Wednesday's analyst calls: Wall Street reacts to Big Tech earnings, SoFi gets a downgrade
(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.) Analysts on Wednesday focused on reports from major tech companies and potential headwinds for one fintech stock. Those covering Google-parent Alphabet and Microsoft reacted to the megacap names’ latest earnings reports, as both stocks fell on the back of those reports. SoFi Technologies was also under pressure following a Morgan Stanley downgrade. Check out the latest calls and chatter below. All times ET. 6:23 a.m.: Baird sees near-term risks for Tesla but maintains its long-term bullishness The near-term outlook for Tesla is looking troublesome, according to Baird. While the investment firm maintained its outperform rating for the electric vehicle maker, it also designated the stock as a “bearish fresh pick” in a Wednesday note. As a catalyst for the bearish sentiment, analyst Ben Kallo cited a ruling against Tesla CEO Elon Musk’s pay package . “We believe this will create a negative overhang on the stock until additional clarity is given and expect shares to trade down on this news,” the analyst wrote. He also expects disruptions to Red Sea shipping routes to send Tesla deliveries falling in 2024. Tesla shares fell more than 2% after judge voided Musk’s $56 billion pay package. The stock has been under pressure recently, losing nearly 23% this month. On the other hand, Kallo remains bullish on Tesla in the long term, underscoring the company’s product pipeline, increased production capacity, future vehicle rollouts, recurring revenue potential and expanded energy storage products capacity. Kallo’s price target of $300 implies that Tesla stock could rally more than 56% from its Tuesday closing price. “Our price target … is a premium to large-cap, high-growth peers, which we believe is justified given its growth and suite of technologies,” he added. — Lisa Kailai Han 6:15 a.m.: Advanced Micro Devices sell-off could be a good entry point, analysts say Advanced Micro Devices’ post-earnings pullback could be a good entry point for investors, according to Wall Street analysts. While the chipmaker’s fourth-quarter earnings and revenue were in line with analyst expectations , its first-quarter forecast estimated revenue of $5.4 billion was lower than the $5.73 billion analysts had expected. Shares of AMD fell 6% on the back of those results. However, analysts at both Goldman Sachs and Citi saw the sell-off as a buying opportunity. “We reiterate our Buy rating on AMD and would view a near-term correction in the stock as an opportunity to add exposure to an asset that has 1) growing exposure to Gen AI and the build out of its infrastructure; 2) continued potential to grow market share in server CPU; and 3) significant run-way ahead in terms of margin expansion and earnings growth,” wrote Goldman Sachs analyst Toshiya Hari. Hari raised his 12-month price target for the stock to $180 from $157. Citi analyst Christopher Danely also stood by his buy rating on the stock while lifting his price target to $192 from $136. This updated target corresponds to a potential 11.6% upside for shares of AMD. Bank of America analyst Vivek Arya had one of the higher price objectives of $195, implying that AMD stock could rise 13%. Like Hari and Danely, Arya also reiterated his buy rating for the name. On the other hand, JPMorgan analyst Harlan Sur kept his neutral rating for the stock, although he lifted his price target to $180 from $115. While Sur is optimistic on AMD’s ability to improve market share and revenue growth in the near term, he believes that share gains look less certain over the long term, while the stock already appears to be fully valued. — Lisa Kailai Han 5:53 a.m.: Barclays downgrades Verizon Barclays is moving to the sidelines on Verizon . The bank downgraded shares of the telecommunications giant to equal weight from overweight. Analyst Kannan Venkateshwar kept his price target at $44, which just 3.6% upside. “Verizon is on a much better operational trajectory than has been the case over the last couple of years, but upside to numbers and valuation may be more limited from present levels,” Venkateshwar wrote. As a reason for the downgrade, the analyst underscored Verizon’s reliance on price increases to grow its revenue, a lever that may be difficult to continue using. Additionally, Venkateshwar expects the company’s free cash flow to take a hit as costs pick up this year. Meanwhile, Verizon’s prepaid business, Tracfone, is taking longer than expected to integrate. “While the prepaid business is not as material for the story as postpaid, its integration path is an important data point to gain further conviction around improvement in the company’s execution story on the consumer side. This business was also expected to be a small tailwind in 2024 both in terms of sub trends and service revenue growth contribution,” Venkateshwar said. He added that shares of Verizon also no longer appear to be trading at a discount, and now seem to be fairly priced. Shares of Verizon have risen 12.65% in the past month. — Lisa Kailai Han 5:41 a.m.: Wall Street analysts stand behind Alphabet after fourth-quarter earnings results Alphabet shares may be under pressure following mixed quarterly results, but analysts at major banks are standing behind the name. The company beat estimates on both earnings and revenue for the fourth quarter but reported ad revenue of $65.52 billion, missing expectations. Subsequently, the stock slid 6%. Despite this near-term setback, Wall Street analysts from the major banks are still bullish on the name. GOOGL 1D mountain GOOGL falls “In total, we see this quarter as a combined set of messages with stable/strong digital advertising and media consumption trends, solid upside surprise in terms of segment level Operating Income margins & some nuance around one-timers,” wrote Goldman Sachs analyst Eric Sheridan. Sheridan reiterated his buy rating on the stock while raising his 12-month price target to $171 from $164, implying that Google shares could rise 13% from their Tuesday closing price. Likewise, Bank of America analyst Justin Post also reiterated his buy rating but maintained his price objective at $173. Barclays analyst Ross Sandler also maintained his overweight rating on the stock, lowering his price target to $173 from $180. A $173 price target corresponds to a potential 14.2% rally. “Bulls (like us) point to accelerating growth in Search and YT, but the skeptics likely flag increased costs of AI and limited upside to numbers. With shares up 59% last year and 10% thus far in January, we aren’t surprised to see GOOGL take a temporary breather,” Sandler wrote. At $168, up from $153, Citi analyst Ronald Josey had a lower price target. Josey also maintained his buy rating for Google, with his updated price forecast implying that shares could rally 11%. — Lisa Kailai Han 5:41 a.m.: Morgan Stanley downgrades SoFi Technologies Growing near-term headwinds and execution risks to achieving 2026 earnings targets have led Morgan Stanley to recommend clients stay away from SoFi Technologies . Analyst Jeffrey Adelson downgraded the company to underweight from equal weight and cut his price target to $6.50 from $7. The new forecast implies 22.6% downside for the stock. Shares were down more than 3% in the premarket. SOFI 1D mountain SOFI under pressure “Slowing top-line, execution risk on the path to 2026 EPS takes us back to Underweight,” Adelson wrote. “We previously moved off our Underweight call 3 months ago as 1) the stock price had come down to our prior PT, reflecting a more balanced risk-reward skew and 2) SOFI announced capital relief in the form of a new $2B forward flow agreement and other loan sales.” “However, with shares now more than 20% higher since then, and trading at a [price to tangible book value] of ~2.4x, we believe the stock is pricing in too much optimism on the path to 2026 profitability laid out by SOFI, all while staring in the face of a worsening top-line growth outlook for 2024,” Adelson wrote. SoFi shares surged more than 115% in 2023, marking their best year ever. However, they are down 15.6% year to date. — Fred Imbert
