Tuesday's analyst calls: Nvidia a top AI pick, Tesla cutting prices too much?

Published Tue, Mar 5 20245:45 AM ESTUpdated Tue, Mar 5 20249:22 AM EST

(This is CNBC Pro's live coverage of Tuesday's analyst calls and Wall Street chatter. Please refresh every 20-30 minutes to view the latest posts.) Nvidia and two electric vehicle makers were in focus in the analyst chatter for Tuesday. Baird named Nvidia a top artificial intelligence/machine learning play, calling for a more than 20% gain in the stock. Meanwhile, Goldman Sachs noted Tesla and Rivian need to be careful when cutting prices. Check out the latest calls and chatter below. All times ET. 8:11 a.m.: Guggenheim hikes price target for Dollar Tree Discount retail company Dollar Tree is poised for a strong year, according to Guggenheim. Analyst John Heinbockel raised estimates for Dollar Tree ahead of the company's earnings report next week. "We regard DLTR as among the best-positioned retailers amid a still challenging operating backdrop and modestly raise our 4Q and 2024 top- and bottom-line estimates while reiterating our BUY rating," Heinbockel said in a note to clients. Heinbockel hiked the price target on Dollar Tree to $170 per share from $155. The new target is 16% above where the stock closed Monday. The optimism from Guggenheim is not necessarily a call for a big year for discount retailers in general. Part of Dollar Tree's upside comes from its plans to cut costs in its Family Dollar division, according to Heinbockel. "We are confident that the significant potential value creation at DLTR will not be obscured by any underperformance at FDO," the note said. — Jesse Pound 7:43 a.m.: UBS downgrades Chemours to neutral, cites lack of visibility Chemours can't escape its issues in the short term, according to UBS. The bank downgraded shares of the chemical company to a neutral rating from buy, at the same time slashing its 12-month price target to $21, down from $37. This implies that shares of Chemours could rise a mere 4% from their current level. The chemical firm has already slid 36% this year. While analyst Joshua Spector remains positive on the stock's fundamentals, he cited a lack of visibility as a reason for the downgrade. "We see the ongoing investigation and internal changes (CEO/CFO removed) as an overhang for the stock. With issues ranging from 'tone at the top' to accounting issues, it is difficult to gauge the extent of the issue without further information," he wrote. The analyst added that it will take some time before investors regain their trust in the company's management, the extent of which will depend on the investigation's outcome and financial implications. However, Spector believes the company is taking proactive measures to wind down its major risks. — Lisa Kailai Han 7:22 a.m.: Citi renews buy rating on Novo Nordisk on higher GLP-1 supply expectations Analyst Peter Verdult assigned a buy rating on Danish drugs manufacturer Novo Nordisk , forecasting the company's sales to grow above consensus between 2023 and 2028. The analyst's roughly $141 price target implies the stock, which has already jumped more than 23% so far this year, could gain nearly 10.9%. Shares declined 1.6% in early morning trading. "We expect the upcoming CMD to reveal the market underappreciates the scale of Novo's ambition with respect to scaling GLP-1 supply and, potentially, Ozempic data from FLOW and Wegovy "high-dose" obesity data," Verdult wrote in a Tuesday note. With Ph III CagriSema obesity data due at the end of this year, and Ph III sema data in NASH/Alzheimer's scheduled for 2025, Verdult said he finds it "difficult not to remain constructive." The analyst also anticipates the company will leverage its market dominance by launching authorized generics of its Ozempic and Wegovy diabetes and weight loss drugs. — Pia Singh 6:51 a.m.: Williams-Sonoma's valuation is significantly above historical mean levels, according to Loop Capital It may be time to ease positions on Williams-Sonoma, according to Loop Capital. Anthony Chukumba downgraded Williams-Sonoma to hold from buy. He increased his price target by $20 to $220, however, suggesting shares could shed 7.4% from Monday's close. "Our downgrade is based on the current valuation, as opposed to a more bearish view of the company's fundamentals," Chukumba wrote in a Tuesday note. "While we continue to believe Williams-Sonoma "bears" are underestimating the company's ability to maintain current profitability levels and have a bullish long-term fundamental view, we think this is priced in at current levels. Thus, we await a more attractive entry point to become more constructive on the stock again." The stock–which is up 17.8% so far this year–is currently trading well above Loop Capital's consensus diluted earnings per share estimate for F2024, and its current valuation is a premium to the historical 10-year average, according to Chukumba. The analyst noted that the company is still maintaining profitability due to a variety of factors, including its shift to e-commerce and elimination of sitewide promotions. "We believe upside