Friday's analyst calls: Rivian to nearly double, cloud stock gets an upgrade

Published Fri, Mar 15 20245:50 AM EDTUpdated Fri, Mar 15 20249:21 AM EDT

(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 electric vehicle maker and a major cloud player were in focus in Friday's analyst chatter. Piper Sandler raised its rating on Rivian to overweight, noting the stock can rally 96% from here. Guggenheim also became more positive on Snowflake, upgrading shares to neutral from sell. Check out the latest calls and chatter below. All times ET. 8:08 a.m.: Morgan Stanley downgrades waste company Republic Services Republic Services has outperformed its competitors and the broader market, but the waste management company is expected to face headwinds as inflation normalizes, according to Morgan Stanley. Analyst Toni Kaplan downgraded Republic Services to equal weight while maintaining Morgan Stanley's price target of $199, which implies modest upside of around 7%. Republic Services has outperformed the S & P 500 and its peers by 12% year over year, but Morgan Stanley sees a risk-reward balance moving forward. Waste management companies have benefited from strong pricing growth, but this trend is expected to moderate as inflation comes down. "While pricing in the industry remains stronger than pre-pandemic, we expect pricing growth to moderate as inflation normalizes," Kaplan said. — Spencer Kimball 8:06 a.m.: Morgan Stanley upgrades nCino NCino's valuation is starting to look more reasonable, according to Morgan Stanley. Analyst upgraded the banking software company to equal weight from underweight, saying the stock is now more fairly valued as investor expectations moderate, and the company shifts its focus to profitable growth. "While we still believe consensus FY25 subscription revenue growth of +14.9% y/y is too high such that the company is likely to provide a fullyear growth outlook below consensus (we model +13.1% y/y total revenue growth in FY25), we think the buyside now believes the company will guide in-line with our below-consensus estimates," Faucette wrote on Friday. Additionally, NCNO's recent emphasis on driving profitable growth has caused valuation to appear more reasonable," Faucette added. The analyst's $27 price target is just slightly below where shares closed Thursday, at $29.84. The banking software stock is down more than 11% this year. It gained 2% in premarket trading. — Sarah Min 7:51 a.m.: RBC Capital Markets initiates coverage of Five9 at outperform Software company Five9 could be a major beneficiary from generative AI trends, according to RBC Capital Markets. Analyst Rishi Jaluria initiated shares with an outperform rating and assigned an $80 price target, which implies the stock could gain 34.9% over the next year. The stock is down about 24.6% year to date. FIVN YTD mountain FIV year to date The firm's coverage of the stock is "based on Five9's market leadership position in CCaaS, misunderstood GenAI story, upmarket and international expansion, and potential for margin expansion," he said in a Friday note. "We believe Five9, and the CCaaS space as a whole, will be a real beneficiary of GenAI, while we believe the market is currently treating Five9 as a GenAI loser." Five9 is the "only pure-play" in the space of CCaaS, he added, which is an acronym for contact center as a service, or a cloud-based solution that allows companies to use a contact center provider's software. According to Jaluria, contact centers will buy generative AI solutions from Five9 to move their operations to the cloud. — Pia Singh 7:49 a.m.: Bank of America bets big on TKO Group Bank of America sees sizable revenue opportunities ahead for the newly formed TKO Group . Analyst Brent Navon initiated coverage of the sports and entertainment company at a buy rating, setting a price objective of $100. This implies a 25% rally from TKO's Thursday closing price of $79.70. "With the media industry increasingly fragmenting, we believe there is scarcity value for premium IP companies," he wrote. "Our valuation reflects a unique opportunity to own a quasi-sports league with attractive year-round programming and substantial growth." TKO was formed in September 2023 as a merger between World Wrestling Entertainment and the Ultimate Fighting Championship. The stock is down around 2% so far this year but Navon sees it rising on the back of growing fundamentals. "In '25-'26E, we project a 13% revenue CAGR, a 20% EBITDA CAGR and a 34% FCF CAGR, which we believe offers an attractive combination of top line growth, margin expansion and free cash flow generation," he wrote. The most important catalyst in the intermediate term for TKO are the remaining U.S. media rights deals for the UFC, Navon wrote. "We believe UFC's U.S. rights remain the crown jewel within the TKO's media rights portfolio and will command significant increases upon renewal in '26. Assuming the UFC commands a 1.7x AAV increase, it will drive an incremental ~$143mn in revenue in '26," he added. Additionally, Navon predicts cost savings to come in between $50 million to $100 million, based solely on the initial deal announcement. Meanwhile, he also sees "sizeable" revenue potential, citing sponsorships, ticketing and dynamic pricing, international media rights and expansion, site fees and better monetization of the company's social media engagement. — Lisa Kailai Han 7:27 a.m.: Citi initiates Pure Storage at a buy rating, sees 28% upside ahead It's full speed ahead for Pure Storage , according to Citi. The bank initiated coverage of the technology firm with a buy rating, setting a price target of $65. This is 28% above Pure Storage's Thursday close. Pure