Wednesday's analyst calls: Microsoft and Alphabet get price target increases after earnings, SoFi downgraded

Published Wed, Jan 31 20245:41 AM ESTUpdated Wed, Jan 31 20248:29 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.) Analysts on Wednesday focused on reports from major tech companies and potential headwinds for one fintech stock. Those covering Google-parent Alphabet and Microsoft reacted to the megacap names' latest earnings reports, as both stocks fell on the back of those reports. SoFi Technologies was also under pressure following a Morgan Stanley downgrade. Check out the latest calls and chatter below. All times ET. 8:16 a.m.: William Blair upgrades this Check Point Software, says cybersecurity stock can reach an inflection Investors may want to reconsider snatching up shares of Check Point Software , according to William Blair. Analyst Jonathan Ho upgraded the cybersecurity company to outperform from a market perform rating as the stock heads for an inflection in 2024 and trades at a discount to competitors. "In particular, we believe the risk/reward has become more attractive given the recent run-up in the cybersecurity space and the downside protection offered by the company's high degree of profitability and large cash balance," he said in a Tuesday note. Looking ahead, Ho expects the company to benefit from the launch of new firewall products and prior deals signed. The proliferation of AI will also heighten security needs and drive ongoing innovation. "We continue to believe Check Point has a real opportunity to enhance its market position through successfully delivering its go-to market functions and messaging," he said. – Samantha Subin 8:14 a.m.: Wells Fargo raises Spotify price target, cites cost cuts Corporate changes at Spotify could result in stock boost, according to Wells Fargo. The bank maintained its overweight rating on the music streaming platform. Analyst Steven Cahall's price target of $280, updated from $250, implies that Spotify stock could rise nearly 29% from its Tuesday closing price. As reasons for the price update, Cahall cited Spotify's strong outlook and "significant cost cuts." "We est. SPOT's Dec'23 cost cuts, incl. -17% to the workforce, equate to -€280mm in structural cost reduction," he wrote. Cahall also highlighted changes in Spotify's new royalties model as a positive. "Not long ago it seemed like a zero-sum game vs Labels, but we think SPOT's '23 price increase + new royalty structure indicates more of a partnership," he wrote. "We think it's no coincidence these are happening alongside SPOT's margin expansion." The analyst added that Spotify's marketplace and audiobooks channels, as well as its ad-supported investments, should be the primary margin drivers for the company. — Lisa Kailai Han 8:03 a.m.: Roth MKM says Plug Power can rally more than 140% Roth MKM turned bullish on Plug Power as its green hydrogen plant progresses nicely. Analyst Craig Irwin upgraded shares of the hydrogen fuel cell turnkey solutions to buy from neutral and doubled his price target to $9 from $4.50. Irwin's new target implies the penny stock can soar 141.3% in the next year over Tuesday's close. Irwin's upgrade centered on a visit to Plug Power's green hydrogen plant in Georgia, which he said should begin delivering liquid hydrogen "imminently." "Our visit to the Georgia green hydrogen plant gives us confidence the facility is ramping smoothly and all major technical issues are handled, addressing our prior concerns about backlog and margin visibility," he wrote to clients. Elsewhere, he said the company should see "rapid margin remediation" after pricing hydrogen sales to customers in line with the cost of procurement. Irwin also said the company has flexibility within near-term funding needs. Shares jumped 7.8% in the premarket. But the stock has shed more than 17% in 2024, adding to last year's loss of more than 63%. — Alex Harring 7:56 a.m.: Canaccord Genuity upgrades Stryker on strong earnings Stryker's fourth-quarter earnings have Canaccord Genuity turning bullish on the stock. The medical technology company beat on both the top and bottom line, despite tough comps, and continued to note healthy demand, analyst Caitlin Cronin wrote in a note Wednesday. She upgraded the stock to buy from hold. "With waning macro headwinds, a robust capital order book, and a 'super cycle' of new products, we view SYK as being in a favorable position to continue delivering growth at the high end of MedTech and executing on its many levers to drive further operational efficiencies," she said. Cronin also upped her price target to $360 from $315, although Stryker is already trading at a healthy premium to its broader large-cap peers, she said. The new price target suggests nearly 14% upside from Tuesday's close. — Michelle Fox 7:54 a.m.: UBS downgrades Erickson