Wednesday's analyst calls: Analysts raise Netflix targets, AMD gets an upgrade

Published Wed, Jan 24 20245:46 AM ESTUpdated Wed, Jan 24 20249:23 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.) Big Tech was the focus of Wednesday's early calls. Wall Street analysts reacted to Netflix's fourth-quarter results, which sent shares soaring. The streaming giant posted weaker-than-expected earnings, but paid subscriptions came in above expectations. Elsewhere, Morgan Stanley gave its preview for Apple earnings due out next week. The bank expects the tech giant to report above-consensus results. NewStreet Research also upgraded AMD . Check out the latest calls and chatter below. All times ET. 9:22 a.m.: 'Pulling the Plug': BMO downgrades Plug Power despite rally Plug Power faces a tough road ahead despite positive news from the company's business update this week, according to BMO Capital Markets. Analyst Ameet Thakkar downgraded Plug Power to underperform and cut his stock price target to $2.50, implying 33% downside from Tuesday's close of $3.72. Plug's stock surged 31% Tuesday after management announced they were moving closer to securing a $1.6 billion conditional loan guarantee from the Department of Energy. The company also announced liquid hydrogen production commenced at its Georgia plant. "However, we see increasingly arduous path between now and when and if DOE funding flows," Thakkar wrote in a Tuesday note. Plug's five-to-eight month timeline for securing the loan was optimistic, Thakkar said. The company will likely have to tap some of its recently announced $1 billion at-the-market equity offering program. This will weigh on its shares, Thakkar wrote. The analyst said Plug's results continue to get worse with management indicating fourth quarter revenue is expected to come in at just over $200 million, far less than the company's $530 million guidance as recently as October. Thakkar estimates Plug's 2024 revenue will likely come in at $1.1 billion, less than the company's initial guidance of $1.4 billion. — Spencer Kimball 9:21 a.m.: Barclays downgrades life sciences companies, cites valuation Barclays downgraded the life sciences industry to neutral and Danaher and Thermo Fisher Scientific to equal weight ratings due to valuation concerns. "Given recent run in shares, stocks trade at or above historical premiums to the market, leaving little room for more multiple expansion," wrote analyst Luke Sergott. "Given the macro uncertainty across the end markets, we struggle to see significant EPS upside to current estimates. Despite the industry's recent outperformance, Sergott expects the overall market to decline in the low single as biopharmaceutical end markets recover. "We can get on board with this assumption and hold it ourselves, but whenever a steep recovery becomes consensus and visibility remains subdued vs. what is normal, we see risk of pushouts / slower demand recovery that could lead to downside," he said. "Street estimates are still coming down across most of the group, ultimately making the stocks more expensive." – Samantha Subin 8:15 a.m.: Verizon is 'a big ship' turning around, Daiwa says in upgrade Daiwa upgraded Verizon Communications to outperform from neutral after the communication giant reported a fourth-quarter revenue beat and strong wireless consumer growth Tuesday. "We have a positive impression of 4Q given the strength in VZ's core business (net adds in consumer postpaid phone and total broadband) and the 2024 guide," analyst Jonathan Kees wrote in a note Tuesday. "Like a big ship turning in a different direction, VZ has been in a multi-Q turnaround and is starting to show clear progress and improvement." He said 2024's guidance was more affirmation of continued progress in the company's turnout. Kess raised his price target to $47 from $36, suggesting 11% upside from Tuesday's close. Shares of Verizon are up 12% year to date, after losing 4% in 2023 and 24% in 2022. — Michelle Fox 8:13 a.m.: Citi raises price target for Chipotle, says shares can jump 16% Chipotle Mexican Grill's fourth-quarter earnings results next month will likely reinforce the bull case for the stock, according to Citi. Analyst Jon Tower reiterated a buy rating on the quick-serve food chain, saying a cooling labor market and increasing digital capabilities will support same store sales. Tower hiked his price target to $2,699 from $2,292. That implies 16% upside from Tuesday's closing price at $2,321.82. "We expect 4Q earnings will continue to paint a picture of clear, controllable SSS drivers from here, including: thruput initiatives that will be further helped by an easing labor environment, investments to improve the off-premises/delivery business, and a strong digital platform with growing 1-1 marketing capabilities," Tower wrote. "We see this recipe, along with a push toward 10% unit growth (recent competitive commentary regarding the easing of permitting delays helpful) and easing inflation, as contributing to another year ahead of 20%+ EBIT growth," he added. Chipotle reports fourth-quarter and full year 2023 earnings on