Friday's analyst calls: General Electric gets upgraded, Deutsche names a top Chinese EV pick

Published Fri, Mar 8 20245:41 AM ESTUpdated Fri, Mar 8 20248:30 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.) An industrial giant and Chinese electric vehicle play were in focus among Friday's analyst calls. JPMorgan upgraded shares of General Electric to overweight. Meanwhile, Deutsche Bank initiated Li Auto with a buy rating. Check out the latest calls and chatter below. All times ET. 8:30 a.m.: Melius ups estimates on Advanced Micro Devices, calls stock the 'Nvidia-Mini' Melius Research upped its price target on shares of Advanced Micro Devices to $265 from $192, citing improving data center prospects. "With a chip optimized for the inferencing explosion, AMD is just getting going as AI models move into production," wrote analyst Ben Reitzes. "While our rapid revisions look like misprints – it shouldn't be all that surprising since you saw what happened with Nvidia last year when buying picked up." Shares of Advanced Micro Devices have surged 43% so far in 2024, with the firm's price target implying another 25% upside. He anticipates the company's MI300X product to benefit as AI enters its inferencing phases. Reitzes likened AMD's chart to a "mini-Nvidia on a delay," but said that its progress shouldn't have an "adverse impact" on Nvidia's momentum given the AI darling's dominant position in the market and the large total addressable market. "Nvidia continues to do AMD and everyone else a favor by expanding the market and driving awareness," he said. — Samantha Subin 8:18 a.m.: Citi hikes price target for Instacart Instacart has the runway to continue its hot start to the year, according to Citi. Analyst Ronald Josey reiterated a buy rating on Instacart and raised the price target to $42 per share from $36, citing improved visibility into orders. The new target is more than 20% above where the stock closed Thursday. "While we acknowledge competition is ramping across the online grocery sector, we believe Instacart's longstanding partner relationships, its deep technology integrations, and order history create significant competitive advantages," Josey said in a note to clients. The valuation for instacart remains attractive even if its growth profile is not eye-popping, according to Citi. "Growth remains below that of its online grocery peers, but with shares trading at ~10x our '25 EV/EBITDA, we believe the risk-reward is favorable as execution continues to improve," the note said. The stock has already jumped more than 40% year to date. — Jesse Pound 7:34 a.m.: Bank of America downgrades Vail Resorts on weak visitation Despite improving snow conditions, Vail Resorts isn't seeing a strong rebound in visitation, Bank of America said. The bank downgraded the ski resort to neutral from buy, citing a more challenging setup from here. Analyst Shaun Kelley sees a risk to Vail's full-year guidance due to the weak visitation and a risk to its 2025 estimates as its year-over-year organic growth is slower than anticipated. Vail had already narrowed its guidance to the lower half of its original guidance after the season got off to a weak start. "We think this was predicated on trends improving through the season, which now seems optimistic given 1) Placer visitation to domestic resorts is -8% Y/Y since the early season update, and 2) recent Inntopia mountain lodging data shows winter (Nov-April) occupancy -6% Y/Y," Kelley said. He also lowered his price target to $250 from $285, suggesting nearly 11% upside from Thursday's close. — Michelle Fox 7:31 a.m.: Bank of America upgrades aircraft manufacturer Textron to a buy rating Textron has room to fly higher, according to Bank of America. The bank upgraded shares of the aircraft manufacturer to a buy rating from neutral. Textron stock has popped 12% this year, but the bank's updated price target of $105, up from $85, implies that there is still room for a further 16% upside. "Textron has been one of our better performing large caps YTD, up 12.31% (vs. S & P 500 +8.17%). However, concerns around Industrials, falling bizjet demand, and poor defense sentiment have peaked, translating into a multiple that is roughly one standard deviation below the historical average," wrote analyst Ronald Epstein. "Our higher multiple accounts for 1) stronger Aviation performance despite the post-COVID demand decline, 2) efforts to consolidate costs at