Tuesday's analyst calls: Nvidia a 'best idea' for 2024; Apple gets a downgrade
(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.) Analysts kicked off the new year on Tuesday focusing on major tech companies. On one hand, Stifel called Nvidia one of it top plays for 2024 after a stellar performance in 2023. On a more negative note, Barclays downgraded Apple to underweight from equal weight, citing weakness around iPhone sales and other products. Check out the latest calls and chatter below. 6:17 a.m. ET: Goldman initiates Rollins as a buy, citing organic revenue growth Goldman Sachs thinks pest control services provider Rollins has an attractive upside potential. Analyst George Tong initiated coverage of Rollins with a buy rating and $49 price target, suggesting shares could gain about 12% over the next year. Shares gained about 6.7% over the past month. ROL 1M mountain ROL in past month “We believe ROL is a differentiated and leading provider of pest control services leveraged to strong route density, a unique multi-brand strategy that facilitates market share gains, and attractive business model characteristics including recurring revenues, defensiveness and operating leverage,” Tong wrote in a Monday note. The company’s organic revenue growth has seen a “structural step-up” from mid-single-digits between 2008 and 2020 to high-single-digits since 2021, Tong said. That growth has been driven by an expanded brand portfolio, as Rollins has dozens of local and national brands in addition to its popular Orkin pest control subsidiary. Rollins has also placed a higher emphasis on door-to door sales as well as increased sales capacity and shifts in post-Covid consumer behaviors. — Pia Singh 6:05 a.m. ET: Amazon, Meta are among RBC’s top global ideas for 2024 RBC analyst Brad Erickson named major tech players Amazon and Meta among the firm’s top picks for next year. The firm added e-commerce giant Amazon to its coverage, assigning an outperform rating and $180 price target, indicating 18.5% upside for the stock. “In our view, the company’s unmatched scale and advantage in verticalized e-commerce combined with its industry-leading cloud business give it many future opportunities in new vertices, and management is playing offense on GenAI,” Erickson wrote in a Tuesday note. Amazon Web Services is “now de-risked” for 2024, which could help re-rate the stock, he said. Meta, which also has an outperform rating from RBC, could gain 13% from its $400 price target, according to the firm. Erickson noted Meta has the largest user base and deepest amount of data on that user base, adding that Facebook parent can compound 15% to 20% earnings growth once it passes through its “currently elevated investment cycle around AI.” Meta’s trading at a discount to the broader internet group, he said. Shares of Amazon and Meta were trading just above flat during premarket trading. — Pia Singh 5:35 a.m. ET: Barclays downgrades Apple, says stock could lose more than 15% It’s time to take a breather on Apple , according to Barclays. Analyst Tim Long downgraded the iPhone maker to underweight from equal weight, discouraged by weakness in iPhone volumes and mix as well as in Macs, iPads and wearable devices. His $160 price target suggests the stock could lose about 17% from its latest close. Shares dipped 1.2% in premarket trading Tuesday. “[iPhone 15] has been lackluster and we believe IP16 should be the same,” Long wrote in a Tuesday note. “Other hardware categories should remain weak, and we don’t see services growing more than 10%. We expect reversion after a year when most quarters were missed and the stock outperformed.” Ongoing weak results coupled with multiple expansion isn’t “sustainable,” Long said, adding that next year will be more risky for Apple’s services business, which includes Apple Pay. Apple’s fiscal fourth-quarter results had surpassed analyst expectations for sales and earnings per share, but indicated a decline in overall sales for the fourth quarter in a row. — Pia Singh 5:35 a.m. ET: Stifel names Nvidia a ‘best idea’ for 2024 Stifel called Nvidia , last year’s best-performing S & P 500 stock, a “best idea” for the new year, noting the chipmaker can build on the artificial intelligence momentum from 2023. “We believe that NVDA is well positioned in markets that combine to yield an overall TAM of more than $100 billion exiting 2025 and a longer term opportunity funnel that could approach $1 trillion,” Stifel analysts said. “While we continue to view NVDA’s exposure to the Gaming, Automotive and Professional Visualization favorably, the shift from general purpose compute to accelerated compute represents the company’s most significant revenue and profitability growth opportunity over the next several years,” they said. Nvidia roared higher in 2023 with a 238.9% surge. The firm’s price target of $665 implies upside of 34.3% going forward. NVDA mountain 2022-12-30 NVDA in 2023 — Fred Imbert