Feb. 6. — Sarah Min 8:09 a.m.: Gordon Haskett downgrades Uber, says good news is priced in Uber's stock is nearing a ceiling, according to research firm Gordon Haskett. Analyst Robert Mollins downgraded the stock to hold from buy, saying in a note to clients that Uber has little room for upside and some downside risks. "Uber deserves to trade at a premium to peers; however, with (1) catalysts well appreciated, (2) Street incremental EBITDA margin estimates sitting well above the company's long-term target, and (3) risk of cities following NYC and Seattle in terms of establishing higher mandated wages for app-based delivery workers, we think incremental multiple expansion will be hard fought," the note said. Uber has worked to diversify its business away from pure ride sharing into areas like advertising, but those efforts are well understood by investors, Mollins said. "While ads are a high margin product and Uber has been able to grow its advertising merchant base at an impressive rate over the past few quarters, we believe investors already appreciate that the ads business will continue to grow and lead to incremental profitability," the note said. The downgrade comes after the stock has gained more than 50% since late October. Gordon Haskett has a price target of $66 per share, which is about 2.5% above where the stock closed on Tuesday. — Jesse Pound 7:41 a.m.: UBS downgrades Biogen ahead of fourth-quarter earnings release UBS is cautious on Biogen ahead of its fourth-quarter earnings release next month. The Wall Street bank's Colin Bristow downgraded Biogen to neutral, and lowered his price target, ahead of the Feb. 13 results. His price target, cut to $276 from $311, implies roughly 10% downside from Tuesday's close. Bristow expects revenue will come in line with expectations, while earnings will beat estimates by 8%, but he said he finds it difficult to get excited about the stock. The beat will likely be driven by strength in Skyclarys, a treatment for neuromuscular disorder, that will do little to offset what's expected to be the slow rollout in Alzheimer treatment Leqembi. "We downgraded to Neutral (here) - we like Leqembi and expect it to be the dominant player in the current wave of Alzheimer's treatments but do not expect sufficient acceleration of the launch to move numbers higher over next 12 months," Colin Bristow wrote. Biogen, which is down more than 2% already this year, fell another 1.7% in Wednesday premarket trading. — Sarah Min 7:15 a.m.: The 2024 outlook for Stellantis is uncertain, HSBC says in downgrade Stellantis , an outperformer last year, may have a tougher time in 2024, according to HSBC. Analyst Michael Tyndall downgraded Stellantis to hold from buy, saying near-term uncertainty is clouding the outlook for the automaker. While buyers expect Stellantis will be insulated from any shocks by its strong balance sheet, sellers are certain the automaker is losing its competitive edge. "2024 looks to be more uncertain, which gives us cause to be wary: there is a dichotomy in the conversations we have around Stellantis with investors – the bulls believe that margins will remain above peers and the cash pile on the balance sheet offers both comfort and options – we share this view," Tyndall wrote. "Meanwhile the bears (some of whom are quite vocal) are adamant a catastrophe is around the corner and the continued loss of market share is the early warning sign. Like all autos at present, it is hard to paint a rosy outlook," he continued. Stellantis shares jumped more than 60% in 2023, but they're down about 8% in 2024. — Sarah Min 6:53 a.m.: NewStreet Research upgrades AMD to buy on datacenter AI chip growth AMD may be the best play if the market for datacenter AI chips surges, according to NewStreet Research. Analyst Pierre Ferragu upgraded AMD to buy after assessing remarks from CEO Lisa Su, who said late last year the total addressable market for datacenter AI chips would amount to $400 billion. The analyst, who deliberated both fast pace and slow case scenario, said AMD would come out on top among chipmakers if the forecast bears out. A fast adoption scenario refers to a $400 billion total addressable market by 2027, while a slow case scenario would mean a $200 billion market by the same year. "AMD best way to play a fast adoption scenario, with most valuation and expectation upside," Ferragu wrote. "The fast adoption scenario corresponds to the AMD guide for $400bn spent on AI chips in 2027, and corresponds to the full picture we have described in the first part of this series. In essence, it is a scenario in which AI usage continues to grow faster than deployments, with spending on AI accelerated growing unabated." AMD shares are higher by 14% already this year. It was up another 2% in Wednesday premarket trading. — Sarah Min 6:27 a.m.: Sunoco is a buy after NuStar deal, Citi says Sunoco is a buying opportunity after its recent deals helped diversify its cash flow, according to Citi. Analyst Spiro Dounis upgraded the stock to buy from neutral and raised his price target, citing the strength of the firm's recent