Industrial, and 3) a robust Systems pipeline that should materialize in stronger outyear growth," Epstein said. Due to the company's aging portfolio and possible future budgetary cuts, Epstein provided the caveat that his relative multiple remains below Textron's historical average. One catalyst the analyst cited was a strong outlook this year for the aviation industry. And although industrials remain underappreciated by the market, Textron is making the right moves to cut costs and unlock underlaying business value such as through reducing headcount, Epstein said. "Fundamental conditions remain strong, and demand and utilization remain above historical norms," he wrote. "Near-term revenues are buffered by an already robust backlog. We now expect 2024 revenue growth of 13.6% Y/Y." Meanwhile, the company plans to prioritize share buybacks through 2024, an approach which should be well-received by investors, the analyst added. — Lisa Kailai Han 7:08 a.m.: Goldman Sachs upgrades Coinbase, pointing to crypto tailwinds Shares of Coinbase could continue to rally alongside the crypto market, according to Goldman Sachs. The investment bank upgraded shares of the cryptocurrency exchange platform to a neutral rating from sell, citing bitcoin's moves to all-time highs as a catalyst. Increased retail participation has pushed Coinbase's daily volumes to between $3 billion to $5 billion, levels not seen since 2021, analyst Will Nance said. Shares of Coinbase have rallied 40% this year, alongside the broader cryptocurrency market. Nance's 12-month price target of $282, up from $170, implies that there could be another 16% to go. "We attribute the outperformance in shares to the significant increase in crypto prices, as well as the company's commitment to managing towards more consistent profitability over time, which we had underestimated," the analyst wrote. "While we still see limited use cases for crypto at present, the 'beta' to the price action has significantly outweighed any alpha from not seeing an acceleration in retail adoption over time." The company's renewed commitment to increasing profitability while controlling expenses presents another tailwind. Coinbase could also benefit from higher interest rates, due to the firm's revenue shares in interest income. Nance also attributed Coinbase's outperformance to more focused regulation in the crypto market. "Ultimately this regulatory crackdown has benefited Coinbase given its historical focus on regulatory compliance, manifested in trading market share gains over this timeframe (despite a dramatically smaller market)," he wrote. — Lisa Kailai Han 6:58 a.m.: D.A. Davidson upgrades MongoDB, sees room to rally D.A. Davidson sees positive upside ahead for MongoDB . The firm upgraded shares of the database stock to a buy rating from neutral. Analyst Rudy Kessinger accompanied this move by raising his price target to $430 from $405. Shares of MongoDB are fractionally higher this year. Kessinger's updated price target indicates that they could edge 4% higher from here. "We are buyers on the weakness as the FY25 guide is very conservative, particularly on implied Atlas growth," the analyst wrote. "We see significant upside to estimates as likely throughout the year & find shares attractive at 13x EV/CY25 Rev with that in mind." Kessinger noted that the firm's first-quarter and full-year guidance for the year 2025 remain on the lower end. "This seems very, very conservative, particularly as consumption growth in FY25 is expected to be similar to FY24, newer products such as Relational Migrator will likely drive stronger new workload acquisition, and mgmt. is accelerating sales capacity additions," he wrote. Furthermore, Kessinger believes that artificial intelligence could be a long-term growth driver for the firm. "Mgmt. noted that it's going to take AI applications being deployed at scale for it to really positively impact their business, which is expected to be 'at least another year' out," he added. — Lisa Kailai Han 6:56 a.m.: Victoria's Secret gets double downgraded by Bank of America Underwhelming comparable sales and weaker-than-expected guidance have Bank of America throwing in the towel on Victoria's Secret . Analyst Alice Xiao downgraded the stock to underperform from buy. She also slashed her price target to $15 from $34. The new target calls for a 16.7% decline. The stock this week has lost more than 36% after the company reported