Wednesday's analyst calls: Tesla price target cuts, GE spinoff to pop more than 20%

Published Wed, Apr 17 20245:44 AM EDTUpdated Wed, Apr 17 20249:23 AM EDT

(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.) Two of Wednesday's biggest calls on Wall Street centered around a major electric vehicle maker and a newly spun-off energy company. Barclays cut its price target on Tesla. Meanwhile, Raymond James kicked off its coverage of GE Vernova with an outperform rating. Check out the latest calls and chatter below. All times ET. 7:43 a.m.: Bernstein reiterates outperform on red-hot Ferrari European auto stocks have continued to rally in 2024 after a strong run last year, but there still appears to be room to run for names like Ferrari , according to Bernstein. Analyst Stephen Reitman said in a note to clients that the valuations for the group still look mostly reasonable and that investor sentiment toward these stocks is improving. "Many investors are asking if there's more to the sector rally than fleeting margin improvements and sector rotation. We believe there are good reasons for investors to remain cheerful rather than fearful about Autos." Ferrari, which is already up more than 20% year to date, is one of Reitman's recommended stocks. "With its order book covered until at least the end of 2025, Ferrari does not so much sell its products as allocate them, making it 'Even more Hermès than Hermès,'" the note said. — Jesse Pound 7:41 a.m.: TD Cowen becomes bullish on Elf Beauty Elf Beauty is on the path for superior growth, says TD Cowen. The firm upgraded Elf Beauty shares to buy from hold. To be sure, it lowered its price target to $190 from $220, citing the recent pullback in shares. Although the stock is up nearly 15% year to date, it has declined 15.5% in April. Nonetheless, TD Cowen believes the company's "premium growth deserves a premium valuation." According to analyst Oliver Chen, revenue could double over the next three years into a double-digit long-term growth story. He cited Elf's consistent innovation and strong connection to its consumer base. "We remain impressed by new product introductions increasing overall growth at key franchises such as Camo, Halo, and Putty, as well as the international and skincare growth opportunities," said Chen. "Valuation is rich, but ELF's LT low-to-mid 20% EPS growth algorithm warrants a premium multiple prospects provide a floor for the stock, in our view." — Hakyung Kim 7:06 a.m.: Wells Fargo remains bullish on Microsoft ahead of earnings next week Wells Fargo analyst Michael Turrin kept his overweight rating and upped his price target on Microsoft ahead of earnings, saying he continues to see the tech giant as "the best way to play AI." "We still see a bright future ahead for Microsoft, driven by continued growth prospects in huge categories of IT spend, ability to further monetize strong positioning in multiple end markets, and a financial profile that continues to exhibit durable margin expansion," Turrin wrote in a Tuesday note. Earnings are due April 25 after market close. Turrin's $480 price target suggests Microsoft shares, which are up more than 10% this year, could add another 15.8% over the next 12 months. While that target is a premium, Turrin said in the note that he feels it is warranted given the unprecedented scale and durability of the company's AI lead, incumbent position in a "tight market" and favorable long-term tailwinds in the future. "The current AI-focused capex build cycle continues to impact FCF multiples, therefore we remain focused on P/E multiples in the interim," the analyst said. — Pia Singh 6:51 a.m.: New management at Crocs could lead shares higher, according to Bank of America Bank of America thinks the latest management shakeup at Heydude is a long-term positive for owner Crocs . Analyst Christopher Nardone reiterated his buy rating on the casual shoe retailer after Crocs announced Terence Reilly as EVP and president for its Heydude brand, effective on April 29. Nardone kept his $150 price target, which implies Crocs shares could gain 24.3% over the next 12 months. This year, Crocs shares are up more than 29%. "We are Buy-rated given our view that the Crocs business has strong momentum, incremental progress at Heydude will lead to multiple expansion, and the company's cash flow profile is undervalued," Nardone wrote in a Tuesday note, adding that Reilly's previous success as the president of the Stanley drinkware company and in senior marketing roles at Crocs drives confidence in a Heydude turnaround. — Pia Singh 6:29 a.m.: Royal Caribbean shares could jump nearly 30%, according to Mizuho Securities