Thursday's analyst calls: Upside ahead for Amazon and Meta, but a 'rate trap' looms for BofA
(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.) Online marketplace giant Amazon took focus in the overnight market calls, with analysts at Jefferies seeing a broad range of factors likely to contribute to a surge in the company's share prices. The news wasn't as good for Bank of America, with UBS worried about a potential "rate trap" that could slam one of the Big Four U.S. banks. Other analysts saw upside for Coinbase and DoorDash along with Meta Platforms, as the social network builds advertising market share. Check out the latest calls and chatter below. All times ET. 8:28 a.m.: Raymond James moves to sidelines on Bumble; initiates on Grindr Raymond James has turned less bullish on Bumble as consumer habits change. Analyst Andrew Marok downgraded the dating app to market perform from outperform. He also removed his price target after previously expecting shares to reach $15 from their Wednesday close of $11.22. Marok said dating apps may need a refresh to appeal to Gen Z, which favors slower-paced connections and spends more time being single. While he said the brand has "good bones," the outlook is cloudy until a new action plan and its reception among users comes to light. "While we believe that its brand is among the best-positioned in the space in terms of relevance with young people, we do see near-term headwinds stemming from changing user habits, which require significant rethinks among apps built in the Millennial era," Marok said. "We do think the path can be navigated, but the scale of changes required raises near-term execution risk, and as a result we see current estimates as properly calibrated with a balanced risk/reward." Bumble has tumbled nearly 24% this year, adding to last year's 30% drop. Elsewhere in the dating app space, Marok initiated coverage of Grindr with an outperform rating. His $14 price target implies the LGBTQ-focused platform's shares can rally 33.1% from Wednesday's close. "We see several factors that make us constructive on the company's near- and longer-term prospects," Marok said, citing a committed user base, competitive moat and an attractive margin structure, among other qualities. Grindr rose more than 2% before the bell. Shares have climbed almost 20% this year. — Alex Harring 8:30 a.m.: Goldman Sachs downgrades Hertz, upgrades Avis Budget Group Goldman Sachs downgraded Hertz to sell, while upgrading Avis Budget Group to neutral, as it reviewed its outlook for the car rental companies. Analyst Lizzie Dove said Hertz has further to fall even after its underperformance this year. Shares are off by more than 26% this year. Dove's $7 price target, down from $8, implies more than 8% downside from here. The car rental stock dropped another 5% in premarket trading. "We believe the full extent of pricing, cost and DPU pressures have not been priced in," Dove wrote on Hertz. "Though we see merit to the turnaround story, we believe that right-sizing the fleet and stabilizing pricing may take longer (and require more investment) than previously expected." On the other hand, Avis Budget Group was upgraded to neutral from sell, as the analyst "thesis has played out" for the stock. Shares have dropped more than 31% this year. Avis shares popped 2.4% in premarket trading. — Sarah Min 7:50 a.m.: Morgan Stanley cuts Hershey estimates on higher cocoa prices The continued surge in the price of cocoa is going to take a bite out of Hershey's earnings, according to Morgan Stanley. Analyst Pamela Kaufman cut estimates for the chocolate maker on Thursday, saying in a note to clients that the commodity's rise is becoming too much for Hershey to work around. "We are reducing our 2025 EPS estimate by 7.5% and now see HSY's EPS falling by 5% YoY due to the significant recent rise in cocoa prices, which are +90% over the last two months and 125% YTD," the note said. Morgan Stanley had already downgraded Hershey to underweight in February, but the cocoa outlook is getting worse, Kaufman said. "Since our downgrade, cocoa spot prices are up another 66% and futures are pointing to cocoa prices increasing 155% YoY in 2024 (vs. ~70% on 2/12). In comparison, HSY shares are +5% YTD as the market believes the company can navigate the cost environment given its track record for execution and pricing power," the note said. — Jesse Pound 7:18 a.m.: Benchmark initiates DoorDash, highlights 'ever-growing dominance' Benchmark says DoorDash will continue its dominance among restaurant delivery stocks as it expands further into grocery and retail. "DoorDash is well-positioned to benefit from a bevy of secular and fundamental catalysts over the next several years as its addressable market continues to broaden geographically and vertically," analyst Mark Zgutowicz said. The firm initiated coverage of DoorDash stock with a buy rating and a $165 per share price target. Benchmark's forecast implies nearly 19% upside from Wednesday's $138.78 close. "Our Buy recommendation is rooted in DASH's ever-growing dominance in restaurant delivery and the subsequent network effects its massive user/driver scale afford it to new retail vectors including grocery, convenience, and brick and mortar broadly," the analyst added. DoorDash stock has climbed more than 40% in 2024 and was up nearly 1% in the premarket. —Brian Evans 7:01 a.m. Evercore ISI upgrades Wayfair, says fundamentals are improving Evercore ISI says Wayfair stock will benefit from a material recovery in the home furnishing market. "We might be early, but waiting for demand to turn has historically been too late to catch the first leg up in W and we believe the cost takeout provides downside protection in a soft sales environment," analyst Oliver Wintermantel said. The firm upgraded the e-commerce stock to outperform from in line, and raised its price target to $80 per share from $65. Evercore's forecast implies more than 28% upside from Wednesday's $62.41 close. "At its current valuation, our perspective