full-year operating income guidance that was well below what the Street expected. VSCO mountain 2024-03-01 VSCO this week "We see risk to F24 sales guidance, as it assumes the broader lingerie market will stabilize in 2H after declining MSD in 1H, as well as the impact of initiatives in sport and technology materializing," Xiao wrote. "We see downside risk to these assumptions should the broader lingerie market continue its secular decline throughout the year given the deflationary shift to less structured, more casual, and multi-functional bras." 6:36 a.m.: Citi cuts Apple price target, moves stock down from top picks Apple's woes aren't likely to evaporate anytime soon, according to Citi. The bank lowered its price target for the tech titan to $220 from $225, implying that shares still have a potential 33% upside from their Thursday closing price of $169. The "Magnificent Seven" member is down 12% so far in 2024, weighed down by weak iPhone sales in the Chinese market. At least in the near term, analyst Atif Malik expects this trend to continue. "We lower our Mar-Q China unit estimates modestly down by 0.4M, or -21% Y/Y from prior -17% on continued weak consumer confidence and Huawei patriotism," he wrote. "We now model total iPhone units flat in CY24 at 231M." However, Malik underscored that premiumization supported by services growth and AI smartphones is enough to justify his buy rating on the stock. Citi also moved Apple down from its previous status as its number-two communications stock pick, "as the upside case of AI adoption in smartphones appears more of a 2025 event," Malik wrote. — Lisa Kailai Han 6:23 a.m.: RBC upgrades Carvana to sector perform from underperform RBC Capital Markets is betting that a bright outlook could push Carvana higher from here. The firm upgraded shares of the automobile e-commerce platform to sector perform from underperform. Analyst Brad Erickson more than doubled his price forecast for the stock to $90 from $45, implying that shares could rise 13% from here. Carvana has already rallied an eye-watering 50% this year. CVNA YTD mountain CVNA year to date "We believe CVNA's recent run has the potential to trade even higher before reasonable valuations may matter again making risk/reward on an Underperform rating infeasible for the foreseeable future," Erickson wrote. The analyst added that an "extremely favorable" setup in Carvana's unit acceleration could push the stock "well above" $100. Meanwhile, he believes that analysts may be underestimating the company's amount of cash generation per car. "Investors routinely note the company burns significant cash/ car when normalizing for quarterly fluctuations in inventory and timing differences between finance receivable originations and sales," he noted. "After spending time with the company, it appears further adjustment below the operating cash flows is necessary to reflect steady state operations and points to modest cash burn in Q3 and cash generation/car in Q4 steady state," the analyst added. Although Carvana owes an estimated $7.4 billion in the next seven years, Erickson believes the company's improvements in per car profitability could provide some leeway to cover future debt costs. "This, combined with any further rise in the stock would become self-reinforcing, enable improving access to refinancing and reduces any lingering future liquidity concerns even further," he added. — Lisa Kailai Han 5:56 a.m.: Oppenheimer downgrades Figs as near-term challenges linger Time to move to the sidelines on Figs , according to Oppenheimer. The firm downgraded shares of the health care apparel company to perform from outperform. Analyst Brian Nagel accompanied this change by removing his price target for the stock, which was previously set to $9. Figs is down 23% this year, but Nagel still doesn't believe the stock has presented an attractive enough entry point for investors to buy in. "While the valuation of FIGS tracks well below recent highs, multiples for shares are not necessarily 'washed out' and still somewhat susceptible to further unfavorable rerating amid prospects for ongoing, nearer-term fundamental malaise," he wrote. While Nagel remains constructive in the long term on Figs, he said the company faces too many internal and external challenges in the near term to ignore. "2024 is shaping up as another post-pandemic, transitional year for FIGS, impacted by stepped up, somewhat 'catch