Monday's analyst calls: Amazon a top pick into earnings, Apple price target cut

Published Mon, Apr 22 20245:46 AM EDTUpdated Mon, Apr 22 20248:48 AM EDT

(This is CNBC Pro's live coverage of Monday's analyst calls and Wall Street chatter. Please refresh every 20-30 minutes to view the latest posts.) Monday's analyst calls included a price target cut for one of the biggest tech companies in the world and Goldman Sachs getting bullish on an e-commerce giant ahead of earnings. Morgan Stanley cut its price target on Apple to $210 from $220, citing the potential for disappointing fiscal third-quarter guidance. Goldman, meanwhile re, reiterated Amazon as a top pick Check out the latest calls and chatter below. All times ET. 8:48 a.m.: Chemicals company Ingevity could jump nearly 40%, Jefferies says Jefferies upgraded chemical manufacturing company Ingevity to buy, citing a rebound in intermediate chemicals which should lead to significant further upside. Analyst Daniel Rizzo upped his price target by $10 to $62 price target, which suggests 39.5% upside for the stock. This year, shares have fallen 5.9%. "Hybrid sales are outpacing EV sales, bolstering activated carbon volumes, and likely leading a 4% increase in segment sales and a 7% increase in EBITDA through 2026," Rizzo said in a Monday note. "In Performance Chemicals, a re-stock cycle, a change in feed stocks, and a focus on higher-margined products will likely support an EBITDA rebound." Rizzo noted that while the company's EBITDA fell 15% in 2023 and will likely decline 23% in the first half of this year, he expects it to rebound 55% in the second half of 2024 and increase 13% in 2025, making the current valuation of shares attractive as it trades below its 5-year average. — Pia Singh 8:11 a.m.: Morgan Stanley upgrades Alcoa on a more balanced risk-reward Improving fundamentals and opportunities ahead make the risk-reward for Alcoa look more attractive, according to Morgan Stanley. The bank upgraded the aluminum producer to an equal-weight rating from underweight. Analyst Carlos De Alba accompanied the move by raising his price target for the stock to $36.50 from $28.50, implying that shares could rise nearly 3% from their Friday close. De Alba said the operation concerns that plagued Alcoa for much of 2023 have largely de-risked, and now sees a much more balanced risk-reward. Besides reducing its costs, the company also has a solid plan in place to boost its profitability. "The company has already started to execute its plan with the closure of the Kwinana Refinery in WA and it is benefiting from announced production cost credits of $35-40m per year at its US smelting operation related to the IRA's 45x credits," the analyst wrote. Additionally, another catalyst comes from the Western Australian government allowing Alcoa to continue its bauxite mining operations in the region, which will ultimately improve the company's operation performance. Shares of Alcoa have risen 4.5% in 2024. — Lisa Kailai Han 7:39 a.m.: BMO downgrades REIT Prologis on 'murky' demand picture A sharper-than-expected decline in rental demand leaves little room for upside in Prologis shares, according to BMO Capital Markets. Analyst John Kim downgraded the San Francisco-based real estate investment trust to market perform and lowered his price target to $112, suggesting 8.2% potential upside. This year, shares have lost roughly 22%. "Despite underperforming year to date, we see the shares as being under pressure as long as the demand picture remains murky," Kim wrote in a Monday note. "Our call may be wrong if demand improves this year, or PLD grows essentials and its data center conversion profits quicker than we expect." The analyst expects vacancy to increase by the fourth quarter while rent growth decelerates, and said that weaker market demand will likely lead to further multiple compression for Prologis shares. "We believe a weaker-than-expected rent growth outcome will create volatility in the stock. PLD's share price is 0.82 correlated to changes in market rents," he said. — Pia Singh 6:50 a.m.: Morgan Stanley remains bullish on Nvidia even after chipmaker's sell-off The recent slump in artificial intelligence-related stocks hasn't steered Morgan Stanley away from Nvidia . "We remain buyers of NVIDIA post last week's selloff," analyst Joseph Moore wrote in a Monday note. "In terms of broader earnings outlooks, we also look for mixed conditions this quarter, even as fundamentals bottom out in general." Moore reiterated his bullish view on AI-centric stocks in the short and long term despite the stocks having sold off more than the broader market on Friday on several concerns, such as GPU shortages easing, and a compute original equipment manufacturer, or OEM, failing to preannounce positive results, he noted. The analyst remains overweight on Nvidia. Shares of the darling chipmaker are up 