Wednesday's analyst calls: More Nvidia gains ahead, Tesla 'self-inflicted' wounds
(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.) Nvidia and a major electric vehicle maker were in focus as part of Wednesday's analyst chatter. Morgan Stanley raised its price target on Nvidia, calling for more than 15% upside going forward. Jefferies, meanwhile, cut it 12-month forecast on Tesla. Check out the latest calls and chatter below. All times ET. 8:15 a.m.: Morgan Stanley raises price target on GM, says it could benefit from EV slowdown Morgan Stanley raised its price target on GM to $46 from $43 and said that the current slowdown in EVs could be positive for the auto maker. It has an overweight rating on the shares. Analyst Adam Jonas said a doubling of its full-year restructuring/impairment charges to $3 billion, related to electric and autonomous vehicles should "lower the bar on big investments in EVs that will not deliver on expected volume." The firm also trimmed its capex estimates to the low end of GM's guidance and raised its earnings estimates by 9%. He also noted that although GM has acknowledged the momentum in hybrids, it "virtually gave up on hybrids in its push towards pure [battery electric vehicle] architectures," and "may have to spool up investment in hybrids from here." GM shares were little changed in premarket trading. –Tanaya Macheel 8:14 a.m.: Block shares could rally more than 30%, Mizuho says Mizuho sees more upside in store for shares of Block . Analysts Dan Dolev lifted the firm's price target to $106 from $99, citing the potential for gross profit to exceed 20% in 2024. The updated target implies about 33% upside from Tuesday's close. "Reinvigorated management focus on Cash App and Square ecosystems could potentially drive meaningful upside to 2024 guide," he wrote. "Management guided to 15%+ gross profit growth, but we see potential for > 20%." Underpinning this upside potential is a bet that the company can convert 1 million cash card users to direct deposit and reach higher-income customers. Other critical components include the expansion of the company's Cash App borrow product and a recovery in point-of-sale momentum within the U.S. restaurant industry. "We are raising our estimates to reflect more optimism around SQ's gross profit potential," he wrote, and ahead of the 15% guide and 16% consensus estimate. – Samantha Subin 7:44 a.m.: Truist downgrades Deckers to hold It's time to step to the sidelines on footwear company Deckers Outdoor , according to Truist. Analyst Joseph Civello downgraded Deckers to hold from buy, and lowered his price target, citing card data showing softening demand for the footwear company's popular Hoka brand. On the other hand, the analyst noted trends for UGG shoes remain strong. "Truist Card Data indicates that HOKA's Direct-to-Consumer (DTC) growth decelerated in mid-Feb and remained softer through March. We lowered our segment growth forecast from ~40%E (where the Street currently is) to 25%E," Civello wrote. "Truist Card Data for UGG looks very strong and we are raising ests for the segment." To be sure, the analyst said he remains optimistic over Hoka's long-term potential, but noted the risk/reward for the stock "looks balanced" from here after its outperformance. The stock is up about 30% this year. The analyst's $864 price target, lowered from $983, is just slightly lower from Tuesday's closing price of $867.81. Shares fell 2% in premarket trading. — Sarah Min 7:42 a.m.: Goldman Sachs initiates Alcon at a buy rating, sees 21% upside ahead An attractive valuation and strong growth drivers make Alcon a good investment, according to Goldman Sachs. The bank initiated shares of the contact lens solutions maker at a buy rating. Analyst Richard Felton also set a price target of $100, which corresponds to a 21% rally for the stock. Shares of Alcon are up nearly 6% this year. "We believe current valuation represents an attractive entry point ahead of potential upgrades and an FCF inflection," Felton wrote. The analyst added that additional gains are supported by attractive growth across multiple sectors. "Alcon's core businesses are delivering solid growth, supported by what we see as strong market positions and attractive end markets. We also see multiple opportunities to drive incremental growth," he said. Specifically, Felton highlighted volume-based procurement in the Chinese market as one driver of incremental growth. This could increase both Alcon's procedure volume and current market share. Another factor that has yet to