Wednesday's analyst calls: Tesla price target cut, big retailer gets an upgrade after strong earnings

Published Wed, Mar 6 20245:40 AM ESTUpdated Wed, Mar 6 20248:09 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.) A major electric vehicle maker and a retail giant were in focus among early analyst calls Wednesday. Morgan Stanley cut its price target on Tesla after trimming its profitability forecasts. On a more positive note, HSBC upgraded Target to buy from hold on the back of a strong fourth-quarter report. Check out the latest calls and chatter below. All times ET. 8:09 a.m.: Bank of America downgrades Old Dominion Freight A weak start to the first quarter could put Old Dominion Freight Line on the sidelines, according to Bank of America. Analyst Ken Hoexter downgraded Old Dominion to neutral from buy, citing early first quarter data that shows softness in less-than-truckload shipping volumes. "We see limited upside to our [price target] given its elevated multiple and as volume growth has lagged our forecast," the note said. Despite Old Dominion's issues, investors should not read too broadly into its shipping data due to a key strategy difference from its rivals, according to Bank of America. "Old Dominion remains focused on delivering consistent 100-150 bps of pricing over cost inflation while protecting service for existing shippers. Given its longer-term strategy, its -3.0% decline in 1QTD tonnage lags peer Saia's +7.2% and XPO's +1.2%," the note said. — Jesse Pound 7:38 a.m.: Troubles for Apple continue in China, says JPMorgan Don't expect Apple's headwinds in the Chinese market to subside anytime soon, according to JPMorgan. Apple sales in China dropped 24% on a yearly basis in the first six weeks of 2024 . By comparison, sales grew 30% year-over-year in 2023, and as much as 173% in 2021. Apple's 2024 decline also outpaces the broader 7% fall in China smartphone unit sales in the six-week period. "The magnitude of the decline ... suggests an acceleration in the pace of declines relative to the Dec-end quarter, for which the management team had commented that iPhone sales were down mid-single digits," analyst Samik Chatterjee wrote. To be sure, Chatterjee maintained his overweight rating and $175 price target on the stock Shares are currently down 11.6% year to date. "Despite the share loss in the China market, we do expect a recovery in the overall China smartphone market to be a positive catalyst for the shares given the implication on Apple's volumes as well as implications of better consumer spending on Services revenue as well," Chatterjee wrote in a Wednesday note. However, he noted that visibility remains cloudy. — Hakyung Kim 7:19 a.m.: Bank of America reiterates XPO as one of its 'top transport picks' Trucking carrier company XPO could be a winner in the transport sector thanks to its earnings potential and "trapped value," according to Bank of America. The firm reiterated its buy rating and notched up its price target by $5 to $137, which implies 11% upside from Tuesday's close. Analyst Ken Hoexter cited better-than-expected results, such as volume growth momentum and strong pricing momentum as to why XPO remains one of his favorite picks among transport stocks. "The company is set to deliver outsized earnings growth over the next few years (30% CAGR '24e-'26e) given its moves to ramp its network and reduce costs," Hoexter wrote in a Tuesday note. Shares have surged 40.8% year to date. The stock gained an additional 1.6% Wednesday before the bell. — Hakyung Kim 7:04 a.m.: MongoDB 'the best way' to play generative AI, says Wells Fargo Ahead of the developer data platform's earnings report Thursday after the bell, Wells Fargo reiterated its overweight rating on shares. The firm is particularly optimistic on MongoDB's cloud database Atlas. The stock is down 0.9% in 2024, lagging the S & P 500's gain of more than 6%. "Shares of MDB have underperformed since 3Q24 and the stock now trades at a discount to the peer group. While we are concerned with the FY25, we believe MDB is still the best way to play Gen AI off the heels of strong Atlas growth," analyst Andrew Nowinski wrote in a Wednesday note. MongoDB is also the best-positioned among its peers to capture workloads from AI applications, Nowinski added. The analyst has a price target of $500, which implies upside of more than 20% over the next 12 months. Shares declined nearly 8% Wednesday before the bell. — Hakyung Kim 6:51 a.m.: JPMorgan raises CrowdStrike price target after earnings beat CrowdStrike is managing to grow quickly while delivering strong results, says JPMorgan. The bank raised its price target by $21 to $371, suggesting nearly 25% upside potential from Tuesday's close. It also maintained an overweight rating on the stock. Shares rallied more than 23% Wednesday premarket after the company's fourth-quarter earnings and revenue topped analysts' estimates. Full year revenue guidance also beat consensus estimates. Analyst Brian Essex believes the company on pace to reach $100 billion in market cap "faster than we expected with better growth, profitability and [free cash flow]." "Considering challenges that peers have had this quarter, there was a lot to like about CRWD's results as the company continues to out platform its platform peers with its data centric, AI cloud native, single agent architecture and the most efficient go to market dynamics within our coverage universe," Essex said in a Wednesday note. — Hakyung Kim 6:36 a.m.: Barclays initiates UnitedHealth with overweight