Thursday's analyst calls: This pets stock gets an upgrade, more Salesforce gains ahead?
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(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.) Tech and e-commerce were in focus Thursday with upgrades to Salesforce and Chewy. Baird raised its rating on Salesforce, citing the company’s strong margins. Barclays, meanwhile, moved to an overweight rating on Chewy, noting the stock is primed for a recovery. Check out the latest calls and chatter below. All times ET. 6:09 a.m.: Deutsche Bank downgrades Albemarle, cites pricing uncertainty Deutsche Bank downgraded shares of Albemarle to a hold rating as the firm takes a neutral approach toward the lithium industry. “We believe a more cautious view over the near-to-medium term is prudent given the uncertainty and volatility in lithium prices,” wrote analyst Corinne Blanchard. “While most lithium producers are expecting a rebound in Q2 (post Chinese Lunar New Year), further details into the magnitude of the rebound remain meager, at best.” Given this outlook, Blanchard trimmed the firm’s price target by $20 to $135 a share. The new object implies less than 2% upside from Wednesday’s close. At the same time, she views the lithium market for Albemarle as adequately supplied through 2026, with uncertainties lingering over the normalization in mid-cycle pricing. “Over the coming 3-4 years, we now forecast a structural surplus market, reversing the deficit trend we have observed the last couple of years,” the analyst wrote. Albemarle shares are down nearly 8% in early 2024 after dropping 33.4% last year. — Samantha Subin 5:46 a.m.: Goldman Sachs downgrades Lyft, cites balanced risk-reward Goldman Sachs is moving to the sidelines on Lyft , with the stock up nearly 35% since its last quarterly earnings report in November. Analyst Eric Sheridan downgraded the ridesharing stock to neutral from a buy rating, citing a more balanced risk-reward. To be sure, the firm remains constructive on the company’s operating trajectory, anticipating a reacceleration in revenue growth and ride-volume growth in the double digits. “That said, we see this inflection as already well reflected in Street estimates in 2024 and continue to see execution risks around this trajectory, namely via the potential for contribution margins to see further headwinds in Q4’24 from an increase in insurance costs (reflected at the time of LYFT’s annual renewal cycle),” he wrote. Sheridan also sees threats from a slew of “topline outcomes” ahead as Lyft executes against a handful of “product initiatives aimed at broadening its portfolio and further repositioning its brand.” He also lifted the firm’s price target to $15 from $12 a share due to higher long-term profitability expectations, with the adjustment reflecting about 12% upside from Wednesday’s close. – Samantha Subin 5:39 a.m.: Barclays upgrades Chewy, says ‘dog days are over’ The “dog days are over” for Chewy following a rough patch in 2023, according to Barclays. Analyst Trevor Young upgraded the e-commerce pet products company to overweight from equal weight, citing expectations for resilient demand and a growth trough in 2024. “We think growth inflects in F2H24, and we see upside to consensus in FY25, with incremental upside optionality from vet clinics, int’l and ads,” he wrote in a Thursday note. Shares gained about 4% before the bell. The stock’s already lost more than 15% in 2024 and dropped 36.3% in 2023. The bank’s fresh price target — adjusted to $30 from $19 — implying more than 50% upside from Wednesday’s close. The stock valuation also looks attractive at 15 times 2025 EBITDA, with Young projecting Chewy could post 30% EBITDA growth and upside to consensus over the next few years due to high-margin advertising and the scaling of its vet clinic and insurance segments. While Amazon does pose threats to Chewy as it gains shares in pet categories, Young views the company as relatively insulated from China-based Temu. “We see categories such as branded consumables, pharmacy, and specialty pet categories as being at low risk from Temu or other foreign e-commerce competitors, as brand loyalty, quality/distribution control requirements, or the niche nature of products make it unlikely for Temu or its merchants to be able to compete in a meaningful way,” he said. — Samantha Subin 5:39 a.m.: Baird upgrades Salesforce Shares of Salesforce were upgraded to outperform from neutral by Baird, which also raised its price target on the cloud computing giant to $300 from $240. The new forecast implies upside of 13%. “We underestimated the company’s willingness to deliver margins, which drove strong performance last year,” analyst Rob Oliver wrote. Salesforce shares nearly doubled in 2023 after losing 47.8% in 2022. They were also the best performer in the Dow Jones Industrial Average. CRM 1Y mountain CRM in past year “With current valuation … near historical lows, top-line growth and expectations muted … we see upside from current levels,” Oliver said. “Price increases, the potential return of front office spend, and crisper sales execution should drive upside.” Salesforce were up 1% in the premarket Thursday. — Fred Imbert
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