53.9% this year, but have dropped more than 15% this quarter as AI stocks have taken a dive on concerns that the group grew too far, too fast in an uncertain market environment. The bank has a price target of $1,000, which implies more than 20% upside going forward. — Pia Singh 6:44 a.m.: Bank of America names Apple a top pick Despite its struggles, investors shouldn't give up on Apple, according Bank of America. Analyst Wamsi Mohan named the iPhone maker a "top pick for 2024" and expects the tech company to beat earnings expectations and benefit from improved AI/machine learning performance of its new iPhone models this year. Mohan reiterated his buy rating and $225 price target, suggesting shares could gain 36.4%. He modeled double-digit year-over-year revenue growth and further upside for Apple's services business, and added that he expects strong revenue growth in licensing, app store, iCloud and subscriptions as well. "We see catalysts including re-upping the capital return at earnings (May), Gen AI announcements at WWDC (June), the launch of new iPhones in the fall (iPhone 16) and reacceleration in gross profit dollar growth each qtr," he wrote. "Our checks indicate that all 4 new models of iPhone this year could be launched with the same application processor (A18) that can enable improved AI/machine learning performance." Apple shares are down more than 14% this year. — Pia Singh 6:12 a.m.: Spotify shares could jump 27%, Morgan Stanley says Investors should look to Spotify as a long-term investment, according to Morgan Stanley. Analyst Benjamin Swinburne, who has an overweight rating on shares, hiked his price target to $350 from $270. The new forecast suggests the streaming giant could gain 26.9% over the next 12 months. Already this year, Spotify shares have jumped 46.8%. SPOT YTD mountain SPOT year to date "We expect Spotify's transformation from a great product to a great business to accelerate in 2024, as price increases, market share gains, and operating leverage become even more clear," Swinburne wrote in a Monday note. The analyst anticipates further material upside to expectations, which he said are higher and priced into the stock, as he sees the $50 billion company being just ahead of an inflection point of profitability and free cash flow generation. Swinburne is also bullish on the music streaming industry as an under-monetized, "large global opportunity" where Spotify is the market leader. The industry is focused on increasing monetization for the entire supply chain, including opportunities in audiobooks, video and AI, he noted. — Pia Singh 5:46 a.m.: Heading into earnings, Goldman favors Amazon as its top e-commerce pick Goldman Sachs analyst Eric Sheridan named Amazon its top e-commerce pick, anticipating strong trends in the sector for the first quarter. Sheridan kept his buy rating and $220 price target on Amazon, which is expected to post its earnings results on April 30. That target suggests about 26% potential upside for the stock. Amazon shares have gained nearly 15% this year. The analyst pointed to industry research and third-party data sources that suggested resilient consumer spending in the first quarter, underlining his bullish sentiment on Amazon. He remains cautious on the sector for 2024, however, noting a wide dispersion of expected results from tech companies. Factors behind Sheridan's Amazon rating include: Consumer demand levels remain strong in retail business AWS revenue should continue to reaccelerate in the first quarter and throughout 2024 on easing optimizations, growing cloud migrations and rising contribution from AI workloads Strong momentum and secular tailwinds should lead to solid advertising revenue growth Expected "residual upside" to Amazon's North America margins, which should benefit from an increasingly efficient logistics network and operating leverage — Pia Singh 5:46 a.m.: Morgan Stanley cuts Apple price target Apple's fiscal second quarter report will be good but not stellar, according to Morgan Stanley. Analyst Erik Woodring reiterated his overweight rating on the tech giant but cut his price target to $210 from $220. The new target implies upside of 27.3% over the next 12 months. "[We] expect AAPL to slightly beat March Q Consensus revs/EPS, driven by stable product demand and Services outperformance," Woodring said in a note. "However, we expect June Q rev guidance closer to MSe of $80B vs. Consensus at $83.5B (more in-line with buyside at $78.5-81.5B)." "We see a similar earnings setup to 3 months ago, as we anticipate slight March quarter revenue upside but a fairly sizable June quarter guide-down vs. Consensus; a print we believe this market would punish," he added. Apple, which is slated to report earnings next week, has struggled this year. Shares are down 14% in that time, lagging other major tech names. AAPL YTD mountain AAPL year to date — Fred Imbert