(This is CNBC Pro’s live coverage of Thursday’s analyst calls and Wall Street chatter. Please refresh every 20-30 minutes to view the latest posts.) An auto giant and a toymaker were among the biggest names being talked about by analysts on Thursday. Bernstein initiated Ford Motor with a buy rating, calling for more than 30% upside. Meanwhile, JPMorgan upgraded Hasbro to overweight from neutral and said the stock was poised to rise more than 20%. Check out the latest calls and chatter below. All times ET. 7:52 a.m.: Oppenheimer downgrades Under Armour The return of Kevin Plank to Under Armour won’t create a quick fix for the struggling apparel brand, according to investment firm Oppenheimer. Analyst Brian Nagel downgraded the stock to perform from outperform, saying in a note to clients that a turnaround at Under Armour is a wait-and-see story. “We have studied trends and developments at UAA closely. While we still look optimistically towards longer-term potential for Under Amour, particularly now with Kevin back at the helm, we recognize that positive change at the company will require time,” Nagel said. Specifically, investors shouldn’t expected Under Armour to role out new products for at least a year. “Senior leadership at UAA indicated clearly that meaningful levels of new, more-elevated products will not go to market until Fall/Winter of 2025,” the note said. — Jesse Pound 7:42 a.m.: UBS stands by its buy rating for GE Aerospace, sees 25% upside ahead UBS believes that GE Aerospace is set to build on its already impressive year-to-date rally. The bank reiterated its buy rating on the aerospace company but raised its price target to $201. This updated forecast implies that the stock could rise 25% from where it closed Wednesday afternoon at $160.81. Shares of GE Aerospace have already rallied an eye-watering 58% this year, but analyst Gavin Parsons believes that further outperformance is in the picture. “We see both earnings and valuation upside, driven by GE’s 100% EBIT exposure to recurring aerospace aftermarket and dominant narrowbody engine position,” he wrote. The analyst believes that the company’s revenues and margins are set to grow on the back of GE’s multidecade market leadership. By 2030, Parsons predicts that GE engines will account for 65% of growth in the worldwide aircraft fleet. “All of this drives significant cash flow — we estimate $34bn over 5 years — and even greater near-term dry powder for buybacks,” he added. Parsons noted that while the stock currently trades at a 50% premium to the S & P 500, he believes that this could expand to 60% based on GE’s historical comparations and ownership structure. — Lisa Kailai Han 7:18 a.m.: RBC Capital Markets upgrades Norfolk Southern, sees an attractive entry point Norfolk Southern’s year-to-date underperformance has created an attractive entry point for investors, according to RBC Capital Markets. The bank bumped up shares of the railroad operator to an outperform rating from sector perform, although it left its price target unchanged at $270. This price target is about 17% above where shares of Norfolk Southern closed on Wednesday. The stock has slipped 2% so far this year and is around 12% off its 2024 highs, which analyst Walter Spracklin attributed to negative sentiment surrounding the company’s proxy battle. This underperformance means that the company is now currently trading at 9% discount to its peer group, reflecting an attractive valuation for investors, Spracklin wrote. “With the turnaround story intact, we see recent share price volatility surrounding the proxy vote as creating an attractive entry point,” he wrote. The “crux” of Spracklin’s upgrade, he noted, lies in the “significant improvement” he expects in Norfolk Southern’s operating ratio. Subsequently, this should push earnings growth up much higher. “Important is that this expected EPS growth is industry leading and comes with the shares trading at a discount (-9%) versus the group average, representing a compelling entry point in our view,” he added. “This EPS growth is also ‘self-help’ driven, which is less dependent on external macro factors versus volume led EPS growth stories, and therefore in our view deserving of a higher multiple.” — Lisa Kailai Han 7:15 a.m.: Bernstein initiates SAP at outperform, calls it ‘one of the best investment opportunities’ at the moment Bernstein thinks SAP represents “one of the best investment opportunities” in its coverage universe at the moment. The firm initiated the software company at an outperform rating and a $227 price target. This implies that the stock could rally another 15%, on top of its 25% year-to-date rally. Analyst Mark Moerdler cited SAP’s leading position within the data cloud space as a major catalyst for the stock. “There are few very large Cloud transitions left and SAP could be the largest purely Cloud transition driven story,” he wrote. “We believe that SAP can deliver both double-digit revenue growth plus improving margins (and possibly an increasing return of cash) driven by the ERP market and SAP’s transition to the Cloud.” This revenue growth will be driven by a combination of adding new customers to the cloud platform and shifting existing customers to cloud services. Additionally, cross-selling of SAP’s other products and increased monetization of its business technology platform could bolster revenue, Moerdler added. The analyst also believes that the company’s margins are due to improve, citing reasons such as increased operational efficiency and a shift towards higher margin services. — Lisa Kailai Han 6:46 a.m.: Morgan Stanley downgrades NetEase to equal weight Near-term risks are materializing for NetEase , according to Morgan Stanley. The bank downgraded shares of the Chinese internet company to an equal weight rating from its previous overweight. Morgan Stanley accompanied the move by cutting its price target to $100 from $120. Shares of NetEase have climbed more than 5% this year. This updated forecast implies the stock could move just 1.7% higher. “Risks are unfolding from macro weakness, more intense competition and potential regulation, driving lower grossing and ROIC potential for both existing and future game titles,” analyst Alex Poon summarized. Games with higher average revenue per paying users are at risk due to potential regulation and