Friday analyst calls: Wall Street sticking with Pinterest, Citi upgrades Liberty Global
(This is CNBC Pro’s live coverage of Friday analyst calls and Wall Street chatter. Please refresh every 20-30 minutes to view the latest posts.) With more than 60% of quarterly earnings reports in the books, analysts continued to look for winners and losers from S & P 500 companies. Pinterest rocked the market after hours Thursday when it released earnings guidance that was below expectations, sending shares down more than 9% in premarket trading. However, analysts largely have not soured on the visual discovery company, based on expected opportunities ahead. Elsewhere, Citi boosted Liberty Global ahead of the telecom’s earnings report next week, and Morgan Stanley sees opportunity in aerospace leader TransDigm. 6:17 a.m. TransDigm remains Morgan Stanley’s top pick in aerospace TransDigm shares closed 1.6% lower Thursday after the company lowered its earnings outlook for the year. Despite the disappointment on the weak guidance, Morgan Stanley remains bullish on the stock. The firm reiterated its overweight rating on TransDigm as its top pick designation in the aerospace market. “In our view, the relative underperformance [yesterday] was driven by higher than expected interest expense headwinds to EPS outlook paired with the stock’s strong performance YTD of up ~11.5% vs. the S & P 500 of up ~4.8%,” analyst Kristine Liwag wrote in a Friday note. Liwag said she is positive on the company’s primary end markets. TransDigm’s commercial aftermarket growth could jump to the mid-teens range due to the halt of Boeing’s 737 Max model production. Liwag also kept her price target of $1,275, which implies the stock could gain about 13% from Thursday’s close. — Hakyung Kim 6:05 a.m. ET Citi upgrades telecommunications firm to buy rating Citi says there’s a “low hurdle” for Liberty Global ahead of its 2023 full-year results on Feb. 15. The bank’s analysts upgraded shares to buy from neutral and raised the price target to $24 from $20. The new target price suggests 25.1% upside potential from Thursday’s close. According to Citi’s estimates, the telecommunications company could unlock value between $2.1 billion and $3.1 billion from its operating companies, including Ziggo, Sunrise, Telent and VMO2. “Overall, we believe LBTY has sufficient levers to unlock value over the next 12-18 months while also improving its balance sheet and liquidity position across at least some of the [operating companies],” analyst Georgios Ierodiaconou said in a Thursday note. To be sure, Ierodiaconou noted that 2024 will likely be a mixed year for Liberty amid forecasts of a cut to its free cash flow, but it will see some benefits from energy cost tailwinds. “Overall, we believe the hurdle for value creation is low enough and LBTY has the capacity to deliver on these in the coming years. Unlike other telcos with significant discounts in terms of valuation, LBTY is poised to take action and thus the timing of this is important,” the analyst said. The stock is 7.2% higher year to date, up more than 25% from its lows in November 2023. — Hakyung Kim 5:52 a.m. ET Analysts stick with Pinterest despite letdown on sales guidance Although Pinterest shares are down Friday morning following a disappointing revenue forecast and quarterly from the company, analysts remain optimistic on the company. The stock was last down nearly 10% in premarket trading as investors digested disappointing revenue guidance, in addition to a revenue miss in the fourth quarter. However, analysts at some of Wall Street’s biggest firms remain confident in the stock. Goldman Sachs, UBS, Bank of America and Citi all reiterated their buy ratings on Pinterest. UBS analyst Stephen Ju cited the sharp fall in shares as an “attractive opportunity.” He is also optimistic on the company’s new partnership with Google announced during a call with analysts. ” Although there are current guardrails with Google bringing advertisers in territories where Pinterest does not yet monetize , this partnership can be expanded to include other regions over time ” Ju wrote in a Friday note. He reiterated his $48 price target on shares, which suggests around 18% upside from the stock’s closing price on Thursday. Goldman also believes the partnership with Google Ads Manager should close Pinterests’ gap between user base and engagement “into a monetization driver.” “In our view, PINS [management] remains focused on building scale into a wider pool of ad budgets (advertiser diversity, new product iteration and better monetization of intent signals) to drive an improved revenue trajectory in the quarters and years ahead,” analyst Eric Sheridan said in a note on Friday. Bank of America’s Justin Post also foresees “multiple tailwinds to aid growth and margins” this year for Pinterest. An improving macro backdrop should help growth and ad pricing, he noted. Post also expects benefits from the Google deal should start to appear in a few quarters. “Given our view on acceleration and margin expansion, we see valuation as attractive vs history (at AH price of $37, stock valued at 19x our ’25 EBITDA, slightly below 20x historical average),” Post said in a Friday note to clients.” — Hakyung Kim
