Friday’s analyst calls: Buy this ‘best-in-class’ software stock, Barclays downgrades

(This is CNBC Pro’s live coverage of Friday’s analyst calls and Wall Street chatter. Please refresh every 20-30 minutes to view the latest posts.) Two tech stocks were in focus early Friday among Wall Street analyst. Piper Sandler upgraded Twilio shares to overweight, noting they are poised to build on a strong 2023 performance. Barclays analyst were less sanguine on Snowflake, downgrading the stock while noting its valuation “looks full.” Check out the latest calls and chatter below. All times ET. 8:46 a.m.: Dump Johnson Controls amid earnings, cyberattack concerns, RBC says There’s multiple reasons to be concerned about Johnson Controls stock, according to RBC Capital Markets. Analyst Deane Dray downgraded the conglomerate to underperform from sector perform and lowered his price target by $4 to $50. His new target implies the stock will slide 13.5% from Thursday’s closing level. “Margin and FCF shortfalls vs. previously set F2024 targets adds an element of ‘show-me’ to the story,” he told clients when explaining why now is the time to sell the stock. “As a serial restructurer and persistently low cash generator vs. peers, JCI also ranks in last place in our annual quality of earnings rankings according to our Investment Framework.” Dray listed four main reasons for the downgrade: Uncertainty to margin expansion goals. Lackluster growth in earnings. Further repercussions from a recent cyberattack disclosed in the fiscal fourth quarter of 2023. Low earnings quality. Investors interested in a company providing heating, ventilation and air conditioning, or HVAC, services should look at Carrier Global instead, Dray said. Shares of Johnson Controls slipped 1.7% in premarket trading. The stock has added about 0.3% since the start of 2024, making up some ground after dropping nearly 10% last year. — Alex Harring 8:44 a.m.: RBC upgrades Regeneron to outperform “There’s more than meets the eye” to biotech company Regeneron, according to RBC Capital Markets. Analyst Brian Abrahams upgraded shares to outperform from sector perform in a Friday note. He also increased his price target to $1,076 from $884, implying 17% upside potential from Thursday’s close. After staying on the sidelines over initial concerns regarding “over-optimism” for its vision-loss drug Eylea, Abrahams believes several recent successes has improved the medium- and long-term growth outlook for the company. “While shares have appreciated and we acknowledge some may prefer to wait for a pullback before stepping in, with these near-term overhangs removed and considerable room for additional fundamental upside, we believe this is as good a time as any to own one of the most dynamic all-around stories in large-cap biotech,” Abrahams wrote in a Friday note. Abrahams added that the company has a strong R & D pipeline that will help expand its future commercial offerings. The stock jumped 1% Friday before the bell. — Hakyung Kim 8:24 a.m.: Goldman reiterates buy on Monster Beverage Goldman Sachs is staying bullish on Monster Beverage , and believes its upcoming investor meeting on Jan. 16 could be a positive catalyst for the stock. The firm has a buy rating and $62 price target on shares, suggesting shares could gain 5.7% from where they closed on Thursday. “MNST is expected to gain incremental shelf/cooler space in retailer non-alc bev spring resets behind impressive innovation, largely at the expense of Red Bull — which is expected to be the largest space donor according to our retailer contacts,” analyst Bonnie Herzog wrote in a Friday note. Herzog also sees upside potential for the company’s fourth-quarter topline growth, and forecasts an increase of 15% year-over-year. An improving cost outlook as sugar and aluminum costs cool is another tailwind, Herzog added. Volume growth and price increases in European markets and growth potential from its acquisition of Bang should also aid in gross margin potential, she added. — Hakyung Kim 7:44 a.m.: Citi becomes bullish on Qualcomm, upgrades stock Citi thinks chipmaker Qualcomm should see revenue and margin tailwinds in 2024. The firm upgraded its rating on shares to buy from neutral, and raised its price target by $50 to $160. The new price target implies shares could rally 15% from Thursday’s close. “Our industry checks also indicated inventory replenishment in the wireless end market continues and we expect upside to Qualcomm print and guide,” analyst Christopher Danely wrote in a Friday note. An improving “inventory replenishment” in the handset sector will benefit Qualcomm, Danely added. Qualcomm shares jumped nearly 2% Friday during premarket trading. Shares have slipped 3.8% year to date. — Hakyung Kim 7:33 a.m.: Bank of America reiterates underperform rating on Paramount A difficult period in the advertising industry will continue to weigh on Paramount, says Bank of America. The firm thinks Paramount’s advertising revenue remains limited and may not be able to recover in 2024. Analyst Jessica Reif Ehrlich maintained her underperform rating and $9 price target on shares, suggesting they could fall 36.2%. “Meanwhile, 4Q should also be impacted by a weaker Box Office slate and the lingering effect of the various talent strikes on PARA’s licensing business,” she wrote in a Friday note. Ehrlich also lowered her fourth-quarter revenue estimates to $7.6 billion from $7.9 billion. “While we continue to believe PARA retains an attractive collection of assets, secular and cyclical headwinds should remain challenging to fundamentals near term,” said the analyst. Shares slipped 0.7% during premarket trading. — Hakyung Kim 6:58 a.m.: Bank of America sees ongoing headwinds for Coinbase Crypto volumes climbed back up in the fourth quarter after falling to multi-year lows, but Bank of America says the risks still outweigh potential benefits for Coinbase. Analyst