Thursday's analyst calls: Tesla sell rating conviction, Qualcomm gets a downgrade

Published Thu, Feb 1 20245:41 AM ESTUpdated Thu, Feb 1 20248:46 AM EST

(This is CNBC Pro's live coverage of Thursday's analyst calls and Wall Street chatter. Please refresh every 20-30 minutes to view the latest posts.) A legacy automaker and a major semiconductor maker were in focus among analysts Thursday. Morgan Stanley raised its price target on General Motors. Meanwhile, Qualcomm got a downgrade from Citi, citing concern that the chipmaker may not be able to beat earnings expectations and raise its guidance for much longer. Elsewhere, Redburn Atlantic reiterated its sell rating on Tesla, noting the company's latest guidance adds conviction to its thesis. Check out the latest calls and chatter below. All times ET. 8:27 a.m.: Goldman adds Target to its conviction list Target should soon shake off its slow start to the year, according to Goldman Sachs. The firm said in a note to clients on Thursday that the retail stock is now part of its U.S. conviction list. "For TGT, Kate McShane sees a compelling entry point for a company that she expects will get a boost from a return to discretionary spending from a buoyant US consumer in a soft landing economy. She expects the company to successfully cycle easy compares with topline growth that should translate into margins eventually recovering to 6%+ – and all comes at an undemanding valuation," the note said. Shares of Target are down about 2.4% year to date. — Jesse Pound 8:25 a.m.: JPMorgan downgrades Lennox International, sees 23% downside JPMorgan is getting cautious on Lennox International , downgrading the climate control solutions company to underweight from neutral on Thursday. The bank cited uncertainty around the residential and commercial macro conditions, less favorable cost/price benefits than in years past and Lennox's premium valuation. "We see reinforced caution on the residential HVAC end market cycle outlook … as well as the potential for declines in short cycle light commercial HVAC markets in 2H24, both of which would play into ongoing weakness in volumes for 2025 leading to downside to earnings estimates," analyst C. Stephen Tusa, Jr wrote in a note to clients. He also cut its price target on the stock to $330 from $370, suggesting about 23% downside from Wednesday's close. — Michelle Fox 8:21 a.m.: Deutsche Bank upgrades Cigna following news of Medicare Businesses sale Cigna has a bright growth outlook ahead, according to Deutsche Bank. The bank upgraded the health insurer to a buy rating, simultaneously increasing its price target to $370 from $355. This implies a potential 23% upside from where shares of Cigna closed on Wednesday afternoon. "Our investment thesis around Cigna's shares has focused on valuation, with our expectation being that investors would eventually pay more for exposure to the more profitable but slower growing commercial market vs the government-pay space," wrote analyst George Hill. The analyst highlighted Cigna's announcement to sell several businesses to fellow health insurance company HCSC as a "value unlocking-transaction." As part of the $3.7 billion deal, HCSC will acquire Medicare Advantage, Medicare Supplemental Benefits, Medicare Part D and CareAllies. Hill added that the transaction is due to close in the first quarter of 2025, pending regulatory approval, and that Cigna plans to allocate most of the proceeds to share buybacks. "Cigna currently generates over $9B in revenue annually from its MA business, and the segment has been consistently below target margin. It has been reported the company could lose ~$200 to $500mm each year on the MA business, so offloading it and buying back shares will enable CI to achieve EPS accretion in two ways," the analyst noted. Shares of Cigna are up 0.5% so far this year, after sliding 9.62% in 2023. The stock popped 1% before Thursday's opening bell. — Lisa Kailai Han 8:08 a.m.: Bank of America calls Harley-Davidson 'well positioned' for 2024 ahead of earnings report Bank of America is staying optimistic on Harley-Davidson as investors gear up for the motorcycle maker's earnings report. Analyst Alexander Perry reiterated his buy rating on the stock and raised his price target by $5 to $45 in the run up to the financial release expected Feb. 8. Perry's new forecast for share price implies the stock will rally 38.7% from Tuesday's closing level "We see