Tuesday's analyst calls: Netflix downgraded by Citi, Deutsche sees more upside for JPMorgan Chase
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(This is CNBC Pro’s live coverage of Tuesday’s analyst calls and Wall Street chatter. Please refresh every 20-30 minutes to view the latest posts.) Netflix was in focus Tuesday after the streaming giant got a big downgrade. Citi lowered its rating on the stock to neutral from buy, noting expectations for the company have become too lofty. Shares fell slightly in the premarket. Elsewhere, Deutsche Bank upgraded JPMorgan Chase to buy from hold. Check out the latest calls and chatter below. 5:47 a.m. ET: Morgan Stanley upgrades CrowdStrike, says cybersecurity tech provider is ‘firing on all cylinders’ Morgan Stanley said traders should flock to CrowdStrike shares. Analyst Hamza Fodderwala upgraded the cybersecurity software stock to overweight from equal weight and raised his price target by $101 to $304. His new target reflects the potential for shares to climb 16.4% from Monday’s closing level. “We are upgrading CRWD … based on improving demand, broader platform traction and multiple product cycles still ramping up, including the recently launched Charlotte AI,” Fodderwala said, adding that the company is “firing on all cylinders.” “We think these factors should result in more meaningful upside to ARR and FCF forecasts throughout the year,” he added, using acronyms for annual recurring revenue and free cash flow. That allows for “driving the stock higher despite significant outperformance over the last year.” CrowdStrike is the “leading beneficiary” as ransomware becomes more common given the company’s s incident response and endpoint security services, Fodderwala said. In fact, attacks grew by a clip of more than 70% last year, leading to growth in professional services revenue, according to the analyst. Elsewhere, Fodderwala pointed to multiple product cycles still ramping up. In particular, he pointed to the company’s “strong position” for leveraging and monetizing generative artificial intelligence. CrowdStrike’s Charlotte AI can add $100 million in annual recurring revenue by 2025 if there’s 10% penetration in the installation base, he said. To be sure, Fodderwala knows his upgrade comes after a strong year for the stock, with shares outperforming security peers and the Nasdaq Composite in 2023. While he admitted to being late to the party, he said investors aren’t too late to buy in given the reasons for optimism. CRWD .IXIC 1Y mountain CRWD vs Nasdaq in past year Shares rose 2% before the bell on Tuesday. — Alex Harring 5:32 a.m. ET: Citi downgrades Netflix, says streaming giant could underperform on some Street projections Investors should move to the sidelines on Netflix as Wall Street’s expectations have gotten too grandiose, Citi warned. Analyst Jason Bazinet downgraded the streaming giant to neutral from buy. His $500 price target implies an upside of 3.1% from Monday’s close. “Across 2024 and 2025, the Street has lofty expectations for Netflix. We see three potential risks,” Bazinet wrote to clients. “At prevailing levels, we find the risk-reward relatively balanced.” Bazinet said the first of those three reasons is that 2024 revenue expectations may be too high. Next, 2025 content investments should be higher than analysts anticipate. And finally, he said potential acquisitions can’t be ruled out. Given these risks, he said the risk-reward ratio is no longer compelling. Bazinet’s downgrade comes on the heels of a strong year for Netflix, making Bazinet’s upside expectations relatively muted. Shares rallied more than 65% in 2023, regaining some ground after dropping more than 50% in the prior year. Netflix stock slipped 2.1% before the bell Tuesday. — Alex Harring 5:32 a.m. ET: Deutsche Bank upgrades JPMorgan Chase JPMorgan Chase shares have more upside left in them after a stellar 2023, according to Deutsche Bank. Analyst Matt O’Connor raised his rating on the bank to buy from hold and raised his price target to $190 from $140 per share. The new forecast indicates a potential gain of 10.5% from Monday’s close. “Shares should benefit from upside to net interest income guidance (vs. downside risk at peers), good leverage to a pick up in capital markets revenues, and strong capital and loan loss reserve levels,” O’Connor wrote. “And while we wouldn’t argue JPM shares are cheap, they also aren’t expensive at 11.5x our 2024e or just a slight premium to the broader group multiple of 11.0x.” JPMorgan Chase rallied 24.6% in 2023. The stock hit a record high last week. JPM 1Y mountain JPM in past year — Fred Imbert
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