to a sell rating Ericsson might be due for some tough times ahead, according to UBS. Analyst Francois-Xavier Bouvignies downgraded shares of the Swedish telecommunications stock to sell from neutral. As a catalyst for the change, the analyst cited the market pricing in a cyclical North America recovery despite concerns around a structural, long-term disruption from OpenRAN. "We are fundamentally concerned by the disruptive threat that OpenRAN could represent for the wireless industry in terms of pricing and market share," he wrote. Furthermore, the analyst also sees regional difficulties placing downward pressure on the company's stock. "We would highlight: 1) 2024 remains challenging - we expect India spending to level off in 2024 after a significant year of investment, and also lack of growth in Europe mainly due to macro uncertainty," he said. — Lisa Kailai Han 7:48 a.m.: BMO initiates Sarepta Therapeutics at outperform, sees upside of more than 40% Sarepta Therapeutics could be in for a big 2024 as its latest drug continues to roll out to patients, according to BMO Capital Markets. Analyst Kostas Biliouris initiated coverage of Sarepta at outperform and said in a note to clients that the company, which focuses on treatments for Duchenne Muscular Dystrophy, has a new growth driver in Elevidys. "Elevidys generated $200M (+12% vs. cons) in the first two quarters post-approval, reflecting a strong patient demand. Our physician checks suggest that the vast majority of eligible patients will be willing to receive Elevidys, as even the most bearish/negative physicians expect ~50% of their patients to use Elevidys," the note said. BMO said that the Food and Drug Administration should make a decision on whether to give Elevidys full approval by August. BMO set a price target of $170 for Sarepta Therapeutics, which is more than 40% above where the stock closed on Tuesday. — Jesse Pound 7:35 a.m.: UBS upgrades TechTarget amid potential deal, special cash dividend UBS moved off the sidelines on TechTarget , noting a value-expanding deal. Analyst Kunal Madhukar upgraded shares of the software provider to buy from neutral and raised his price target by $14 to $45. Madhukar's price target implies shares can jump 34.2% from Tuesday's close. Madhukar pointed to a deal with Informa Tech announced earlier this year that would combine Informa's digital businesses and TechTarget. As a result of the agreement, a new company called New TechTarget would be created. The analyst said the plan — particularly the special cash dividend of $11.79 paid to TechTarget shareholders upfront — "creates substantial value for TTGT shareholders." While he did warn that some targets set by the company may be difficult to achieve, he also said there could be more upside to the potential synergies between the two firms than previously anticipated. "Even using more conservative expectations for growth, we think the transaction has the potential to add significant shareholder value, which the market does not appreciate currently," Madhukar told clients, adding that the deal is likely to close in the second half of this year. TechTarget shares popped 3.7% before the bell. Still, the stock has fallen more than 3% this year, extending losses after dropping nearly 21% in 2023. — Alex Harring 7:34 a.m.: Citi downgrades Deutsche Bank stock after recent rally A 16% rally in Deutsche Bank stock over the last three months has warranted a downgrade, according to Citi. Citi analyst Andrew Coombs downgraded shares of Deutsche Bank to neutral from his previous buy rating ahead of the company's fourth-quarter results release, slated for Thursday. "We see few positive surprises with 4Q23, as we model a small PBT [profit before tax] miss during the quarter and expect existing revenue and capital return guidance to be reiterated and, if anything, we also see a risk of heavier cost guidance," he wrote. While the valuation is still not expensive, Coombs said that a discount is still warranted against Deutsche Bank's peers, given his reduced earnings and revenue estimates due to a weaker investment banking outlook. — Lisa Kailai Han 7:06 a.m.: TD Cowen names Ulta a top idea ahead of earnings Ulta looks poised for a fourth-quarter earnings beat, according to TD Cowen. The bank listed the beauty company as a top idea in a Wednesday note, citing "strength in cosmetics & solid holiday traffic prospects." Analyst Oliver Chen also maintained his buy rating for Ulta stock, simultaneously lifting his price target to $580 from $570. This implies that shares of Ulta could gain a further 14%. Ulta stock has slid 1% in the last 12 months, although it has popped nearly 4% this month alone. "We believe ULTA has managed expectations well enough to deliver a 4Q beat and guidance above Street," the analyst wrote. "We think management will likely guide