Thursday's analyst calls: Apple gets another downgrade, Nike named a top pick
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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.) Apple seemingly can’t catch a break from analysts. On Thursday, Piper Sandler lowered its rating on the tech giant, marking the second major downgrade for the company. Shares are down more than 4% to start the year. On a more positive note, Barclays and Bernstein named Nike a top pick, noting the stock could see a sharp rebound after back-to-back down years. Check out the latest calls and chatter below. 6:09 a.m. ET: Bernstein downgrades Analog Devices, says company needs to ‘grow’ into new multiple Bernstein is moving to the sidelines on shares of Analog Devices in the new year as the company grows into its heightened multiple. Analyst Stacy Rasgon downgraded the company to market perform from outperform, citing valuation concerns as the analog industry faces its reset. “We think the story gets a little murkier in analog-land,” he said in a Thursday note to clients. “On the one hand numbers have been cut (in some cases substantially), but many of those cuts have already been aggressively bought, and some of the stocks may need time to grow into multiples.” Within the analog and large-cap semiconductor space, the company’s experienced one of the steepest estimate revisions, while consensus expectations sit down a third from their 2023 peak, Rasgon noted. At the same time, Analog’s multiple has climbed nearly 50% and looks elevated in the high 20s – even for a “high-quality” company. “That being said, while a high-20’s multiple isn’t crazy to put on a trough earnings, it seems likely to us that those earnings will probably have to grow into the multiple, and the stock itself may trade sideways for a bit until then, and there may be better places to put new money to work in the space for now,” he wrote. The firm’s unchanged $200 price target suggests about 6% upside from Wednesday’s close. — Samantha Subin 5:43 a.m. ET: Piper Sandler downgrades Apple, cites valuation and handset concerns Piper Sandler is turning more cautious on Apple in 2024. Analyst Harsh Kumar downgraded shares of the iPhone maker to neutral from overweight, citing valuation concerns, macro weakness and a strained handset outlook. “We are concerned about handset inventories entering into 1H24 and also feel that growth rates have peaked for unit Sales,” he wrote. The setup for handset companies looks murky in the first half of 2024 following a slowdown in 2023, with a recovery unlikely until the back half of the year, Kumar wrote, adding that a weakening macro environment in China could also further weigh on this business. The difficult handset setup also led Kumar to downgrade both Qorvo and Skyworks Solutions. More negative news surrounding the company’s Apple Watch, at the center of an intellectual property dispute with medical technology company Masimo, and other legal battles, could also pose headwinds in the new year, he added. “Difficult comps from 2023 paired with constant currency headwinds are expected to continue in 1H24 with interest rates remaining elevated,” he added. Apple shares lagged behind megacap peers in 2023 but rallied 48%. According to Kumar, Apple’s valuation already looks high, trading above a five-year historical price-to-earnings ratio of 24 times at 29 times earnings on a next twelve-month basis. Given this outlook, Kumar trimmed the firm’s price target to $205 from $220 a share, representing 11% upside from Wednesday’s close. Shares lost 0.7% before the bell. This is the second major downgrade Apple has received this week. On Tuesday, Barclays lowered its rating on the tech giant to underweight from equal weight. — Samantha Subin 5:42 a.m. ET: Barclays and Bernstein name Nike a top pick After back-to-back losing years, Barclays and Bernstein think it’s time for Nike to turn around. Both firms named the apparel giant a top pick. Barclays analyst Adrienne Yih rates the stock as overweight with a price target of $142, which implies upside of 36.5%. Bernstein’s Aneesha Sherman has an outperform rating on shares with a $134, pointing to a 29% gain. Barclays’ Yih pointed to wholesale recover and improving margins as catalysts for the stock in 2024. “Our 2024 best idea recommendation is based on: 1) continued and accelerating positive sales-to-inventory growth; 2) improved product margins accelerating on lower costs; 3) expected wholesale ‘bottom’ in FY2Q24; and 4) new innovation cycle that will be more impactful in FY25 and beyond,” the analyst said. Sherman from Bernstein, meanwhile, thinks Nike’s fiscal 2025 estimates are down too much. “Consensus seems to have extrapolated the weak H2 guidance to underwrite demand weakness through the entire following fiscal year as well. This is an overreaction,” Sherman said. “The H2 guidance cut was more indicative of current market conditions and retailer timidness in 2024 order books … than of Nike’s fundamental viability as a brand.” Nike shares posted their second straight annual decline in 2023, losing 7.2%. This comes after a 29.8% drop in 2022. NKE mountain 2021-12-31 NIKE in past two years — Fred Imbert
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