rating Barclays thinks UnitedHealth is better-positioned among its peers amid a challenging environment for Medicare. The firm initiated coverage on the health insurance stock with an overweight rating in a Tuesday note. Medicare is the public health insurance system for people 65 and older or with disabilities. Senior citizens have begun to utilize facilities and services more, according to analyst Andrew Mok. Combined with regulatory rate cuts, the future for Medicare is uncertain — but UnitedHealth could weather the challenges better than its peers, Mok said. "Fortunately, Medicare is a short-tailed business and plans can rebid annually. Unfortunately, bids are a competitive process dependent on the (sometimes unpredictable) actions of others," Mok said. "Simply put, there's too much uncertainty to 'look through' 2024. We think UNH is best-positioned over a multi-year period." Mok has a price target of $551 on shares, suggesting 16.4% upside potential. The stock is down more than 10% year to date. UNH YTD mountain UNH year to date — Hakyung Kim 6:04 a.m.: Honeywell upgraded to buy at Berenberg Shares of Honeywell have underperformed this year — which Berenberg believes creates an entry point for investors. The firm upgraded shares to buy from hold. It holds a price target of $240, which implies shares could rally 21.6% from the previous close. Previously, the firm advised owning a basket of stocks that could represent the sum-of-the-parts (SOTP) of Honeywell, which includes aerospace chemicals and automation. However, shares have now underperformed this SOTP composite by 25%, according to analyst Philip Buller. Honeywell's management and "relentless" focus on profitability also stand out from its peers in the industrials sector, Buller added. "After a continued derating, valuation multiples no longer reflect the quality of this asset, to the extent we would favour Honeywell over many of the constituents of the SOTP at this juncture," said Buller. Year to date, shares are down more than 5%. — Hakyung Kim 5:49 a.m.: Progressive on pace for market share gains, says Morgan Stanley Insurance company Progressive could become the largest personal auto loan underwriter in the U.S., according to Morgan Stanley. The firm upgraded shares to overweight from equal weight. It also notched up its price target to $227 from $185, implying shares could gain 18.5% from Tuesday's close. "Progressive's strong culture of tech innovation, favorable competitive environment, and gradual business mix shift should give it the ability to outgrow the market," analyst Bob Jian Huang wrote in a Wednesday note. According to Huang, the company could capture more than 19% market share in five years. The company is structurally better-positioned than its competitors, Huang said. The stock has rallied more than 19% this year, outperforming the S & P 500's 6.4% rise. — Hakyung Kim 5:40 a.m.: HSBC upgrades Target After a strong fourth quarter, HSBC thinks Target is primed for a turnaround. The bank upgraded the retailer to buy from hold, increasing its price target to $195 from $140. The new forecast implies upside of nearly 16% from Tuesday's close. "Target is a true omnichannel retailer, blending 2,000 physical stores with digital sales (18% of total sales in FY2024), where stores operate as hubs for digital orders," analyst Daniela Bretthauer wrote. "Going forward the company plans to pick up its store opening pace and open 300 new stores, and extend its assortment with a focus on new partnerships all of which should strengthen further Target's brand recognition." Target shares rallied 12% on Tuesday after the company posted quarterly earnings that beat analyst expectations. For the year, they are up 18.4%. TGT YTD mountain TGT year to date HSBC wasn't the only firm becoming more bullish on Target. Deutsche Bank raised its rating on the stock to buy as well with a price target of $206, which implies upside of more than 22%. "With 2024 initial guidance behind us (appears reasonable while leaving room for upside), traffic improvements underway, and the company's top line on track to inflect positively starting in 2Q, we see a number of drivers ahead for sustained SSS growth and EBIT margin expansion, resulting in EPS of $10+ in the not-too-distant future," analyst Krisztina Katai wrote. — Fred Imbert 5:40 a.m.: Morgan Stanley cuts Tesla price target 2024 will be for electric vehicles, said Morgan Stanley's Adam Jonas, who warns that Tesla could lose money this year. Tesla shares have already fallen by more than 27% year to date. The automaker is struggling with demand challenges, increasing competition and investor concern over price cuts. Jonas lowered his price target on Tesla to $320 from $345 to reflect more pessimistic profitability forecasts. To be sure, the new price target still implies 70.8% upside potential from Tuesday's close. He also maintained his overweight rating on the stock. "We believe Tesla has significant attributes to be valued as an AI beneficiary, but the company must see a stabilization in the negative earnings revisions within the auto business first," said Jonas. "At the same time, however, we believe investors should not ignore the continued developments of Tesla's other plays, many of which are auto-related … and other areas that we do not include within our $320 target but that the market may include (i.e. Optimus)," the analyst said. Further updates on these are likely to come during the company's AI Day, for which the date is not yet set, Jonas added. — Hakyung Kim