Wednesday's analyst calls: Tesla price target cut, big retailer gets an upgrade after strong earnings
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(This is CNBC Pro’s live coverage of Wednesday’s analyst calls and Wall Street chatter. Please refresh every 20-30 minutes to view the latest posts.) A major electric vehicle maker and a retail giant were in focus among early analyst calls Wednesday. Morgan Stanley cut its price target on Tesla after trimming its profitability forecasts. On a more positive note, HSBC upgraded Target to buy from hold on the back of a strong fourth-quarter report. Check out the latest calls and chatter below. All times ET. 6:04 a.m.: Honeywell upgraded to buy at Berenberg Shares of Honeywell have underperformed this year — which Berenberg believes creates an entry point for investors. The firm upgraded shares to buy from hold. It holds a price target of $240, which implies shares could rally 21.6% from the previous close. Previously, the firm advised owning a basket of stocks that could represent the sum-of-the-parts (SOTP) of Honeywell, which includes aerospace chemicals and automation. However, shares have now underperformed this SOTP composite by 25%, according to analyst Philip Buller. Honeywell’s management and “relentless” focus on profitability also stand out from its peers in the industrials sector, Buller added. “After a continued derating, valuation multiples no longer reflect the quality of this asset, to the extent we would favour Honeywell over many of the constituents of the SOTP at this juncture,” said Buller. Year to date, shares are down more than 5%. — Hakyung Kim 5:49 a.m.: Progressive on pace for market share gains, says Morgan Stanley Insurance company Progressive could become the largest personal auto loan underwriter in the U.S., according to Morgan Stanley. The firm upgraded shares to overweight from equal weight. It also notched up its price target to $227 from $185, implying shares could gain 18.5% from Tuesday’s close. “Progressive’s strong culture of tech innovation, favorable competitive environment, and gradual business mix shift should give it the ability to outgrow the market,” analyst Bob Jian Huang wrote in a Wednesday note. According to Huang, the company could capture more than 19% market share in five years. The company is structurally better-positioned than its competitors, Huang said. The stock has rallied more than 19% this year, outperforming the S & P 500’s 6.4% rise. — Hakyung Kim 5:40 a.m.: HSBC upgrades Target After a strong fourth quarter, HSBC thinks Target is primed for a turnaround. The bank upgraded the retailer to buy from hold, increasing its price target to $195 from $140. The new forecast implies upside of nearly 16% from Tuesday’s close. “Target is a true omnichannel retailer, blending 2,000 physical stores with digital sales (18% of total sales in FY2024), where stores operate as hubs for digital orders,” analyst Daniela Bretthauer wrote. “Going forward the company plans to pick up its store opening pace and open 300 new stores, and extend its assortment with a focus on new partnerships all of which should strengthen further Target’s brand recognition.” Target shares rallied 12% on Tuesday after the company posted quarterly earnings that beat analyst expectations. For the year, they are up 18.4%. TGT YTD mountain TGT year to date HSBC wasn’t the only firm becoming more bullish on Target. Deutsche Bank raised its rating on the stock to buy as well with a price target of $206, which implies upside of more than 22%. “With 2024 initial guidance behind us (appears reasonable while leaving room for upside), traffic improvements underway, and the company’s top line on track to inflect positively starting in 2Q, we see a number of drivers ahead for sustained SSS growth and EBIT margin expansion, resulting in EPS of $10+ in the not-too-distant future,” analyst Krisztina Katai wrote. — Fred Imbert 5:40 a.m.: Morgan Stanley cuts Tesla price target 2024 will be for electric vehicles, said Morgan Stanley’s Adam Jonas, who warns that Tesla could lose money this year. Tesla shares have already fallen by more than 27% year to date. The automaker is struggling with demand challenges, increasing competition and investor concern over price cuts. Jonas lowered his price target on Tesla to $320 from $345 to reflect more pessimistic profitability forecasts. To be sure, the new price target still implies 70.8% upside potential from Tuesday’s close. He also maintained his overweight rating on the stock. “We believe Tesla has significant attributes to be valued as an AI beneficiary, but the company must see a stabilization in the negative earnings revisions within the auto business first,” said Jonas. “At the same time, however, we believe investors should not ignore the continued developments of Tesla’s other plays, many of which are auto-related … and other areas that we do not include within our $320 target but that the market may include (i.e. Optimus),” the analyst said. Further updates on these are likely to come during the company’s AI Day, for which the date is not yet set, Jonas added. — Hakyung Kim
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