Storage stock has already rallied 42% this year alone. Analyst Asiya Merchant noted that this was about a 25% premium to their median multiple but believes this higher valuation is warranted given the firm's transition to subscription revenues, which will drive higher margins and stickier revenues. As another catalyst, Merchant pointed towards Pure Storage's high growth opportunities. "With 100% of its portfolio based on all-flash, Pure participates in the highest-growth subsegment of external storage," she wrote. "AI/ML workloads are likely to further catalyze growth in flash-based subsegment, underpinned by need for faster retrieval/analysis for vast amounts of unstructured data." Merchant added that Pure Storage is poised to drive down its unit costs in the near term. — Lisa Kailai Han 7:19 a.m.: Piper Sandler upgrades DoorDash, still sees stock as overvalued DoorDash is still poised to reap the benefits of Covid-induced consumer food delivery habits, according to Piper Sandler. The investment firm upgraded shares of the food delivery platform to a neutral rating. Analyst Thomas Champion also lifted his price target for DoorDash to $127 from $53, which corresponds to a 4% decline for the stock. Shares of DoorDash have rallied 34% in 2024. While Champion noted that the stock is now the most expensive out of its peer group, he no longer thinks an underweight rating is warranted due to the company's focus on profitability and consistent execution. DASH YTD mountain DASH in 2024 As one catalyst for the change, the analyst pointed to DoorDash's position as the largest player in the U.S. food delivery market, citing his estimation that the company holds around 65% market share. "This strong position allows them to negotiate favorable terms with restaurants and expand market share in the U.S.," he wrote. What's more, Champion believes that there's still "considerable room" for the company to grow. The analyst pointed to shifting consumer habits towards adopting more on-demand delivery services as evidence of this trend. "The on-demand delivery market is still expanding, with new categories like groceries and convenience store items being added. DoorDash should be well-positioned to capitalize on this trend through partnerships and platform improvements," he wrote. — Lisa Kailai Han 6:49 a.m.: JPMorgan sees continued upside for Eli Lilly, nods to its competitive moat Pharmaceutical darling Eli Lilly has more room to run, according to JPMorgan. The bank reiterated its overweight rating on shares of the firm. Analyst Chris Schott lifted his price target to $850 from $775, implying that shares could rally another 12% from Thursday's. Shares of Eli Lilly are already up an eye-watering 31% this year. LLY YTD mountain LLY year to date As a catalyst, the analyst pointed to Eli Lilly's optimal position in the diabetes and obesity market, noting that Zepbound is off to a strong start as cash pay demand for the drug has been greater than expected. "LLY remains one of our favorite names as we see further upside to Street estimates as Mounjaro continues to ramp, Zepbound fully launches in 2024, and the company's incretin pipeline continues to advance," Schott wrote. "In addition, we are encouraged by LLY's efforts to expand its early/mid stage pipeline to address longer-term growth." As an example, the analyst underscored Eli Lilly's prediction that demand for incretions should outstrip supply in the near future, translating to more stabling pricing within the obesity market. Schott estimated that sales for Eli Lilly's incretion franchise could reach $20 billion in 2024 and more than $60 billion by 2030, up from $12.5 billion in 2023. Meanwhile, Eli Lilly's oral GLP-1 drug, orforglipron, could offer further upside for the company once it's past development and has been fully released. "LLY is broadly investing in a next wave of obesity assets with orforglipron representing the most meaningful near-term opportunity in our view … Ultimately, we see LLY and Novo building a still underappreciated competitive moat that will result in a sustained duopoly in this unprecedented large market," the analyst added, nodding towards the company's recent steps into the Alzheimer's space. — Lisa Kailai Han 6:21 a.m.: Citi reiterates buy rating for Micron, sees AI-related tailwinds ahead Micron is the next name poised to ride the artificial intelligence wave, according to Citi. The bank stood by its buy rating and named the semiconductor manufacturer as one of its top picks. Analyst Christopher Danely also raised his price target for Micron to $150 from $95, implying a potential 64% rally for the stock. "This is a 50% premium to Micron's historic range, but we believe MU stock should get a premium given increasing AI exposure and other AI-exposed stocks such as AVGO and AMD have seen a 100% increase in their multiples," he wrote. Shares of Micron have added 7% this year. The firm is scheduled to report its fiscal second-quarter results next week. MU YTD mountain MU year to date "We expect the company to post upside to Consensus and increased guidance for F3Q24 given strong DRAM pricing and shipments of higher-priced, higher-margin, High Bandwidth Memory (HBM) which is shipping with Nvidia AI systems," Danely added. — Lisa Kailai Han 6:13 a.m.: Citi upgrades Thor to buy, notes currently attractive entry point for investors A recent sell-off has opened up an attractive entry point for shares of Thor Industries , according to Citi. The bank upgraded shares of the RV manufacturer to buy rating from neutral, lifting its price target to $122 from $111. This corresponds to upside of 21%. A "tempered" industry outlook and disappointing