is that W's margin unlock is underappreciated by the market and provides an opportunity for a meaningful re-rating in the coming months," Wintermantel added. "Our $80 Base Case is based on 13x 2025e EBITDA." —Brian Evans 6:42 a.m.: Morgan Stanley's Adam Jonas trims Tesla price target Morgan Stanley's head of U.S. auto coverage Adam Jonas says Tesla's weaker-than-expected first-quarter deliveries will find a bottom by the second quarter, but is a sign of continuing headwinds in the electric vehicle sector. The analyst reiterated his overweight rating on Tesla stock but lowered his price target slightly to $310 per share from $320. Jonas' forecast implies more than 84% upside from Wednesday's $168.38 close. Tesla stock has pulled back more than 32% in 2024. "Negative developments in the global EV market very much matter to Tesla and should reasonably have a negative near-term impact on the price of the stock," Jonas wrote. "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 (i.e. the recurring revenue opportunity from the Tesla fleet – embedded in our Tesla Network Services valuation) and other areas that we do not include within our $310 target." "We think numbers bottom by 2Q results, well before a major rejuvenation of the model cycle," Jonas said of Tesla's vehicle deliveries moving forward. Tesla shares rose less than 1% premarket. — Brian Evans TSLA YTD line Tesla under pressure 6:28 a.m.: Oppenheimer raises Coinbase price target on growing adoption, room for higher earnings estimates The continued adoption of digital assets and blockchain technology can help Coinbase remain a key beneficiary in the cryptocurrency sector over the long-term, according to Oppenheimer. The firm reiterated a buy rating on the crypto exchange stock and raised its price target to $276 per share from $200. Oppenheimer's forecast equates to roughly 10% upside from Wednesday's $251.58 close. Coinbase stock has climbed more than 44% in 2024. "We view COIN as an enabler of crypto innovation, which solves some pain points in the existing financial system, and one of a few remaining exchanges in this space," analyst Owen Lau said. "As a leader in the cryptoeconomy, COIN is well positioned to benefit from the mass adoption of digital assets, we believe," he added. Coinbase shares rose nearly 1% in premarket trading. — Brian Evans 6:19 a.m.: Jefferies raises Meta Platforms price target on forecast higher advertising market share Jefferies says strength in Meta Platforms ' advertising revenue growth could see the company surpass Amazon's ad business for the first time in nine years. The firm reiterated a buy rating on Meta stock and raised its price target to $585 per share from $550 on Thursday. Jefferies' forecast implies more than 15% upside from Wednesday's $506.74 close. Meta stock has surged more than 43% in 2024. "With Q1'24 rev guidance calling for even greater outperformance, we believe Meta could capture as much as 50% of incremental industry ad dollars (vs. 33% in 2023), which would be the most in company history," analyst Brent Thill said. "In fact, we now estimate that in 2024 Meta's ad business could outgrow Amazon's for the first time since 2015." The analyst also lauded the company's suite of generative artificial intelligence products which he says will be a key driver for further capturing advertising dollars. "As a reminder, Meta last disclosed in 2021 that they had 10M advertisers on the platform vs. 200M+ businesses implying there is still ample runway to convert non-paying businesses into advertisers," he said. Meta shares rose 1.4% in premarket trading. — Brian Evans META 1Y line Meta stock rise 6:06 a.m.: Jefferies raises Amazon price target, says company has 'plenty to be excited about' After hosting industry experts and former Amazon employees, Jefferies thinks the company has enough in its pipeline to give investors "plenty to be excited about." The firm reiterated a buy rating on the e-commerce stock on Thursday and raised its price target to $225 per share from $190. Jefferies' forecast calls for more than 23% upside from Wednesday's $182.41 close. "The global AWS [Amazon Web Services] and advertising opportunities are driving overall revenue growth with corresponding margin accretion to the whole business," analyst Brent Thill said. "Investment in AWS, content, and fulfillment supports expansion into new products, services, and geographies with sizable potential," he added. Thill cautioned that Amazon will need to expand its artificial intelligence offerings to stay competitive in the sector as "multi cloud adoption grows." Shares of Amazon have climbed more than 20% in 2024. —Brian Evans 6:06 a.m. UBS downgrades Bank of America, says upside is limited over the next 12 months UBS thinks Bank of America is headed for a "rate trap" which will limit upside for the stock. The firm downgraded the bank stock to neutral from buy, but raised its price target slightly to $40 per share from $39. UBS' forecast implies nearly 7% upside ahead from Wednesday's $37.44 close. Analyst Erika Najarian defines the "rate trap" as a double edged sword of central bank interest rate cuts or a higher-for-longer scenario. If the Federal Reserve indeed does pivot to cuts, then "asset sensitive BAC will be subject to downward revisions to EPS [earnings per share]" and will hurt its market multiple. If interest rates remain elevated for longer, Najarian says, then investors may become concerned with BofA's held to maturity portfolio which could also hurt the stock's market multiple. "After adjusting estimates upward to reflect 3 cuts in '24 and 4 cuts in '25 (vs. 6 and 2 prior) and raising our PT by $1 to $40, we find upside limited at BAC over the next 12 months," Najarian said. "To be clear, there's a lot of positive momentum at the company, from strong deposit growth, a reawakened investment banking & markets business, and the prospect for accelerating buybacks, especially in 2H24," the analyst added. Bank of America stock has climbed more than 11% in 2024. — Brian Evans