FY24 conservatively, as strong fragrance, wellness, and skincare post-pandemic growth eases and promotions continue to normalize 1H24, leading to slowing topline growth and modest gross margin expansion." Meanwhile, Chen also highlighted three key drivers of optimism for the company. These include strong beauty industry momentum, alongside positive holiday sales and beauty readthroughs. — Lisa Kailai Han 6:52 a.m.: Artificial intelligence is a lasting driver for Microsoft, analysts say Wall Street analysts view artificial intelligence as a driver for the Microsoft's strong fiscal second-quarter results. The tech titan beat both its earnings and revenue expectations for the quarter, although it issued lighter guidance for its fiscal third-quarter . "Though the rapid acceleration of AI revenue opens questions around the strength of broader cloud computing spend, we see the lens in which Gen-AI is viewed separately than cloud workload growth likely being temporary as such workloads are likely to become increasingly interconnected," wrote Goldman Sachs analyst Kash Rangan. "Our confidence also stems from the notion that enterprises have yet to carve out a discernible amount of IT budgets toward Generative-AI." The analyst sees further growth for the company next year, once macroeconomic conditions have improved. He added that Microsoft's plethora of growth avenues and cost discipline could contribute to near-term strength in earnings and top-line growth. Here's where Goldman Sachs and other Wall Street banks stand on shares of Microsoft post its earnings announcement: Goldman Sachs: Reiterate buy rating and $450 price target, implying 10% upside. Deutsche Bank: Reiterate buy rating and $450 price target, implying 10% upside. Citi: Reiterate buy rating and $470 price target, implying 15% upside. Barclays: Maintain overweight rating and raise price target to $475 from $421, implying 16% upside. Microsoft shares have gained nearly 65% over the past 12 months, and have gained 8.7% in January alone. — Lisa Kailai Han 6:23 a.m.: Baird sees near-term risks for Tesla but maintains its long-term bullishness The near-term outlook for Tesla is looking troublesome, according to Baird. While the investment firm maintained its outperform rating for the electric vehicle maker, it also designated the stock as a "bearish fresh pick" in a Wednesday note. As a catalyst for the bearish sentiment, analyst Ben Kallo cited a ruling against Tesla CEO Elon Musk's pay package . "We believe this will create a negative overhang on the stock until additional clarity is given and expect shares to trade down on this news," the analyst wrote. He also expects disruptions to Red Sea shipping routes to send Tesla deliveries falling in 2024. Tesla shares fell more than 2% after judge voided Musk's $56 billion pay package. The stock has been under pressure recently, losing nearly 23% this month. On the other hand, Kallo remains bullish on Tesla in the long term, underscoring the company's product pipeline, increased production capacity, future vehicle rollouts, recurring revenue potential and expanded energy storage products capacity. Kallo's price target of $300 implies that Tesla stock could rally more than 56% from its Tuesday closing price. "Our price target … is a premium to large-cap, high-growth peers, which we believe is justified given its growth and suite of technologies," he added. — Lisa Kailai Han 6:15 a.m.: Advanced Micro Devices sell-off could be a good entry point, analysts say Advanced Micro Devices' post-earnings pullback could be a good entry point for investors, according to Wall Street analysts. While the chipmaker's fourth-quarter earnings and revenue were in line with analyst expectations , its first-quarter forecast estimated revenue of $5.4 billion was lower than the $5.73 billion analysts had expected. Shares of AMD fell 6% on the back of those results. However, analysts at both Goldman Sachs and Citi saw the sell-off as a buying opportunity. "We reiterate our Buy rating on AMD and would view a near-term correction in the stock as an opportunity to add exposure to an asset that has 1) growing exposure to Gen AI and the build out of its infrastructure; 2) continued potential to grow market share in server CPU; and 3) significant run-way ahead in terms of margin expansion and earnings growth," wrote Goldman Sachs analyst Toshiya Hari. Hari raised his 12-month price target for the stock to $180 from $157. Citi analyst Christopher Danely also stood by his buy rating on the stock while lifting his price target to $192 from $136. This updated target corresponds to a potential 11.6% upside for shares of AMD. Bank of America analyst Vivek Arya had one of the higher price objectives of $195, implying that AMD stock could rise 13%. Like Hari and Danely, Arya also reiterated his buy rating for the name. On