Thursday's analyst calls: Morgan Stanley calls for more GM gains, Qualcomm gets a downgrade
[ad_1]
(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.) A legacy automaker and a major semiconductor maker were in focus among analysts Thursday. Morgan Stanley raised its price target on General Motors. Meanwhile, Qualcomm got a downgrade from Citi, citing concern that the chipmaker may not be able to beat earnings expectations and raise its guidance for much longer. Check out the latest calls and chatter below. All times ET. 6:14 a.m.: Morgan Stanley steps to the sidelines on Zoom ZoomInfo Technologies is “unlikely to zoom into a recovery,” according to Morgan Stanley. A new round of layoffs in the tech industry and slower job postings weighs upon the future growth outlook for ZoomInfo, according to analyst Elizabeth Porter. She also cited increasing competition in her downgrade on shares to equal weight from overweight. “ZoomInfo is a leader in providing B2B company and contact data, which becomes increasingly important as companies look to drive efficiency in sales teams. However, with ~35% of revenue from customers in the software vertical, headcount and cost reductions at this core customer base has significantly impacted demand,” Porter said in a Thursday note. “We moderate our outlook on the growth improvement in 2025 and beyond, and move to the sidelines with an Equal-weight view as catalysts for a material growth re-acceleration and stock re-rating are pushed out, in our view,” she added. Porter also reduced her price target to $20 from $24, implying around 25% upside potential from Wednesday’s close. Shares slipped more than 2% Thursday during premarket trading. ZI 1D mountain ZI falls — Hakyung Kim 6:06 a.m.: JPMorgan upgrades AT & T to overweight JPMorgan is becoming bullish on the investment case for AT & T . Analyst Richard Choe raised his rating on shares to overweight from neutral. He also lifted his target by $3 to $21, suggesting shares could add nearly 19% from Wednesday’s close. “The company has been able to show consistent execution in its wireless and broadband businesses and we see solid long-term growth for both segments, especially in broadband with its ongoing fiber build along with incremental opportunities in and out of existing markets,” Choe said in a note on Thursday. AT & T is also expected to have “steady” free cash flow generation to support dividend payments, Choe added. Shares of the telecom giant are up 5.4% year to date. Over the past six months, the stock has jumped 23.7%. — Hakyung Kim 5:49 a.m.: Jefferies, RBC lower ratings on New York Community Bancorp New York Community Bancorp’s fourth quarter results contained “several negative surprises,” according to RBC. The firm downgraded shares to sector perform from outperform in a Thursday note. This came a day after the stock fell more than 37%, its worst-ever trading day since it went public in 1993. NYCB previously managed to weather the regional bank crisis in 2023, and took over the failed Signature Bank during that time. “Despite the negative results, it is important to emphasize management’s statement that the dividend cut was not tied to the credit quality outlook. Rather, we believe that management became cognizant of the need to maintain peer-like reserve levels and a CET1 ratio closer to peer levels now that they are over $100 billion in assets and a Category IV bank,” analyst Jon Arfstrom wrote in a client note. Category IV refers to banking standards for U.S. banks with total assets of $100 billion or more. Nonetheless, he is moving to the sidelines, citing “growing points from being a larger pain” that will likely weigh on earnings in the near- to medium-term. Arfstrom slashed his price target to $7 from $13, suggesting 8.2% upside potential from Wednesday’s close. Jefferies also cited an “unexpectedly faster regulatory mandate” to Category IV bank compliance for NYCB in its downgrade to hold from buy. The firm also lowered its price target to $7 from $12. — Hakyung Kim 5:40 a.m.: Qualcomm’s ‘beat and raise party may be over,’ says Citi Citi is stepping to the sidelines on chipmaker Qualcomm . The firm downgraded shares to neutral from buy following Qualcomm’s fiscal first quarter results . Although the company managed to beat on top and bottom lines, its lower-than-expected guidance for the current quarter disappointed Citi. “When we upgraded the stock to Buy, we believed Qualcomm would gain share at Samsung and the stock should trade at a higher valuation given our belief in a beat and raise cycle and we were wrong,” analyst Christopher Danely wrote in a Thursday note. He added, “QCOM is within 10% of our price target and it appears the beat and raise cycle is ending so we are downgrading from Buy to Neutral.” Danely kept his price target of $160 on shares, suggesting shares could gain 7.7% from Wednesday’s close. Bank of America and JPMorgan were slightly more optimistic on the stock, reiterating their buy and overweight ratings, respectively. Bank of America’s Tal Liani said “guidance was somewhat lackluster,” but believes Qualcomm should benefit from AI trends and a global handset market recovery in 2024. Liani also reiterated his $173 price target. “While revenue upsides are limited by the countercurrents outlined above, the stronger upside is stemming from margins which benefited from better gross margins as well as tighter cost control,” JPMorgan’s Samik Chatterjee wrote in a Wednesday note. “The margin strength is expected to have a better flow-through to the future quarters than the revenue drivers, and is one of the primary drivers of the raise to our FY24 EPS estimates even though we are lowering our FY24 revenue estimates,” he added. Chatterjee lowered his price target by $3 to $170. — Hakyung Kim 5:40 a.m.: Morgan Stanley raises GM price target A focus shift back to internal combustion engine vehicles can give General Motors another jolt higher, according to Morgan Stanley. Analyst Adam Jonas raised his price target on the stock to $43 from $40, implying upside of 10.8% from Wednesday’s close. Shares have already gained 8% in 2024. GM YTD mountain GM year to date “hen the company said their first priority was to take advantage of opportunities within their internal combustion portfolio… we had to look twice. Is this the same GM that in the fall of 2021 said it would no longer sell internal combustion engine vehicles after 2035?” Jonas wrote. “In our view, ICE will decline, but at a slower pace than market believes, producing substantial cash flows in the process,” he said. “GM has some highly cash flow generative businesses (ICE) but needs to re-calibrate their EV/AV strategies to address cash consumption. We are not in position to ascribe non-zero valuations to these businesses.” The note comes after GM reported stronger-than-expected fourth-quarter results earlier this week. — Fred Imbert
[ad_2]
