8% in 2024. — Brian Evans 6:14 a.m.: Barclays downgrades SolarEdge, says consensus estimates need reassessment Barclays is moving to the sidelines on SolarEdge despite shares trading at a premium to peer Enphase Energy. The firm downgraded the solar stock to underweight from equal weight on Tuesday, and lowered its price target to $50 per share from $74. Barclays' forecast implies more than 31% downside from Tuesday's $72.83 close. "As we have parsed through our numbers, we think the road to recovery will be tougher for SEDG from the perspectives of top line, gross margins, and market share," analyst Christine Cho said. "Lower demand and regulatory changes have led to elevated levels of channel inventories, which we believe will continue to slow growth and also contribute to lower gross margins at SEDG relative to peers," Cho added. SolarEdge has slumped more than 22% in 2024. — Brian Evans 6:01 a.m.: JPMorgan downgrades Morgan Stanley after the firm warns of 'major downside risks' in quarterly results Morgan Stanley is likely fairly valued with limited upside moving forward, according to JPMorgan. The firm downgraded shares of the investment bank to neutral from overweight in a Wednesday note. JPMorgan also lowered its price target on Morgan Stanley to $87 per share from $94. That forecast implies upside of just 1.2%. The move comes after Morgan Stanley CEO Ted Pick warned last week that a potential weakening of the U.S. economy coupled with geopolitical risks served as "major downside risks" moving forward. The bank also posted mixed quarterly results. "While MS offers significant gearing to improvement in capital markets activity, we reflect this in our estimates with IBD revenues +47% YoY in our 2024E forecasts and we would seek any further upside to this exposure through GS (OW) which is our preferred name in US IBs while we prefer UBS' global exposure for WM gearing," analyst Kian Abouhossein said. Morgan Stanley stock has slipped nearly 8% this year. — Brian Evans 5:42 a.m.: UBS downgrades Ford, says stock has limited upside moving forward UBS thinks shares of legacy automaker Ford are fairly valued and that the company will have a more difficult road ahead compared to peers. The firm downgraded Ford to neutral from buy in a Tuesday note and reiterated a $12 per share price target. UBS' forecast implies about 5% upside from Tuesday's $11.46 close. "While Ford is subject to the same industry headwinds as other automakers (pricing, affordability, labor, investment) and is trying to increase their capital efficiency, we believe F may have more to reverse vs peers considering execution and quality challenges," analyst Joseph Spak said. Spak added that while he forecasts more potential for earnings growth on Ford compared to peer U.S. automaker General Motors, he cautioned that chief executive Jim Farley's company blueprint "could take a number of years for the benefits of those plans to be realized." Ford shares have struggled this year, losing 6%. The stock also lagged in 2023, rising just 4.8%, while the S & P 500 jumped more than 20%. — Brian Evans 5:42 a.m.: BTIG upgrades Marathon Digital Crypto mining company Marathon Digital is coming off a banner year, and BTIG thinks there are more gains ahead. Analyst Gregory Lewis raised his rating on Marathon Digital to buy from neutral with a price target of $27 per share. That forecast implies upside of nearly 52% from Tuesday's close. He cited the recent approval of a bitcoin ETF as a positive catalyst for the company. "The approval comes ~10 years after the first spot ETF was proposed and is another step in BTC's maturation and should pave the way for more institutional capital into the ecosystem," Lewis wrote. "Since launching, these ETFs (initial fees of 0% for the first 6 months to ~1.5%) hold ~$2B in BTC and look to have driven some fund flows away from miners with miners down 20%-30% versus BTC which is down ~5%." "On the back of the weakness in the miners and Marathon's decision to pivot into infrastructure late last year, we upgrade to Buy from Neutral," he added. Marathon rallied more than 586% in 2023 as bitcoin prices recovered. Shares have struggled in early 2024, however, losing 24%. MARA 1Y mountain MARA in past year — Fred Imbert