Mizuho analyst Ben Chaiken initiated coverage of Royal Caribbean with a buy rating on Wednesday, calling the company an "icon of the industry." "RCL has a unique mix of quality ship assets, as well as differentiated destinations, the combination of which drives upside potential to estimates," Chaiken wrote in a note. His $164 price target on the cruise operator imply roughly 29.5% potential upside for the stock, which is down 2.2% this year. RCL YTD mountain RCL year to date The analyst's rating has three drivers, he said, including: Royal Caribbean should be able to drive incremental demand through the expansion of existing destinations, like CocoCay, and the development of new attractions, such as Royal Beach Club, which is opening in spring/summer 2025 Potential upside to estimates from better-than-expected costs The stock's current risk/reward ratio is skewed to the upside — Pia Singh 6:07 a.m.: Jefferies downgrades Urban Outfitters, cites slowing foot traffic and higher retail competition Apparel retailer Urban Outfitter's underperformance could continue over the next year, according to Jefferies. Analyst Corey Tarlowe downgraded Urban to underperform from hold and slashed his price target by $10 to $32, implying shares could drop 15.8% from Tuesday's close. "We have some concern regarding URBN's near-term positioning due to slowing foot traffic data, promotional headwinds, and increased competition," Tarlowe wrote in a Wednesday note. "We believe URBN's core brands have been beneficiaries of a recent emerging fashion cycle … but we believe the stock could face short-term headwinds as core Urban Outfitters' turnaround is likely bumpy, and growth at Anthropologie & Free People appears to be moderating." The analyst sees near-term risk in Urban shares based on markdown pressures and slowing traffic data from its most recent monthly data report. Peer retailers such as Abercrombie and Gap are showing an acceleration in traffic, on the other hand, he said, noting that increased competition in the retail space and Urban's skew towards lower-income consumers only adds further pressure on Urban. Shares are up 6.5% this year, but have lost 12.4% this month. — Pia Singh 5:44 a.m.: Tesla earnings next week might take the stock even lower, Barclays says Barclays expects Tesla's first-quarter results to be a negative catalyst for the stock. Analyst Dan Levy kept his equal weight rating on the beaten-down electric vehicle maker, which is set to report earnings on April 23. Levy cut his price target by $45 to $180, which implies 14.6% potential upside from Tuesday's close. "Tesla's deeply challenged near-term fundamentals are taking the backseat to a much larger issue, as Tesla is facing an investment thesis pivot," Levy wrote in a Wednesday note. "We expect the 1Q print to be a negative catalyst for Tesla stock for several reasons." Levy expects Tesla to miss on first-quarter earnings expectations, forecasting gross margins to come out below consensus. He also expects free cash flow may be negative, which last happened during the first quarter of 2020. The company might pivot away from its mass production of Model 2 to instead focus on robotaxi and full self-driving subscription, he added. "While investors will enter the call with significant questions on Tesla's strategy, we believe many of these questions may be unanswered," he added. "And with significant uncertainty remaining on the investment thesis, it could lead investors to capitulate." Tesla shares, which have lost more than 36% this year, traded 1.3% higher in premarket trading. Redburn Atlantic also cut its price target to $130 from $150, reiterating its sell rating on the stock. — Pia Singh 5:44 a.m.: Raymond James initiates GE Vernova as outperform The recently spun-off energy business from General Electric see strong gains ahead, according to Raymond James. Analyst Pavel Molchanov initiated GE Vernova with an outperform. His $160 price target implies upside of 23% over the next 12 months. "Decarbonization of electric power requires not only building clean generation assets but also modernizing the grid. Combining strengths across a broad spectrum of conventional and renewable generation, as well as grid technology, Vernova is involved in practically everything," Molchanov wrote. GE Vernova was spun off from GE on April 2. Shares have been little changed since the close that day. GEV 1M mountain GEV this month "Diversification has both advantages and drawbacks. Generally speaking, we are fans of the Wind and Electrification segments but less so the Power segment, due to its fossil fuel overweight," Molchanov added. — Fred Imbert