accelerating brand momentum and new management strategy driving significant increases in unit profitability," he told clients. Perry called Harley-Davidson "well positioned" for 2024 after a "significant refresh" of the popular Road Glide and Street Glide models. The analyst noted to the company's last major product refresh in 2013, which he said catalyzed an increase in touring shipments and global retail sales. Harley-Davidson should see easy comparable numbers in 2024, Perry said. Meanwhile, he noted that the company should get a boost from higher demand in the sportster unit following a price cut to its most accessible model. And the company has pivoted to producing trikes, which he noted have higher margins and are in vogue with the aging boomer population. Shares climbed 0.7% before the bell Thursday. The stock has slid nearly 12% in the new year, extending losses after losing more than 11% in 2023. — Alex Harring 8:03 a.m.: Tesla's fourth-quarter results 'add conviction to sell thesis,' says Redburn Atlantic Tesla's poor forward outlook issued during its quarterly earnings report last week is adding to concerns around the electric vehicle maker, according to Redburn Atlantic. The firm kept its sell rating on shares while lowering its price target to $160 from $170, suggesting a 10.5% pullback in shares from Wednesday's close. The stock has lost nearly 25% year to date as investors' concerns mount over its weaker-than-expected guidance. "Messages from last week's Q4 results add conviction to our Sell thesis," analyst Adrian Yanoshik wrote in a Thursday note. "A poorer cost outlook noted by management amplifies Tesla's exposure to weakening electric vehicle (EV) pricing." The company's phasing of its next-generation vehicle ramp-up also was slower than had been expected, Yanoshik noted. "The vehicle's accelerated rollout was the most worrying upside risk we considered in our Sell thesis. The likelihood of that scenario has dissipated with management's plans as communicated last week," the analyst said. — Hakyung Kim 7:42 a.m.: Wells Fargo initiates overweight rating on shopping center REIT Regency Centers Corporation's low risk and outsized earnings makes it a top shopping center real estate investment trust, says UBS. Analyst Dori Kesten initiated coverage on the stock with an overweight rating. Her price target of $70 suggests 11.7% upside potential from Wednesday's close. "With investor sentiment improving for Strips, we view REG's stock underperformance of late as a good entry point into this Strip leader with limited tenant credit risk, a history of beats, & an upward earnings bias," Kesten wrote in a note to clients on Thursday. She cited the REIT's history of guidance beats, strong balance sheet and "long-term peer leading dividend" in her overweight rating. Regency Centers has strong positioning in acquiring tenants, which should further strengthen its occupancy gains, she added. — Hakyung Kim 7:34 a.m.: UBS downgrades fintech company StoneCo to neutral UBS is stepping to the sidelines on StoneCo after the stock's rally of around 60% over the last four months. Analyst Kaio Prato downgraded shares to neutral from buy. Meanwhile, he raised his price target to $21, from $18, suggesting 20.7% upside potential from Wednesday's close. Prato said it's "time to wait for execution to play in" for the company. While he expects StoneCo to benefit from lower interest rates and to continue gaining market share, he believes such upsides have already been reflected in the stock's valuation. "In a nutshell, we could become more bullish again especially if we see stronger developments in banking/software businesses and/or faster market share gains (with similar economics), which should lead not only to additional earnings review but also further re-rating," Prato said in a Thursday note. Credit will be key to whether the company can meet higher expectations, the analyst added. A surprise in loan book growth or better asset quality could result in more optimism, according to Prato. — Hakyung Kim 7:17 a.m.: ChargePoint could be a long-term winner, says TD Cowen Electric vehicle charging station company ChargePoint could be a "potential long-term winner," according to TD Cowen — while acknowledging that 2024 will likely be another difficult year. 2024 will likely be a "year of 'crossing the chasm'" for the electric vehicle charging and battery market due to a slowdown in global