macro weakness in the China market, the analyst noted. With this in mind, Poon sees potentially lower return on investment capital in the future. He added that he also expects the stock’s pipeline visibility to become lower. — Lisa Kailai Han 6:31 a.m.: Bank of America upgrades Take-Two Interactive, cites GTA 6 as a major catalyst Bank of America thinks shares of Take-Two Interactive are currently trading at an attractive valuation. Analyst Omar Dessouky upgraded the video game stock to buy from neutral. His $185 price target, up from $160, forecasts that shares of Take-Two could rally 23% from Wednesday’s close. Dessouky cited the upcoming release of Grand Theft Auto VI, alongside an improving pipeline of upcoming rollouts, as major catalysts for the firm. “The release of two immersive sequels, other than GTA 6, in FY25 makes TTWO attractive at its current valuation, buying time for an update from Rockstar Games,” the analyst wrote. “We think Rockstar would likely tease progress of GTA 6 (e.g. trailer, blog post, tweet) by holiday ’24, after which time consensus estimates for FY26 top line could potentially see an upgrade.” Dessouky added, however, that a delay in the video game beyond the fall of 2025 could cause the stock to plateau. “Nonetheless, as time rolls forward, TTWO’s valuation should firm up because elements of GTA 6’s content will come to light, helping the market to realize its commercial success,” he noted. Shares of Take-Two Interactive are down 6% in 2024. — Lisa Kailai Han 6:25 a.m.: Williams Trading downgrades the parent company of Supreme, Vans The outlook for VF Corp is about to get worse, according to Williams Trading. The financial firm downgraded shares of the apparel company to sell from its previous hold rating. VF’s portfolio includes brands such as Supreme, The North Face, Vans and Timberland. Analyst Sam Poser accompanied his downgrade by slashing his price target to $6 from $13, implying a more than 51% decline for the stock. Shares of VF have already plunged more than 34% this year. VFC YTD mountain VFC year to date The analyst justified his bearish stance on the stock through a slew of near-term obstacles. “After a big 4Q24 miss, no formal FY25 guidance, and ongoing weakness of Vans & Dickies on a global basis, The North Face in the Americas & EMEA, Timberland in the Americas, it’s clear the Reinvent transformation plan has a long way to go before it gets the core brands working again, and any optimism appears unfounded,” he wrote. The analyst added that even if the company manages to sell off some brands, more than $3.5 billion of debt will remain on its balance sheet. Additionally, it will take the company at least one year to realize any positive sales inflection. — Lisa Kailai Han 5:59 a.m.: RBC upgrades GoodRx to outperform on ‘significant growth opportunities’ GoodRx’s new initiatives could bolster its stock, according to RBC Capital Markets. The bank upgraded the prescription drug stock to an outperform rating from sector perform. Analyst Sean Dodge also lifted his price target to $10 from $8. This new forecast implies that shares could rise 39%. One catalyst for GoodRx are the “significant growth opportunities” that could potentially be provided by its manufacturer solutions and integrated savings program, the analyst wrote. “Recent indicators from other pharma-adjacent vendors point to an improving demand backdrop, and coupled with GDRX’s high-ROI offerings are expected to drive a 20-30% [compound annual growth rate] over the next 3-yrs … as it signs new brands and sells more solutions to existing ones,” Dodge said. GoodRx has also expanded into direct contracting its own prices with retailers such as Kroger, which should help drive higher revenues for the company. Additionally, Dodge noted that the company could see further upside from several early-stage investment areas including the GLP-1 space. Shares of GoodRx have already climbed 7% year to date. — Lisa Kailai Han 5:55 a.m.: Bernstein initiates Ford at an outperform rating Investors who don’t own Ford are missing out, according to Bernstein. The firm initiated the automobile manufacturer at an outperform rating. Analyst Daniel Roeska also set a price target of $16, implying a 33% upside from Wednesday’s close. Shares of Ford have slipped 1% this year, but Roeska didn’t let the stock’s underwhelming performance this year deter him from his long-term optimism. The company’s forays into the electric vehicle market could further bolster its stock, on top of its already strong pickup truck and large SUV business. “The iconic automaker continues to enjoy strong profits from its core markets and a policy driven investment cycle in the U.S,” he wrote. “While electric execution looms large, we see a clear path to significant operating leverage and ultimately profits for the company’s EV unit.” In the medium term, Roeska believes that operating leverage and a strong industrials cycle could offset pricing headwinds in various markets. With that in mind, he says that the upper range of Ford’s 2024 guidance could be in reach. Ultimately, the analyst expects Ford to narrow its 2024 guidance, which could meaningful propel the stock higher. — Lisa Kailai Han 5:55 a.m.: JPMorgan upgrades Hasbro Don’t expect Hasbro’s momentum to slow in the near future, according to JPMorgan. The bank upgraded shares of the toymaker to overweight from neutral. It also raised its price target on shares to $74 from $61, implying upside of 22%. Analyst Christopher Horvers cited several reasons for the upgrade, including: “At a high level, our estimates remain ahead of the Street as we believe consensus cost efficiency and digital gaming forecasts remain too low while both should ramp into 2H24/1H25;” “Despite our view of some moderation in [point of sale] trends since the toy names reported, we believe the industry is positioned for better growth this year despite a shortened holiday season as green shoots in low ticket/short replacement cycle categories continue to sprout while these retailers … pivot towards driving traffic around events.” Hasbro shares have soared 18% in 2024 after losing 16% in last year. HAS YTD mountain HAS year to date — Fred Imbert
Thursday’s analyst calls: Ford Motor is a buy, toy stock to rally more than 20%
May 23, 2024
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