(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.) A tech giant and an energy name were among the stocks being talked about by analysts on Monday. Evercore ISI lowered its price target on Alphabet to $200 from $225 , citing antitrust worried. Meanwhile, Barclays initiated GE Vernova with an overweight rating. Check out the latest calls and chatter below. All times ET. 7:22 a.m.: Wells Fargo downgrades Colgate-Palmolive to underweight Normalizing organic sales growth is set to pressure shares of Colgate-Palmolive , according to Wells Fargo. The bank downgraded shares of the consumer products manufacturer to an underweight rating from equal weight. Wells Fargo left its $100 price target unchanged, implying that Colgate-Palmolive could slide 5% from Friday’s close. Shares of Colgate-Palmolive have rallied 33% in 2024. “The rise of CL was grounded in fundamentals,” wrote analyst Chris Carey. “But, ultimately, rate of change is set to flip the other way, and we expect CL growth to normalize toward peers now trading at steep valuation discounts vs historical to CL.” A decline in global toothpaste share could also drag the stock down, especially in Latin America. Meanwhile, Carey expects the firm’s gross margin expansion to slow, contrasting its all-time highs in the second quarter of 2024 aside from its peak during the Covid-19 pandemic. “FY25 is likely to see more muted expansion as well,” the analyst added. “This gives less flexibility for an EPS upside driven by gross profit (i.e., this “beat and reinvest” story that has been so powerful for the stock/valuation this past year).” — Lisa Kailai Han 7:07 a.m.: Citi upgrades Entegris to buy and lists stock as top defensive play The outlook for Entegris looks bright, according to Citi. The bank upgraded shares of the semiconductor materials supplier to buy from neutral. Analyst Atif Malik’s $130 price target, up from $119, implies that the stock could rally 17% from here. Malik accompanied the upgrade by adding Entegris to its list of defensive stock picks. “We view Entegris as a defensive play in Phase 3 as the business is less cyclical than WFE market with 75% of the revenue is unit-driven, and the company is in a good position to benefit from the leading-edge growth in 2025,” the analyst wrote. Meanwhile, the company has also addressed previous investor concerns about gross margins after a recent acquisition. The analyst believes the company also has the further capability to grow margins due to better mix and higher volume. Shares of Entegris are 8% lower on the year. — Lisa Kailai Han 7:02 a.m.: Melius Research upgrades Oracle Melius Research sees a rosy outlook ahead for Oracle . The firm upgraded the software giant to a buy rating and hiked its price target to $210 from $155. The updated forecast implies is early 30% above where Oracle stock closed on Friday afternoon. As a catalyst, analyst Ben Reitzes pointed to Oracle’s creative partnerships and its development of an “AI-first Cloud.” Not only is the development innovative but it is also sustainable, as other countries are likely to offload some artificial intelligence overflow to Oracle. “Oracle is a cloud competitor but the big 3 clouds are all also going to be running more Oracle applications on their clouds too. These ‘partners’ need to work with Oracle to keep driving their own Cloud segment growth to please investors,” Reitzes wrote. “So even gains in traditional workloads (like database) help keep those figures going.” With this AI success and cloud revenue acceleration in mind, Reitzes raised his targets for the next several years. “We don’t expect every quarter to be as good as F1Q25 or every meeting to be as good as Thursday’s Analyst Meeting — but accelerating revenue growth of this mega-cap should rewarded over the long-term,” the analyst said. “Now that the train has left the station, we believe investors will continue to reward Oracle for faster revenue growth.” Shares of Oracle are trading 54% higher in 2024. — Lisa Kailai Han 6:34 a.m.: BTIG downgrades Ally Financial to neutral It’s time for investors to head to the sidelines when it comes to Ally Financial , according to BTIG. The investing firm downgraded the online bank to neutral from buy and removed its $44 price target. Shares of Ally Financial are trading nearly 6% lower on the year. “We are uncomfortable recommending to investors to buy Ally shares today, even with shares down 17% wk/wk, as we don’t anticipate positive catalysts for the rest of 2024 versus waiting until we get more clarity on 2025’s trajectory,” analyst Vincent Caintic elaborated. “Given the sudden change after speaking positively in 2Q24 earnings and a sell-side