electric vehicle delivery growth, said analyst Gabe Daoud Jr. The firm raised its price target on ChargePoint by $1 to $4, suggesting 110% upside potential from Wednesday's close. The stock rallied nearly 5% Thursday before the bell. "We expect fewer fireworks with the 4Q print though top-line growth is likely muted as we model total revenue of $116MM and adj. gross margins of 20% (in-line with normalized 3Q levels). On the call, look for further details on F2025 guide, commercial spending / fleet deliveries, inventory levels / build rate, and Asian manufacturing facility," Daoud Jr. wrote in a Thursday note. The company is scheduled to report earnings Feb. 29. — Hakyung Kim 6:56 a.m.: Morgan Stanley calls Bloom Energy a 'secular winner' Morgan Stanley reiterated its overweight rating on Bloom Energy , naming it an underappreciated AI beneficiary. The firm also maintained its $22 price target on shares, which suggests shares surging more than 94% from where they closed on Wednesday. "We believe BE is one of the most misunderstood secular winners in clean energy with several avenues of growth and margin expansion," analyst Andrew Percoco said in a Thursday note. "BE is a secular winner as the world adopts GenAI given the significant incremental power demand associated with data center growth, coupled with grid infrastructure constraints and reliability concerns," added Percoco. Generative AI benefits to electricity generation capacity could result in nearly $75 billion in near-term revenue for the company, according to the analyst. The stock jumped more than 4% Thursday before the bell. To be sure, shares are down 23.5% in 2024, continuing their fall from 2023. — Hakyung Kim 6:42 a.m.: Bank of America reiterates buy rating on Santander Santander , the largest Spanish bank, has been underappreciated by investors, says Bank of America. The firm reiterated its buy rating while lifting its price target on U.S.-listed shares to $5.42. The new price target suggests around 36% upside potential from Wednesday's close. Analyst Antonio Reale said the stock is "a mispriced opportunity" and named it the top pick in Spain. "Santander is a 'show-me story' - its shares have underperformed the synthetic valuation of its subsidiaries," Reale wrote in a Wednesday note." Santander trades on a P/E 2024e of 4.5x – a level that's comparable to BMPS, amongst the lowest multiple in Europe which we view as mispriced." U.S.-traded shares jumped 3% Thursday before the bell. — Hakyung Kim 6:14 a.m.: Morgan Stanley steps to the sidelines on ZoomInfo ZoomInfo Technologies is "unlikely to zoom into a recovery," according to Morgan Stanley. A new round of layoffs in the tech industry and slower job postings weighs upon the future growth outlook for ZoomInfo, according to analyst Elizabeth Porter. She also cited increasing competition in her downgrade on shares to equal weight from overweight. "ZoomInfo is a leader in providing B2B company and contact data, which becomes increasingly important as companies look to drive efficiency in sales teams. However, with ~35% of revenue from customers in the software vertical, headcount and cost reductions at this core customer base has significantly impacted demand," Porter said in a Thursday note. "We moderate our outlook on the growth improvement in 2025 and beyond, and move to the sidelines with an Equal-weight view as catalysts for a material growth re-acceleration and stock re-rating are pushed out, in our view," she added. Porter also reduced her price target to $20 from $24, implying around 25% upside potential from Wednesday's close. Shares slipped more than 2% Thursday during premarket trading. ZI 1D mountain ZI falls — Hakyung Kim 6:06 a.m.: JPMorgan upgrades AT & T to overweight JPMorgan is becoming bullish on the investment case for AT & T . Analyst Richard Choe raised his rating on shares to overweight from neutral. He also lifted his target by $3 to $21, suggesting shares could add nearly 19% from Wednesday's close. "The company has been able to show consistent execution in its wireless and broadband businesses and we see solid long-term growth for both segments, especially in broadband with its ongoing fiber build along with incremental opportunities in and out of existing markets," Choe said in a note on Thursday. AT & T is also expected to have "steady" free cash flow generation to support dividend payments, Choe added. Shares of the telecom giant are