transactions. This week, Sunoco said it's acquiring NuStar Energy in a roughly $7.3 billion deal . On Jan. 11, it announced the sale of 204 convenience stores, as well as its decision buy liquid fuel terminals in Europe from Zenith Energy. "We upgrade SUN to Buy and lift our [target price] to $65 following several cash flow accretive transactions," Dounis wrote. "The January 11th transactions drive ~25% of the target price increase; the NS Acquisition drives the remaining ~75% increase." Sunoco shares are now trading more than 6% lower since the start of the year. But the analyst expects the stock could climb 16% to his $65 price target, raised from $54. The NuStar acquisition is particularly "transformative," as it diversifies the company's cash flows, and boosts its credit and trading liquidity, he said. "We view the $150mm of NS synergies as conservative and see the acquisition driving ~15% accretion by '26," Dounis wrote. — Sarah Min 6:03 a.m.: Baird says Nikola is a buy, sets a $2 price target Nikola may finally have what it takes to turn around, according to Baird. Baird analyst Ben Kallo initiated coverage of Nikola with an outperform rating and a $2 price target, saying the truck company using hydrogen fuel cells can benefit from growing interest in zero emissions trucking, as well as from strong management. "We see significant potential in the market for zero emissions trucking and believe NKLA has finally found the right management team to capitalize on the opportunity," Kallo wrote. Nikola shares, which topped $90 in 2020, were last trading around 65 cents, having cratered for the last three calendar years in a row. In 2024, it's already down more than 25%. The stock rose 4% in Wednesday premarket trading. NKLA mountain 2020-07-01 NKLA since 2020 Still, the analyst's $2 price target implies the stock could surge more than 200% from here. The analyst expects Nikola's design and software will give the company an edge against traditional diesel trucks going forward. "We see potential catalysts ahead for both the Truck and Energy businesses in the form of manufacturing improvements, customer and partnership announcements, and hydrogen infrastructure buildout," Kallo added. — Sarah Min 5:46 a.m.: Netflix results were a 'powerbomb' after subscriber beat, Wall Street analysts say Wall Street analysts are bullish on Netflix after its latest results showed a "powerbomb" subscriber beat. Netflix shares popped 9% in premarket trading. The streaming platform added 13.1 million subscribers in its fourth quarter, beating analysts' expectations of 8 million to 9 million, as the streaming platform cracked down on password sharing and continued to build on its ad tier. In her assessment, Bank of America analyst Jessica Reif Ehrlich called the results a "powerbomb," highlighting the sustainability of Netflix's growth from here. The analyst reiterated a buy rating on the company and hiked her price objective to $650 from $585, implying 32% upside for the stock from where it closed Tuesday. "Netflix exits 2023 with several drivers, which should buoy growth into 2024 and beyond including: 1) continued benefit from password sharing, 2) resumption of content following the strikes, 3) ramp up of their burgeoning ad business and 4) the benefit of Raw programming in 2025," the BofA analyst wrote. Morgan Stanley's Benjamin Swinburne also hiked his price target to $600 from $550, saying the results confirm his overweight thesis on the stock. "The financial output of 1) Netflix's product and technology leadership and 2) the current favorable competitive landscape, by our estimates, is a business that should be able to ramp FCF from $6bn in '24 to $10bn in '26," Swinburne wrote. Elsewhere, Goldman Sachs' Eric Sheridan reiterated a neutral rating on the stock, but hiked his price target to $565 from $500. — Sarah Min 5:46 a.m.: Morgan Stanley sees earnings beat ahead for Apple Apple will likely report stronger-than-consensus fiscal first-quarter results thanks to strong iPhone sales, according to Morgan Stanley. Specifically, the bank sees earnings per share of $2.13 on revenue of $119 billion for the tech giant. However, the bank also warned of disappointing guidance from the company. "We expect Dec Q rev/EPS outperformance, driven by iPhone/Services, but a March Q rev guide $3B (3%) below Consensus," analyst Erik Woodring wrote. "This is well understood by buy-side, and we expect earnings to serve as a clearing event, allowing investors to refocus on FY25 'Edge AI' opportunity, and margin/Services resilience." "As a result, we see earnings ... as a 'clearing event' that will help to 1) reset NTM estimates lower and 2) allow investors to turn their attention towards what we believe will be a positive inflection in fundamentals in FY25, driven by an underappreciated Edge AI refresh cycle," Woodring wrote. Apple shares got off to a rough start this year on concern over iPhone sales in China. However, the stock has since recovered and is now up more than 1% for 2024. AAPL YTD mountain AAPL in 2024 Apple is slated to report earnings on Feb 1. — Fred Imbert