be fully reflected in consensus estimates is the potential for further share gains in Alcon's contact lenses market. "Looking ahead, we see scope for further share gains in Dailies and see upside in reusable lenses, where Alcon's share is relatively underweight," Felton said. Finally, an opportunity also exists within the dry eye category, with Felton predicting a strong growth runway for Alcon's artificial tears brand, as it increases its penetration in the market. — Lisa Kailai Han 7:28 a.m.: Bank of America upgrades Albemarle to buy on the back of increasing lithium prices Improving lithium prices will lift up shares of Albemarle , according to Bank of America. Bank of America analyst Steve Byrne upgraded shares of the chemical manufacturer to a buy rating from neutral. He accompanied the move by lifting the stock's price target to $156 from $137. This updated forecast implies that shares could rise 21%. Albemarle stock is down 11% for the year. One major catalyst that could drive the stock upwards is the improvement in market fundamentals as the prices of lithium rise from here. "Given recent pricing improvement in spodumene and lithium salts, we believe it is likely to see a near-term reduction in lithium inventory levels in China, which would reinforce the upward move in lithium chemical pricing," Byrne wrote. "We have raised our global lithium chemical and spodumene concentrate price expectations." He added that improving lithium prices would also drive Albemarle's near-term and future earnings. — Lisa Kailai Han 7:01 a.m.: Citi upgrades International Flavors & Fragrance to a buy rating International Flavors & Fragrance could rise as the firm re-centers its focus around a new CEO, according to Citi. The bank upgraded shares of the food, beverage and scent manufacturer to a buy rating from neutral. Citi also lifted its price target for the company to $100 from $81, implying that shares could rally nearly 16% from their current price. "Most of the news flow is behind IFF (dividend cut, Pharma business sale), and we see a compelling pathway towards volume recovery and deleveraging, which should drive performance for shares," wrote analyst Patrick Cunningham. The analyst underscored new CEO Erik Fyrwald's focus on sales execution and balance sheet management. Management has also proven its commitment and ability to strengthen the capital structure by reducing debt, the analyst remarked. As another catalyst, he cited the company's potential carry over of 2023's improved volume levels. "The cadence of volume improvements will likely carry through to FY24, with sequential volume growth in Health & Biosciences and Scent in 1H24, based on comments in 4Q23 earnings," Cunningham wrote. "We think the prospects for volume recovery in the industry will be driven by improving prospects for consumer goods companies with some upside potential from restocking." Shares of International Flavors & Fragrance are up nearly 7% this year. — Lisa Kailai Han 6:44 a.m.: Jefferies names Zillow a top pick Jefferies sees a "one in a Zillow opportunity" when it comes to Zillow . The investment firm named Zillow as its new top pick, a designation that was previously rewarded to DoorDash. While shares of the real estate marketplace have already slid 17% this year, Jefferies' price target of $75 means there could be more than 56% upside potential for the stock. Zillow stock has tumbled recently since the National Association of Realtors announced a settlement to potentially lower real estate commission rates on March 15. But Jefferies believes that investors have overestimated the potential drawbacks of the settlement. "As long as buyer agents can see the commission split for a given listing before presenting a buyer, we believe sellers will remain incentivized to offer compensation," wrote analyst John Colantuoni. "The pullback in Z's stock following NAR's proposed settlement creates a more attractive entry point given we expect no impact on fundamentals." Additionally, Colantuoni also believes that Zillow's plans to expand its products and services could lead to revenue upside. Low variable costs should help drive these margins up even higher, increasing Zillow's overall profit-taking. — Lisa Kailai Han 6:26 a.m.: KeyBanc upgrades GoodRx to overweight, sees room for subscription growth KeyBanc Capital Markets sees an increasing subscriber base propelling GoodRx's stock in the future. The firm upgraded shares of the telemedicine company to overweight from sector weight. The bank also lifted its price target to $9, implying shares could rally 34% from Tuesday's close. "We are upgrading shares of GDRX to Overweight as we get more constructive for this re-accelerating high-growth, high-margin company trading at a discount to peers and historical average given positive recent data trends," wrote analyst Scott Schoenhaus. Besides increased estimates, Schoenhaus also listed increased app downloads and monthly active customers as additional catalysts. Downloads of the GoodRx app accelerated in February and have proved to hold up in March as well, despite a more challenging backdrop. Additionally, the analyst noted a 2% increase in GoodRx's gold subscription customers from February to March. With the new Publix membership rollout unveiling GoodRx's gold membership across 1,200 locations, even more unique customers could be subscribed to the program going forward. "Our favorite names into 1Q earnings are CERT, GDRX, PHR, and SDGR, where we see the biggest opportunities for beat-and-raises this quarter and throughout the year, and we support our thesis with data in the following pages." GoodRX shares have struggled this year, rising less than 1%. GDRX YTD mountain GDRX in 2024 — Lisa Kailai Han 6 a.m.: Barclays views Chevron stock as attractive both with or without Hess deal Barclays sees a bright future ahead for Chevron . The bank initiated coverage of the oil and gas giant at overweight, setting a price target of $203. This implies that Chevron could soar another 25%. Year to date, the stock is up 9%. Analyst Betty Jiang thinks Chevron looks attractive, both with or without its potential acquisition of fellow energy company Hess . "After a period of challenging mega-project developments over the last decade, CVX is finally shifting into a development that's lower capital intensity, lower execution risk, and more flexible short-cycle production," she wrote. Meanwhile, Chevron has also managed to finetune a balanced portfolio, consisting of both long- and short-cycle assets, which helps mitigate potential base production decline, Jiang said. Additionally, she sees Chevron's potential cash return of over 10% post-Hess deal as another catalyst. "We believe CVX offers outsized cash return (second highest in our coverage universe), free cash flow inflection from start-up of the TCO expansion, and a high return legacy position in the Permian," she added. As an added bonus, Chevron is also actively contributing to the renewable energy transition. Jiang also viewed possible upcoming asset sales as another catalyst for the energy firm. — Lisa Kailai Han 5:53 a.m.: Jefferies lowers Tesla price target, cites 'self-inflicted' wounds Tesla's troubles may not be over yet, according to Jefferies. The investment firm kept its hold rating on the electric vehicle maker and lowered its price target to $165 from $185. The new forecast implies shares could slide nearly 7% from Tuesday's close. Tesla has already had a tough year, weighed down by waning sales in China and slowing demand for electric vehicles. The stock has lost nearly 29% in 2024, making it one of the worst performers in the S & P 500. Jefferies analyst Philippe Houchois also said Tesla is plagued by shifting product priorities. He cited reports of production of the company's low-cost Model 2 being canceled . "Most issues affecting core auto performance appear self-inflicted and should keep returns well below potential for the coming 24 months," he wrote. — Lisa Kailai Han 5:53 a.m.: Morgan Stanley raises Nvidia price target Nvidia has already rallied more than 72% in 2024. Morgan Stanley sees even more gains ahead. Analyst Joseph Moore raised his price target on the artificial intelligence darling to $1,000 per share from $795. The new forecast points to 17% upside from Tuesday's close. "Preferring NVIDIA seems unimaginative, as it was the best performing stock last year ... and it has risen to market caps that we would have thought of as unfathomable a few quarters ago," Moore wrote. "That said, the peers have not been undiscovered either, with stocks with direct exposure to these markets, such as AMD and MRVL, having risen to new multiple highs." NVDA YTD mountain NVDA year to date The analyst highlighted several factors in favor of Nvidia, including strong pricing and robust orders for its semiconductors. "We expect NVDA's Data Center business to drive much of the growth over the next 5 years, as enthusiasm for generative AI has created a strong environment for AI/ML hardware solutions - NVDA's being one of the most important," Moore wrote. — Fred Imbert