the other hand, JPMorgan analyst Harlan Sur kept his neutral rating for the stock, although he lifted his price target to $180 from $115. While Sur is optimistic on AMD's ability to improve market share and revenue growth in the near term, he believes that share gains look less certain over the long term, while the stock already appears to be fully valued. — Lisa Kailai Han 5:53 a.m.: Barclays downgrades Verizon Barclays is moving to the sidelines on Verizon . The bank downgraded shares of the telecommunications giant to equal weight from overweight. Analyst Kannan Venkateshwar kept his price target at $44, which just 3.6% upside. "Verizon is on a much better operational trajectory than has been the case over the last couple of years, but upside to numbers and valuation may be more limited from present levels," Venkateshwar wrote. As a reason for the downgrade, the analyst underscored Verizon's reliance on price increases to grow its revenue, a lever that may be difficult to continue using. Additionally, Venkateshwar expects the company's free cash flow to take a hit as costs pick up this year. Meanwhile, Verizon's prepaid business, Tracfone, is taking longer than expected to integrate. "While the prepaid business is not as material for the story as postpaid, its integration path is an important data point to gain further conviction around improvement in the company's execution story on the consumer side. This business was also expected to be a small tailwind in 2024 both in terms of sub trends and service revenue growth contribution," Venkateshwar said. He added that shares of Verizon also no longer appear to be trading at a discount, and now seem to be fairly priced. Shares of Verizon have risen 12.65% in the past month. — Lisa Kailai Han 5:41 a.m.: Wall Street analysts stand behind Alphabet after fourth-quarter earnings results Alphabet shares may be under pressure following mixed quarterly results, but analysts at major banks are standing behind the name. The company beat estimates on both earnings and revenue for the fourth quarter but reported ad revenue of $65.52 billion, missing expectations. Subsequently, the stock slid 6%. Despite this near-term setback, Wall Street analysts from the major banks are still bullish on the name. GOOGL 1D mountain GOOGL falls "In total, we see this quarter as a combined set of messages with stable/strong digital advertising and media consumption trends, solid upside surprise in terms of segment level Operating Income margins & some nuance around one-timers," wrote Goldman Sachs analyst Eric Sheridan. Sheridan reiterated his buy rating on the stock while raising his 12-month price target to $171 from $164, implying that Google shares could rise 13% from their Tuesday closing price. Likewise, Bank of America analyst Justin Post also reiterated his buy rating but maintained his price objective at $173. Barclays analyst Ross Sandler also maintained his overweight rating on the stock, lowering his price target to $173 from $180. A $173 price target corresponds to a potential 14.2% rally. "Bulls (like us) point to accelerating growth in Search and YT, but the skeptics likely flag increased costs of AI and limited upside to numbers. With shares up 59% last year and 10% thus far in January, we aren't surprised to see GOOGL take a temporary breather," Sandler wrote. At $168, up from $153, Citi analyst Ronald Josey had a lower price target. Josey also maintained his buy rating for Google, with his updated price forecast implying that shares could rally 11%. — Lisa Kailai Han 5:41 a.m.: Morgan Stanley downgrades SoFi Technologies Growing near-term headwinds and execution risks to achieving 2026 earnings targets have led Morgan Stanley to recommend clients stay away from SoFi Technologies . Analyst Jeffrey Adelson downgraded the company to underweight from equal weight and cut his price target to $6.50 from $7. The new forecast implies 22.6% downside for the stock. Shares were down more than 3% in the premarket. SOFI 1D mountain SOFI under pressure "Slowing top-line, execution risk on the path to 2026 EPS takes us back to Underweight," Adelson wrote. "We previously moved off our Underweight call 3 months ago as 1) the stock price had come down to our prior PT, reflecting a more balanced risk-reward skew and 2) SOFI announced capital relief in the form of a new $2B forward flow agreement and other loan sales." "However, with shares now more than 20% higher since then, and trading at a [price to tangible book value] of ~2.4x, we believe the stock is pricing in too much optimism on the path to 2026 profitability laid out by SOFI, all while staring in the face of a worsening top-line growth outlook for 2024," Adelson wrote. SoFi shares surged more than 115% in 2023, marking their best year ever. However, they are down 15.6% year to date. — Fred Imbert