up 5.4% year to date. Over the past six months, the stock has jumped 23.7%. — Hakyung Kim 5:49 a.m.: Jefferies, RBC lower ratings on New York Community Bancorp New York Community Bancorp's fourth quarter results contained "several negative surprises," according to RBC. The firm downgraded shares to sector perform from outperform in a Thursday note. This came a day after the stock fell more than 37%, its worst-ever trading day since it went public in 1993. NYCB previously managed to weather the regional bank crisis in 2023, and took over the failed Signature Bank during that time. "Despite the negative results, it is important to emphasize management's statement that the dividend cut was not tied to the credit quality outlook. Rather, we believe that management became cognizant of the need to maintain peer-like reserve levels and a CET1 ratio closer to peer levels now that they are over $100 billion in assets and a Category IV bank," analyst Jon Arfstrom wrote in a client note. Category IV refers to banking standards for U.S. banks with total assets of $100 billion or more. Nonetheless, he is moving to the sidelines, citing "growing points from being a larger pain" that will likely weigh on earnings in the near- to medium-term. Arfstrom slashed his price target to $7 from $13, suggesting 8.2% upside potential from Wednesday's close. Jefferies also cited an "unexpectedly faster regulatory mandate" to Category IV bank compliance for NYCB in its downgrade to hold from buy. The firm also lowered its price target to $7 from $12. — Hakyung Kim 5:40 a.m.: Qualcomm's 'beat and raise party may be over,' says Citi Citi is stepping to the sidelines on chipmaker Qualcomm . The firm downgraded shares to neutral from buy following Qualcomm's fiscal first quarter results . Although the company managed to beat on top and bottom lines, its lower-than-expected guidance for the current quarter disappointed Citi. "When we upgraded the stock to Buy, we believed Qualcomm would gain share at Samsung and the stock should trade at a higher valuation given our belief in a beat and raise cycle and we were wrong," analyst Christopher Danely wrote in a Thursday note. He added, "QCOM is within 10% of our price target and it appears the beat and raise cycle is ending so we are downgrading from Buy to Neutral." Danely kept his price target of $160 on shares, suggesting shares could gain 7.7% from Wednesday's close. Bank of America and JPMorgan were slightly more optimistic on the stock, reiterating their buy and overweight ratings, respectively. Bank of America's Tal Liani said "guidance was somewhat lackluster," but believes Qualcomm should benefit from AI trends and a global handset market recovery in 2024. Liani also reiterated his $173 price target. "While revenue upsides are limited by the countercurrents outlined above, the stronger upside is stemming from margins which benefited from better gross margins as well as tighter cost control," JPMorgan's Samik Chatterjee wrote in a Wednesday note. "The margin strength is expected to have a better flow-through to the future quarters than the revenue drivers, and is one of the primary drivers of the raise to our FY24 EPS estimates even though we are lowering our FY24 revenue estimates," he added. Chatterjee lowered his price target by $3 to $170. — Hakyung Kim 5:40 a.m.: Morgan Stanley raises GM price target A focus shift back to internal combustion engine vehicles can give General Motors another jolt higher, according to Morgan Stanley. Analyst Adam Jonas raised his price target on the stock to $43 from $40, implying upside of 10.8% from Wednesday's close. Shares have already gained 8% in 2024. GM YTD mountain GM year to date "Then the company said their first priority was to take advantage of opportunities within their internal combustion portfolio… we had to look twice. Is this the same GM that in the fall of 2021 said it would no longer sell internal combustion engine vehicles after 2035?" Jonas wrote. "In our view, ICE will decline, but at a slower pace than market believes, producing substantial cash flows in the process," he said. "GM has some highly cash flow generative businesses (ICE) but needs to re-calibrate their EV/AV strategies to address cash consumption. We are not in position to ascribe non-zero valuations to these businesses." The note comes after GM reported stronger-than-expected fourth-quarter results earlier this week. — Fred Imbert