(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.) A software giant and a shoe stock were among the stocks being talked about on Wall Street. Analysts reacted to Oracle’s latest quarterly figures as well as some announcements made around artificial intelligence. Meanwhile, Goldman Sachs downgraded Birkenstock to neutral. Check out the latest calls and chatter below. All times ET. 7:38 a.m.: Edward Jones initiates AMD with a buy rating Chip stock Advanced Micro Devices is emerging as another AI winner beside its rival Nvidia , according to Edward Jones. Analyst Logan Purk initiated coverage of the stock with a buy rating, saying in a note to clients that AMD has a higher level of growth ahead of it as the AI boom develops. “AMD has made tremendous strides with its chip technology over time, steadily taking market share for CPUs. It’s newly launched GPU data-center chips should allow the company to take share and drive above average growth as artificial intelligence (AI) proliferates,” the note said. Edward Jones is also optimistic about AMD’s chips for personal computers and the benefits of the Xilinx acquisition. “Even though shares trade in line with their historical average, we think the company should be able to deliver above-average earnings growth due to management’s successful positioning of the company within large and growing end-markets,” the note said. — Jesse Pound 7:38 a.m.: UBS: Lennar and KB Home are still buys heading into earnings as sector struggles Homebuilder stocks Lennar and KB Home remain smart picks despite recent underperformance, according to UBS. Analyst John Lovallo reiterated buy ratings on the pair. That’s in spite of UBS-covered homebuilder stocks declining 9% on average since the end of March compared with a broader market increase of around 2%. “We continue to believe the homebuilder stocks represent an attractive buying opportunity and view current valuation (avg ’25E P/E = 8.9x excl NVR) as undemanding,” he said. “We also remain firm believers that the industry’s vast transformation post-GFC warrants a valuation re-rating … and expect consistent execution through an uncertain macro to help catalyze this event.” In addition to mixed economic data and volatile mortgage rates, Lovallo said this group may be taking a hit from a rise in existing home inventories in some markets. However, he said availability is still considered to be at historically low levels. Both Lennar and KB Home report earnings next week. Lovallo has a $198 price target for Lennar, reflecting 30.1% in upside. Shares have underperformed the broader market in 2024, adding just over 2%. His $87 target price for KB Home implies upside potential of 28.8%. KB Home shares have risen slightly over 8% year to date, also lagging compared with the S & P 500. — Alex Harring 7:07 a.m.: First Solar can keep rallying, Oppenheimer says First Solar has more room to run as pricing and demand appear positive, according to Oppenheimer. Analyst Colin Rusch hiked his price target by $54 to $325, now implying 10.3% upside over Tuesday’s close. Rusch also has an outperform rating on the solar stock. Rusch’s call comes after a meeting with CFO Alex Bradley, where pricing support and incremental demand growth were made apparent. “As the company continues to execute on its manufacturing scale-up, we see potential for FSLR to realize better than anticipated pricing/margin driven by higher blending on non-US modules in US projects, improved conversion efficiency, and higher underlying power prices,” Rusch wrote to clients. “We see significant potential for incremental operating leverage.” First Solar advanced modestly in Wednesday premarket trading, adding to the stock’s 5.3% jump in Tuesday’s session. Those gains build on what’s already been a big year for First Solar, with shares surging more than 70% in 2024. FSLR YTD mountain FSLR year to date — Alex Harring 6:52 a.m.: Klaviyo can rally more than 25%, Barclays says Barclays sees Klaviyo as a top grower than investors should snap up while at a discount. Analyst Raimo Lenschow upgraded the marketing automation stock to overweight from equal weight and upped his price target by $4 to $29. Lenschow’s new target suggests 28.4% upside from Tuesday’s close. “Klaviyo sticks out as a top growth asset that has not been properly rewarded for its healthy execution,” Lenschow said. “Klaviyo as resilient thanks to the data model and many avenues for growth, despite SMB fears, and see a path for solid beats going forward.” Lenschow went on to call the company a “rare bright spot among peers.” Klaviyo is one of just four vendors in its peer group of 13 to see consensus revenue estimates for 2024 rise over the year, but Lenschow said the stock hasn’t been rewarded for this. “We believe continued execution will be the greatest catalyst for the name and allow for separation from the pack,” he said. Shares climbed more than 4% before the bell on Wednesday following the call. The company went public in September 2023. — Alex Harring 6:32 a.m.: Wells Fargo downgrades Paramount as deal talks reportedly cease Wells Fargo moved back to bearish territory on Paramount as a potential merger deal appealed to crumble. National Amusements ended discussions with Skydance around a potential combination with Paramount, sources told CNBC on Tuesday. Paramount shares slipped around 2% in Wednesday’s premarket trading. That news pushed analyst Steven Cahall to downgrade the stock to underweight from equal-weight and cut his price target by $5 to $9. Cahall’s target implies 18.5% downside from Tuesday’s close. “With no potential deal beyond an NAI sale, PARA is back to fundamentals: low-6xs EV/ EBITDA = $9/sh.,” he said. “The process has caused internal disruption, further weakening PARA when it needs to pivot.” Cahall’s downgrade comes during a rough year for shares, with the stock plunging more than 25% in 2024. With that loss, it’s on pace for an eight straight losing year. — Alex Harring 6:23 a.m.: Wedbush shaves down GameStop price target Wedbush sees more downside ahead for GameStop after a common stock sale was less fruitful than previously anticipated. Analyst Michael Pachter cut his price target on the video game retailer down to $11 from $13.50, reversing course after raising it last