Friday's analyst calls: Social media stock gets upgraded, Coinbase to rally 30%?

Published Fri, Jan 26 20245:45 AM ESTUpdated Fri, Jan 26 20248:44 AM EST

(This is CNBC Pro's live coverage of Friday's analyst calls and Wall Street chatter. Please refresh every 20-30 minutes to view the latest posts.) A social media stock was in focus Friday along with a major crypto name. Deutsche Bank raised its rating on Snap to buy from hold, calling for more than 16% gains going forward. Meanwhile, Oppenheimer upgraded Coinbase to outperform, citing improving fundamentals. Check out the latest calls and chatter below. All times ET. 8:43 a.m.: JPMorgan downgrades Dow after fourth-quarter earnings JPMorgan downgraded Dow Inc to neutral from overweight Friday, a day after the industrial giant reported fourth-quarter earnings. "Dow fired on just one of its three business cylinders in 4Q:23," analyst Jeffrey Zekauskas said in a note to clients. In 2023, its specialty plastics division brought in $2.7 billion in earnings before interest and taxes, while its other two segments — industrial intermediates and performance materials — combined added $343 million, he pointed out. Meanwhile, Dow's cash flow can fund its current cash requirements, but is constrained to do more than that, Zekauskas said. Capital expenditures are now rising as Dow builds its large integrated Alberta, Canada PE project," he said. "There is little room for share repurchase or dividend increase without levering the balance sheet." He also believes Dow's 2024 earnings expectations are "aggressive." Dow's stock closed at $54.94 on Thursday, just shy of Zekauskas' $55 price target. Shares are essentially flat so far this year. — Michelle Fox 8:30 a.m.: TD Cowen upgrades American Airlines, says stock can climb more than 30% from here A big fourth quarter for American Airlines is winning over some of its Wall Street skeptics. TD Cowen analyst Helane Becker upgraded the airline to outperform from market perform, saying that a strong quarter for the company could signal a big year ahead. "American has hit a stride in its operations which has knock-on benefits ... Better than expected 2024 guidance looks very achievable. We came away impressed by the franchise's potential for FCF generation and progress on deleveraging," Becker said in a note to clients. The upgrade comes after American Airlines beat estimates on the top and bottom lines for the fourth quarter, fueling a 10% jump for the stock on Thursday. TD Cowen's price target of $21 per share implies that the stock can climb more than 30% from here. Seaport Research Partners also upgraded American to buy from neutral. — Jesse Pound 8:07 a.m.: UBS downgrades Archer-Daniels-Midland to neutral, cites falling soy crush margins It's time to step to the sidelines on nutrition company Archer-Daniels-Midland , according to UBS. Analyst Manav Gupta downgraded shares to neutral from buy, citing diminishing margins on soy crush and ethanol. Soy crush refers to the difference in the value of soybeans and their end products after they're converted into soybean meal and oil. "We downgrade as margins degrade in Soy Crush as well as Ethanol," Gupta wrote in a Friday note. "We see downside to street earnings driven by 1) No growth in Nutrition segment; 2) Soy crush driving Yoy Decline in Crush earnings, 3) Weaker RPO earnings due to refined soybean oil premium shrinking and 4) weaker carbohydrate solutions earnings driven by weakness in ethanol margins." The analyst's $51 price target, slashed in half from $104, is slightly lower from where they closed Thursday at $51.38. Archer-Daniels-Midland shares have already plunged more than 28% this year. To be sure, the analyst said he expects Archer-Daniels-Midland will post $1.3 billion in post-dividend free cash flow for both 2024 and 2025, even on lowered estimates, which would mean strong buybacks. He called it a "key reason" he hasn't downgraded the stock to sell. — Sarah Min 7:52 a.m.: Dow Inc could see upside from Red Sea disruptions, says Bank of America Bank of America reiterated its buy rating on chemicals company Dow Inc , underscoring signs of an earnings recovery. Dow is also a potential beneficiary of trade disruptions in the Red Sea, according to the firm. Although Dow missed on fourth-quarter EBITDA and guidance for the first quarter, analyst Steve Byrne said management sounded more positive compared to prior calls, and market conditions appear more favorable. The trade interruption due to the conflict in the Red Sea could be a headwind for Dow, the analyst added. "We believe that DOW's European operations specifically could benefit from reduced imports of MDI, caustic, coating monomers, siloxanes, and PE into the region, while Dow's US business could see better demand for export PE," Byrne said. — Hakyung Kim 7:14 a.m.: Wells Fargo keeps JPMorgan Chase stock a signature pick Wells Fargo is sticking by banking behemoth JPMorgan Chase after a company reorganization . The firm reiterated the banking stock as a signature pick in a Thursday note alongside an overweight rating and a $200 per share price target. Wells Fargo's forecast implies nearly 16% upside moving forward. Analyst Mike Mayo highlighted recent company moves to expand roles for company executives expected to be top contenders to succeed current CEO Jamie Dimon. "Today's reorg comes from a position of strength and shows how JPM can cross-pollinate skills as it expands roles and moves individuals across business lines. Employees at JPM often have multiple career paths," the analyst said. — Brian Evans 6:49 a.m.: Wells Fargo names Popular a top pick Wells Fargo is growing bullish on Puerto Rican bank operator Popular after a fourth-quarter earnings beat. The firm named the stock a top pick for 2024 and reiterated an overweight rating alongside a $105 per share price target. Wells Fargo's forecast implies more than 22% upside moving forward for the stock. "Our Overweight rating is based on the early stages of widespread tailwinds benefiting the Puerto Rican economy," analyst Timur Braziler said . "With Popular by far the largest and most dominant player on the island, we believe the