Jason Kupferberg cited issues with user trust and regulatory issues, as well as “unpredictability” in the crypto market and lack of revenue diversification as to why he’s sticking with his underperform rating on Coinbase. Even though the Securities and Exchange Commission approved all Bitcoin spot ETF applications, litigation risk is still an overhang, according to Kupferberg. “COIN will serve as custodian for many of these ETFs, though we would expect thin economics given the size of these ETF customers (ie, Blackrock), who are likely to compete heavily on fees. These ETFs could also represent a competitive threat to crypto exchanges such as COIN,” Kupferberg said. He raised his price target to $79 from $66, suggesting shares will decline by 44% from current levels. Shares slipped more than 1% Friday morning. The stock dropped nearly 7% in the prior trading session, and is down 18.8% in 2024. — Hakyung Kim 6:40 a.m.: Roth upgrades Live Nation to buy Secular demand for live events should boost Live Nation’s in 2024, said Roth MKM. The firm thinks Live Nation’s outlook “remains strong” despite the Department of Justice’s investigation into the company for anticompetitive practices. Analyst Eric Handler upgraded shares to buy from neutral. He also increased his price target to $114 from $92, implying nearly 25% upside potential from Thursday’s close. According to Handler, Live Nation should see “above-trend growth” over the next several years and secular demand for concerns and other live events remains elevated. As a result, he increased his full-year revenue and adjusted operating income estimates by 9% and 12%, respectively. In spite of the bullish outlook on the company, “shares are trading at the low end of [their] 5-year trading range,” said Handler. “This depressed multiple, in our view, is attributable to the DOJ investigation, especially when considering the company’s positive fundamentals and the strength of the experiential economy,” Handler added. Shares added 1.5% Friday before the bell. — Hakyung Kim 6:19 a.m.: Morgan Stanley names Dell as ‘best positioned’ in hardware sector The generative AI buzz and enterprise infrastructure growth will create tailwinds for Dell , according to Morgan Stanley. “We view DELL as the best positioned company in our Hardware coverage to benefit from investments in Gen-AI technologies, with 67% of VARs citing customers currently evaluating/ordering DELL solutions to support their GenAI initiatives,” analyst Erik Woodring wrote in a Friday note. The company will also benefit from an acceleration in storage demand in the hardware space, which should further benefit Dell, the top external storage vendor globally, according to Woodring. Morgan Stanley has an overweight rating on shares. The stock has nearly doubled over the last 12 months, and was last up 1.8% Friday during premarket trading. — Hakyung Kim 5:46 a.m.: Oppenheimer raises Netflix price target, forecasts nearly 22% upside Netflix’s advertising acceleration has Oppenheimer optimistic on the company’s revenue outlook, even with tough competition within the streaming sector. On Wednesday, Netflix announced that its advertising monthly active users exceed 23 million, up from 15 million in November and 5 million in May. This quicker-than-expected growth implies the company could top Wall Street’s estimates for the fourth-quarter, according to analyst Jason Helfstein. Helfstein raised his price target on Netflix to $600 from $475, suggesting shares could rally 21.8% from Thursday’s close. Shares have surged 48% during the last 12 months. The analyst says rise in advertising subscriptions means the “bull thesis [is] strengthening” around the stock. “Over the medium-term, we believe the pace of acceleration suggests plenty of room for sub growth in 2024 and are conservatively raising our 4Q/’24E net adds” Helfstein wrote in a Thursday note. ” While accelerating sub growth is positive, the faster NFLX reaches scale in advertising, the faster ARM levels reset higher.” Shares are up 1.1% year to date. — Hakyung Kim 5:40 a.m.: Barclays downgrades Snowflake to equal weight After a successful rally for Snowflake shares in 2023, Barclays thinks the stock’s valuation now “looks full” relative to other software companies. Analyst Raimo Lenschow downgraded shares to equal weight from overweight in a Friday note. Lenschow kept his price target of $198, which is just 1.2% higher than Thursday’s close. Snowflake has surged 39.3% over the last 12 months and are currently trading at 16 times their 2025 enterprise value-to-sales ratio, according to Barclays. “There is a lot of consumption recovery or new product contribution needed to deliver accelerating product growth,” Lenschow wrote. “Unlike a subscription revenue model, Snowflake recognizes revenue as customers consume resources. This could create volatility in the P & L as Snowflake has limited visibility into the revenue it can recognize compared to traditional SaaS companies.” Shares slipped 1.6% during premarket trading Friday. The stock is down 1.7% in 2024. — Hakyung Kim 5:40 a.m.: Piper Sandler upgrades Twilio Twilio shares have more room to run after a strong 2023, according to Piper Sandler. Analyst James Fish upgraded the software stock to overweight from neutral. He also hiked his price target to $82 from $75 per share. The new forecast implies upside of 14.2% over the next 12 months. Fish cited a “material upside potential to FCF estimates as Twilio has executed better on profitability initiatives” and “a positive risk-reward at these levels that gives investors an opportunity to own a best-in-class CPaaS business at an average CPaaS / telco multiple” as reasons for the upgrade. Twilio shares were up more than 2% in the premarket. The stock is coming off a monster year, rallying nearly 55% in 2023. TWLO 1D mountain TWLO rises — Fred Imbert

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