week. Now, his price target implies a 63.9% sell-off over the next year from Tuesday’s close. GME YTD mountain GME year to date Pachter also reiterated his underperform rating on the stock. The analyst’s call comes after GameStop said Tuesday that its sale of 75 million shares was completed at an average price of $28.50. That’s lower than the average cost of $40 per share the firm was anticipating, which Pachter said was tied in part to a big drop last Friday after a “rambling” livestream from meme stock leader Keith Gill. Despite that weakness, GameStop shares have surged more than 70% this year as Gill’s online return has reignited excitement around the meme stock. Shares slipped more than 4% before the bell on Wednesday. — Alex Harring 6:01 a.m.: Piper Sandler opens overweight rating on Valvoline Piper Sandler came out of the gate with an optimistic call on Valvoline . Analyst Peter Keith initiated coverage of the automobile lube service provider with an overweight rating and a $49 target. At that level, Keith predicts shares will climb 20.7% over Tuesday’s close. “After divesting its Global Products business in early 2023, VVV is now a pure-play quick lube service provider with an attractive growth outlook,” Keith told clients. “Considering a fragmented industry landscape with share gain potential, a multitude of comp sales drivers, and majority of its 7-10% growth coming from franchisee growth – we are comfortable with VVV’s algo for top-line growth of 14-16% and EPS growth of 20%+.” Keith lauded the company’s five-year growth algorithm, while noting the stock is a risk in the next 25 to 30 years as the prevalence of different types of cars shake up the business model. He also pointed to the fact that lube hasn’t seen the same interest from private equity as other after-market services within the auto industry. His call comes amid a respectively weak year for shares. The stock has added around 8% in 2024, underperforming the S & P 500’s gain of more than 12%. — Alex Harring 5:44 a.m.: Wells Fargo gives Skechers ‘the respect it deserves’ with overweight initiation Wells Fargo began coverage on Skechers , saying the footwear maker has earned admiration. Analyst Will Gaertner initiated the stock with an overweight rating with an $83 price target. Gaertner’s target implies shares can rise 12.4% over the next year from Tuesday’s closing level. “We believe it is time to give SKX the respect it deserves,” he told clients. “SKX is a compelling growth story that is underappreciated w/ go-fwd rev & EPS growth tops among softlines. Despite the stock’s recent run, there is more room for upside.” Gaertner called the company’s growth outlook on both lines both attractive yet underappreciated, while he said its margin drivers are sustainable. Meanwhile, he said Skechers is improving its operational discipline. Shares added about 0.5% before the bell on Tuesday. The stock has jumped 18.5% in 2024, propelled by a second-quarter rally of more than 20%. — Alex Harring 5:40 a.m.: Wall Street reacts to Oracle earnings, AI announcements Despite a tough quarter on the surface, analysts and traders found nuggets to like out of Oracle’s earnings report. The software company posted $1.63 in adjusted earnings per share on $14.29 billion in revenue for the fourth fiscal quarter on Tuesday. That was below the consensus forecasts from analysts polled by LSEG of $1.65 a share and $14.55 in revenue. However, shares popped more than 8% on the back of cloud deals with Google and Open AI. Firms such as Morgan Stanley and JPMorgan raised their price targets on the stock following the report, citing reasons for excitement like newly announced artificial intelligence deals. Here’s what some on Wall Street had to say: JPMorgan analyst Mark Murphy (neutral rating, price target raise of $5 to $110, 11.2% downside ahead): “Stepping back, while we see this one quarter differently and do not sense investors using the most intellectually-robust framework at the moment, we continue to respect what Oracle has accomplished in terms of margin structure, developing OCI and positioning the business to reaccelerate, and we continue to apply a high growth-adjusted PT multiple to reflect these merits.” Morgan Stanley analyst Keith Weiss (equal-weight rating, price target increase by $10 to $125, 0.9% upside ahead): “The positive of signing 30 OCI customers driving $12.5B in AI bookings outweighed the negatives of revs and EPS missing in Q4, with notable decelerations in SaaS apps. In an environment rewarding hardware vendors participating in the AI build-out, this likely supports positive momentum in ORCL.” Piper Sandler analyst Brent Bracelin (overweight rating, price target hike by $10 to $150, sees upside of 21.1%): “The $12.5B of new AI contract signings reaffirms that ORCL is one of the few software titans (alongside MSFT) that appears to be capitalizing on the generative AI wave now underway”. — Alex Harring 5:40 a.m.: Goldman Sachs downgrades Birkenstock It might be time to cash in on Birkenstock gains, according to Goldman Sachs. Analyst Louise Singlehurst downgraded the German shoe stock to neutral from buy. Singlehurst raised her price target to $58 from $54.20, but the new forecast implies nearly 2% downside from Tuesday’s close. Share have been on fire this year, rising more than 21%. BIRK YTD mountain BIRK year to date “We like the investment thesis at Birkenstock, supported by share gains in a highly fragmented market, new product launches with additional production facilities to ease supply constraints, positive price mix and best in class levels of operating profitability,” the analyst wrote. “However, since listing in October 2023 the shares have outperformed the broader luxury peer group by c.43%; the S & P 500 +24%; and Stoxx 600 +32%, and we now view the shares as fairly valued,” she added. Birkenstock shares were down more than 3% in the premarket following the downgrade. — Fred Imbert Correction: Wells Fargo’s price target on Skechers implies shares can rise 12.4% from Tuesday’s close. A previous version misstated the day of the week. The story has also been updated to reflect Oracle reported quarterly results Tuesday.
Wednesday’s analyst calls: Street reacts to Oracle AI announcements, Goldman downgrades shoe stock
Jun 12, 2024