bank will be an outsized beneficiary of structural tailwinds." Popular stock has ticked up roughly 5% from the start of the year. — Brian Evans 6:41 a.m.: UBS downgrades Humana, cites lack of clarity over margin expansion UBS thinks Humana could suffer due to volatile company results in the near-term as well as a forecast extend timetable to recover margins. The firm downgraded the health insurance stock to neutral from buy, and lowered its price target to $370 per share from $530. UBS' forecast implies about 2% downside moving forward. "Given the volatility in the company's near-term results and management's own commentary suggesting an extended time frame for recovery to normalized margins, we believe the shares will tend to trade at a mid-teens forward multiple from here," analyst AJ Rice said. Humana stock has pulled back more than 22% from the start of 2024. "The company's 2024 outlook contemplates a number of negative assumptions, which admittedly could prove conservative," he added. "Still, given the recent series of outlook adjustments, the market may take time before it again has confidence in near-term forecasts for the company." — Brian Evans 6:20 a.m.: Piper Sandler downgrades U.S. Bancorp Piper Sandler said U.S. Bancorp's "favorable dynamics" will broaden out to its peers and leave the bank in a less unique position. The firm downgraded the regional bank to neutral from overweight in a Friday note and lowered its price target to $46 per share from $47. Piper Sandler's forecast implies more than 7% upside moving forward. The stock has ticked down 1.1% from the start of 2024. Analyst R. Scott Siefers noted that while U.S. Bancorp currently trades at a deserved multiple premium compared to its peers, "we do not see the same degree of differentiated factors that would cause the shares to outperform peers as we have through much of the last year." The analyst noted that he remains optimistic on the stock overall moving forward, albeit at a slower growth clip. "Moreover, growth in USB's diverse fee base should accelerate such that it can generate mid-single digit fee growth this year," he said. "This should all occur in the context of a flattish expense outlook, and we see no visible issues on credit." — Brian Evans 6:01 a.m.: Here's what analysts are saying after Intel's fourth quarter results Analysts on Wall Street are viewing Intel's fourth-quarter results as a lackluster report. Despite surpassing analyst estimates on the top and bottom line, the chipmaker issued a lower-than-expected first-quarter outlook which led to downbeat analyst commentary. "Although we continue to be impressed by the current execution, the next 12 months will be the most difficult for the team as they will be launching two datacenter products and two major client products over three new manufacturing technology nodes – however, we believe it will serve as a strong proxy on the team's ability to execute over the next 3-5 years," JPMorgan analyst Harlan Sur wrote on Friday. Sur reiterated an underweight rating on Intel stock alongside a $37 per share price target, or more than 25% downside moving forward. Intel shares were down 11% in the premarket. Bank of America's Vivek Arya maintained a neutral rating on Intel stock and restated a $50 per share price target, or about 1% below Thursday's close. "GM [gross margin] fall-through could remain choppy and adjusted FCF only break-even for CY24E, suggesting any potential lift-off is another year away," Arya said. Deutsche Bank's Ross Seymour reiterated a hold rating on the stock as well as a $42 per share price target, implying about 15% downside. "We remain impressed by the [company's] technology and operational transformation but remain concerned that the magnitude of revenue growth required to monetize these transformational investments via desirable margins is daunting," Seymour said. — Brian Evans 5:45 a.m.: Oppenheimer upgrades Coinbase on attractive risk-to-reward skew, 'upward trajectory' fundamentals Oppenheimer thinks a slew of positive catalysts will boost Coinbase . The firm upgraded shares of the cryptocurrency exchange to outperform from perform, and initiated its price target at $160 per share. Oppenheimer's forecast implies more than 32% upside from Thursday's close. Coinbase is off to a rough start for 2024, losing roughly 30%. COIN YTD mountain COIN in 2024 Analyst Owen Lau noted that the stock sell-off may present investors with an attractive risk-to-reward skew, while the approval of several spot bitcoin exchange traded funds could serve as a positive catalyst for the stock. "The stock was under extreme scrutiny during crypto winter. While many peers went under, COIN is still standing and fighting for its businesses and the industry," Lau said. "We believe the company is stronger than many people realize, and the management team is tougher than most investors think." The analyst posits that Coinbase will also either come out victorious from its litigation with the U.S. Securities and Exchange Commission, or that the case will be dismissed outright which could further aid company growth. — Brian Evans 5:45 a.m.: Snap gets upgrade from Deutsche Bank Snap shares are in for another leg higher after a strong 2023, according to Deutsche Bank. Analysts Benjamin Black upgraded the Snapchat parent company to buy from hold and raised his price target to $19 from $10. The new forecast implies a gain of 16.6% from Thursday's close. Black cited four catalysts for the upgrade: "Snapchat+ creating incremental revenue;" "the ad platform rebuild yielding strong performance results and driving growing advertiser adoption;" "the Amazon partnership, which could be material given the ~$20bn a year Amazon spends on advertising;" "growing contribution from inbound advertising from China." "Taking a step back, we are also encouraged by our industry checks which suggest the disruption from the ad-platform rebuild is complete and that the new focus on down-funnel conversions is providing demonstrable improvement in advertiser [return on ad spend]," Black said. Snap is coming off a strong year, rising 89% in 2023. Shares were up 2.8% in the premarket. — Fred Imbert