event only a few weeks ago, we worry that management was hoping for a 2H24 turnaround that did not materialize.” Recent released data has cast beliefs that Ally’s credit could further deteriorate, which would require the company to tighten its underwriting. This in turn slows down new originations, lessening the pace of credit improvement. “Contrary to commentary from many lenders across consumer asset classes, we do not believe the credit deterioration cited by lender updates this past week is limited only to the ‘low-end’ consumer,” Caintic added. Meanwhile, Ally’s net interest margins continue to compress despite a falling interest rate environment and ample opportunities for yield upside. — Lisa Kailai Han 6 a.m.: KeyBanc sees 30% upside ahead for Spotify Spotify could see big gains ahead, according to KeyBanc. The firm reiterated its overweight rating on shares of the music streaming stock and raised its price target to $440 from $420. The new target implies upside of 30% from Friday’s close. Spotify has been on a tear this year, rising 80%. Analyst Justin Patterson thinks that shares could get a boost due to Spotify’s large total addressable market, which he thinks could swell to 3.9 billion users by 2030. For comparison, this number was at 3.1 billion in 2023. Monthly active users could total one billion by 2030, while the amount of premium subscribers by then could equal 403 million. “Our TAM analysis reinforced our view that Spotify still has ample room for growth and meaningful earnings power ahead,” Patterson wrote. Meanwhile, Spotify’s upcoming product roadmap could pave the way for eventual long-term growth of around 20%. “As new plan tiers roll out and verticals (e.g., audiobooks, education) are monetized in new ways, we believe that likely explains the gap. We also believe we could be too conservative on bundle monetization, as our industry analysis continues to suggest Spotify is under-priced,” the analyst added. — Lisa Kailai Han 5:49 a.m.: Barclays initiates GE Vernova at overweight GE Vernova is a strong play going forward, according to Barclays. The bank initiated the energy stock with an overweight rating and set a price target of $250, which is approximately 11% higher than where shares closed on Friday. GE Vernova spun off from General Electric in April of this year. Shares of the new entity have rallied 72% since then. Analyst Julian Mitchell nodded to the stock’s potential for organic growth going forward, for which investors have already demonstrated they are willing to pay handsomely for. GEV YTD mountain GEV year to date “We think this high growth profile will yield valuation multiple upside as well as positive consensus estimate revision momentum,” he wrote. Additionally, Mitchell pointed to GE Vernova having the “right kind” of capex exposure as a plus. “We think that Electric Utility capex represents one of the most attractive markets within MI, given the stronger pricing outlook for Electric Utilities, and the somewhat brighter outlook for electricity consumption in the US in particular, where GEV has outsized market shares across most of its product categories,” he said. Meanwhile, Mitchell remained optimistic that electricity demand in the United States would grow and pointed to data center demand as one such growth driver. — Lisa Kailai Han 5:49 a.m.: Evercore ISI trims Alphabet price target Alphabet’s antitrust issues will limit upside going forward, according to Evercore ISI. The firm reiterated its outperform rating on the Google parent. However, analyst Mark Mahaney lowered his price target on the stock to $200 from $225. The new forecast implies upside of 27%. “We believe probable medium-term uncertainty over the DOJ anti-trust trials and their likely remedies will limit the potential for any near-or-medium-term material re-rating,” Mahaney wrote. “We believe a ‘worst case’ scenario is a more likely scenario than the market assumes.” “‘Worst case’ scenario would be where Google is no longer allowed to bid for exclusive Search distribution deals in the U.S., and another company (i.e. Microsoft) ‘buys out’ the exclusive Search distribution deals, leading to a material (20% – 50%+) share loss by Google on the Search access points covered by those distribution deals,” he added. “Key, however, is that even in a ‘worst case’, 60% share loss, the impact to GOOGL EPS could still only be in the single-digit % range, given the likely material savings in TAC (Traffic Acquisition Costs).” Alphabet shares are up more than 12% year to date. GOOGL YTD mountain GOOGL year to date — Fred Imbert
Monday’s analyst calls: Alphabet gets a price target cut, GE spin-off a buy
Sep 16, 2024