up' related, outsized investment spending, and still sluggish purchasing activity, on the part of core consumers," he wrote. "While we are optimistic that sub-algo trends in 2024 are likely to give way to strengthening dynamics in subsequent periods, we are hard-pressed, at least at this juncture, to envision meaningful upside to current subdued, nearer-term forecasts and guidance for FIGS," Nagel added Nagel thinks these concerns will translate to EBITDA margins slowing to 11-12% in 2024, down from 15.8% in 2023. Additionally, he also expects the company's top-line expansion to be depressed. — Lisa Kailai Han 5:48 a.m.: Morgan Stanley upgrades UBS to overweight, cites pickup in investment banking activity A pickup in investment banking activity could lead to big windfalls for UBS , according to Morgan Stanley. Analyst Giulia Aurora Miotto upgraded the bank stock to overweight from equal weight. U.S.-listed shares of UBS have edged nearly 4% lower this year, but Miotto thinks they could recover as the bank finally realizes the tailwinds from its acquisition of rival Credit Suisse. UBS YTD mountain UBS year to date "2024 and 2025 will be transitional years as UBS executes on the merger with CS," she wrote. "But our analysis suggests that cyclically the stars are aligned for IB and WM to outperform, leading UBS to beat rebased estimates." Miotto expects a strong comeback of the investment banking pipeline in 2024 and 2025, and predicts that cash will flow away from the money market into fixed income first and then equities. "We think these trends are very supportive to UBS's business model and are not captured in consensus yet (we are 20% higher on IBD revenues for UBS)," she added. Meanwhile, UBS' wealth management business is a fantastic driver over the long run. "Long-term, we like the exposure to Wealth management, where we see structural growth coming from global wealth creation, vs a more muted outlook for European banks," the analyst said. — Lisa Kailai Han 5:41 a.m.: Deutsche Bank initiates Chinese electric vehicle manufacturer Li Auto as buy Li Auto looks primed to capitalize on the growing Chinese electric vehicle market, according to Deutsche Bank. The bank initiated coverage of the Chinese electric vehicle manufacturer at a buy rating. Analyst Bin Wang cited the company's market positioning as one of its greatest catalysts and called it a top pick. "Li Auto is the largest 6 / 7 seater vehicles manufacturer in China with a 13.8% market share in 2023, which is the sweet spot of the automobile electrification mega-trend in China," he wrote. Wang noted that the firm is slated to enter the pure electric vehicle market this month with the Mega MPV, its new flagship vehicle. Li Auto also plans to strengthen its position as the second-largest plug-in hybrid electric vehicle maker through the launch of its L6 large-size SUV next month. Li Auto is also emerging as an industry leader in the AI-powered autonomous driving field, Wang added. Additionally, the company had the highest gross margin among China new energy vehicle manufacturers, with the figure coming out to 21.2% in the first half of last year. "This is a result of Li Auto garnering a higher average selling price (ASP) from its 6 / 7 seater vehicle segment exposure and best-of-breed execution efficiency, which leads to a lower-per-unit fixed cost than peers," Wang said. U.S.-listed shares of Li Auto have slipped close to 3% this year. — Lisa Kailai Han 5:41 a.m.: JPMorgan upgrades GE to overweight General Electric has been on a roll recently, and JPMorgan expects the outperformance to continue. The bank upgraded the conglomerate to overweight from neutral. It also hiked its price target to $180 from $166, implying upside of 13%. "It is clear that GE is the premier large cap name in Comml Aero with regard to 1) the business, 2) where that business is in the cycle, 3) the balance sheet, and 4) the mgmt team," analyst Seth Seifman wrote. "Some of this is priced in and valuation is an obstacle ... but it is the only obstacle for us right now and with upside remaining, we think the companys fundamental strength wins out," Seifman added. "Vernova looks promising as well based on rebounding margins and cash flow, as well as diversified exposure to the long-term energy transition." GE shares rose 1% in the premarket following the upgrade. Year to date, they are up more than 30%. DIS YTD mountain DIS year to date — Fred Imbert