margin performance led shares of Thor to sell off last week, with the stock now down 15% on the year. But analyst James Hardiman thinks that this pullback has just created an attractive entry point for investors. "While we have resisted previous entry points, following the most recent miss, guide down, and sell-off, we think the worst is behind us, that February declines will be much more modest than those in January, and that the industry is likely to turn positive in April/May," he wrote. "We see the THO story as a 'when' rather than an 'if', and last week's sell off as premature." While Hardiman expects more retail declines in the next two to three months, he expects a positive industry inflection by April or May. This could increase confidence for dealers, original equipment manufacturers and investors, ultimately bolstering Thor's valuations. The analyst also expects that prices and rate cuts will lead to a 17% affordability tailwind in the RV space by the end of 2024, with more gains to be further made in 2024. "Our price target of $122 implies a 22% return, but the appeal in valuation comes if affordability improvement translates into a meaningful improvement in retail demand, which is the driver behind our upside scenario of $193, or nearly 3x the move of our downside scenario of $65," he added. — Lisa Kailai Han 5:56 a.m.: Baird stands by outperform rating on Nvidia ahead of next week's GTC conference Ahead of Nvidia's GTC global AI conference next week, Baird reiterated its outperforming rating on the chipmaker. Baird's $1,050 price target implies that Nvidia stock could still rally another 19%, adding onto its eye-watering 78% gain so far this year. As a catalyst, analyst Trista Gerra noted Nvidia would most likely unveil its next-gen architecture, Blackwell, at the conference. "We expect a very significant step up in performance specs versus H100, as inferred by our channel feedback about the higher pricing versus H100," he wrote. "Nvidia's yearly cadence of new product introductions and performance step up will place increasing pressure on ASIC architectures trying to catch up, in our view." Meanwhile, ongoing robust demand means that Nvidia continues to demand more capacity. Gerra also sees opportunity growth in the enterprise solutions category for Nvidia. These enterprise solutions "are unique to Nvidia, with the weight of the company's entire ecosystem resulting in customizable turnkey solutions in turn now driving rapid adoption of Nvidia's L40S AI architecture in the enterprise," he said. "AI adoption at enterprise is at a very early cycle, boding well for the sustainability of the AI ramp, with no competition so far." After soaring more than 200% last year, Nvidia shares have surged another 77% in 2024. NVDA YTD mountain NVDA year to date — Lisa Kailai Han 5:50 a.m.: Piper Sandler upgrades Rivian to overweight, predicts stock could nearly double Piper Sandler upgraded shares of electric vehicle manufacturer Rivian to an overweight rating from neutral. Analyst Alexander Potter accompanied this move by lifting his price target to $21 from $15, implying that shares could rally 96%, or nearly double. Troubles have plagued the electric vehicle space this year, with Tesla and Fisker as two notable examples. With its stock down 54% this year, Rivian hasn't been exempt. "Make no mistake: buying RIVN is risky and a botched midyear re-tooling effort could yet surprise investors negatively," Potter wrote. "But the newly-unveiled R2 SUV generated 68k orders in less than 24 hours, and we think its sibling, the R3, could be one of the most compelling designs on the market when it is released." The analyst added that this excitement around the new product launch, alongside the company's plans to delay capex and build R2 in an existing plant, should lead to investors feeling more bullish in general about the stock. If the R3 vehicle is priced right, Potter believes it could become Rivian's top seller. Meanwhile, Potter's new model reflects cost savings efforts at Rivian, which would also require only half as much new capital as the firm would previously have needed. The "real endgame," Potter added, was that Rivian was the only automaker following Tesla's vertical integration strategy by scaling up and monetizing its services. "If Rivian can achieve cash flow breakeven in the late 2020s, which is our expectation, then the company should be able to self-fund the production of an internet-connected vehicle fleet and, ultimately, unlock operating margins in the teens," he wrote. "Now that near-term balance sheet concerns have (mostly) been addressed, we think investors can turn their attention back to this bullish thesis and stop fretting so much about cash burn." — Lisa Kailai Han 5:50 a.m.: Guggenheim upgrades Snowflake Things should starting to turn for the better for Snowflake , according to Guggenheim. Analyst John DiFucci upgraded the cloud stock to neutral from sell. He also pulled his $120 price target, which implied downside of more than 24%. "We believe SNOW has a mountain of challenges in front of it that will continue to feed material investor worry, and this likely won't dissipate any time soon," DiFucci wrote Thursday. "At the same time, even if Snowflake only remained a strong cloud-based data warehouse vendor with little success in penetrating the adjacent markets it aspires to, it will remain a valuable asset, in our view; though perhaps not as valuable as it is even today." Snowflake shares have struggled this year, losing 20%, in part due to Frank Slootman stepping down his CEO role. The stock rose slightly in the premarket. SNOW YTD mountain SNOW year to date — Fred Imbert