potential and downside risk are fairly balanced at current levels," he wrote. The stock declined 1.1% in premarket trading. — Pia Singh 6:28 a.m.: JPMorgan upgrades Sea Limited after company turned a profit last year JPMorgan expects Southeast Asian tech giant Sea to continue generating higher earnings. Analyst Ranjan Sharma upgraded the internet services company to overweight from neutral and hiked his price target by $27 to $70, implying 29.9% potential upside for the stock. Shares added nearly 2% in premarket trading after the company reported its first profitable year, which sent them 5.6% higher on Monday. "In the current competitive environment, SE is likely to continue increasing commissions while reducing the intensity of sales and marketing spend," Sharma wrote in a Tuesday note. "However, we believe that the high take-rates could result in volatility in earnings expectations with changes in the competitive environment." Sharma recommended investors to trade the changes in share price, which he expects to be volatile, and said he believes earnings expectations will likely lead to positive earnings revisions in the near-term, driven primarily by e-commerce growth. The company's gaming guidance is also a "positive surprise," he noted. The company guided Free Fire gamers and gross bookings to increase by double digits this year. — Pia Singh 6:07 a.m.: Morgan Stanley downgrades Sunnova, slashes target price Despite having increased uncertainty around Sunnova's growth case, Morgan Stanley thinks the company's discounted trading levels could generate strong returns. Analyst Andrew Percoco downgraded shares to equal weight from overweight and slashed his price target by $10 to $14, which still suggests nearly 103% potential upside for the stock. "We believe there is a large dislocation between NOVA's stock price and the value of the company's asset base, but we see a less clear path to realizing that value over the next 12 months, driving our decision to downgrade the stock," the analyst wrote in a Monday note. NOVA YTD mountain NOVA year to date Percoco said he expects a "volatile and challenging short-term trading environment" for the stock as the market digests Sunnova's funding structure and free cash flow generation. Upside catalysts for the stock include lower interest rates — which tend to help residential solar project financing — and Sunnova's execution of its 2025 cash generation guidance of between $200 and $500 million. Sunnova shares have declined more than 55% year to date and roughly 62.2% over the past year. — Pia Singh 5:45 a.m.: Baird names Nvidia a top AI/ML idea, thinks shares can pop more than 20% Nvidia and several big tech companies, including Amazon and Meta Platforms , are included in Baird's updated top ideas in artificial intelligence and machine learning. "While the implications of AI vary across sectors, we collectively believe the AI tidal wave is still in the early innings," Analyst Tristan Gerra wrote in a Tuesday note. "Thus, we are updating our list of companies that we believe have advanced AI capabilities and/or will be the biggest beneficiaries of the rise of AI-powered applications." Gerra noted that Nvidia has been one of the major early beneficiaries of the AI momentum, but that it's growth is "more than hype." Baird's $1,050 price target suggests shares can still climb more than 23%. Nvidia's stock, which is up more than 72% this year, edged lower 1.2% in premarket trading. Meta is a new addition to Baird's top picks. The firm noted the Facebook owner as a generative AI infrastructure leader alongside Amazon and Google, and said the company is rapidly improving its generative AI capabilities and is well-positioned to continue building AI into customer-facing applications. Baird's $525 price target implies 5.4% potential upside for Meta shares. The stock is up more than 40% this year, and dipped about 0.7% in Tuesday's premarket. — Pia Singh 5:45 a.m.: Tesla and Rivian need to be more selective on price cuts, Goldman says Goldman Sachs thinks Tesla and Rivian need to be careful when they cut prices. "Our analysis suggests that Tesla and Rivian should be targeted on additional price reductions in the US that are faster than cost downs, with the Model 3/Y already affordable to many US consumers, and Rivian generally selling to a less price sensitive consumer at ~$70K+ price points," analyst Mark Delaney wrote. "While our analysis shows that a 1% price reduction generally correlates to a low single digit increase in volume in the mainstream part of the market, we estimate that incremental broad-based price cuts to Model 3/Y would be negative to profit dollars at least in the short-term," he added. Electric vehicle makers have struggled recently as consumers opt for more internal combustion engine and hybrid cars. Rivian is already down more than 53% this year, while Tesla has lost 24%. TSLA RIVN YTD mountain RIVN and TSLA year to date Delaney has a neutral rating on both stocks. His Tesla target of $220 implies upside of 17%, while his $13 forecast on Rivian points to a 19% gain from here. — Fred Imbert