Thursday's analyst calls: Nvidia a top pick, dating stock gets a downgrade
(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.) Nvidia and a major dating stock were among the names featured Thursday by analysts. TD Cowen reiterated the chipmaker as a top pick, citing strong earnings ahead. Meanwhile, Morgan Stanley lowered its rating on Match Group, citing slowing growth for online dating. Check out the latest calls and chatter below. All times ET. 7:50 a.m.: Cost cuts will lead to higher profits at Amazon, Needham says Amazon's cost-cutting actions should quickly fall through to the tech giant's bottom line, according to Amazon analyst Laura Martin. In a note to clients Thursday, Needham hiked its estimate for Amazon's 2024 fiscal year earnings per share by 12%. The estimate now shows a year-over-year gain of 43%. "The catalyst for this note is to raise our FY24 profit ests for AMZN, based on CEO Andy Jassy's shareholder letter promising more cost-cutting at AMZN's inbound fulfillment architecture and inventory placement during FY24. We also expect FY23's cost-cutting actions to drive margin expansion throughout FY24," Martin said. Amazon is set to report its first quarter earnings on April 30. Needham has a buy rating on Amazon with a price target of $205 per share, implying upside of roughly 13%. Martin said that Amazon projects to be one of just a few major winners from artificial intelligence. "AMZN is developing GenAI chips to train and drive better inferences from LLMs (large language models), AND it has the widest variety of choices related to LLMs, because it offers a captive O & O (owned & operated) LLM, and its also hosts dozens of other LLMs of various sizes," Martin said. — Jesse Pound 7:38 a.m.: Loop Capital downgrades BJ's Wholesale Club, believes stock has reached fair value A year-to-date rally has boosted shares of BJ's Wholesale Club to fair value, according to Loop Capital. The financial firm downgraded the membership warehouse club to a hold rating from buy. Analyst Laura Champine also lowered her price target to $80 from $85, implying a 6% increase for the stock. In the note, Champine wrote that her in-line earnings and sales estimates no longer support a buy rating for the stock. The analyst cited inflation as a key concern for the company. "We are concerned that BJ's stock may hit a wall as investors see evidence of still-high inflationary pressures on the company's core consumer," she wrote. "We see risk to management's expectation for a 20 bps lift in merchandise margin as inflation stays firm on grocery categories." Additionally, Champine noted "mixed" performance at the store level. On one hand, BJ's patio furniture and apparel mix looks "much more attractive," with the company's merchant making solid choices likely to drive cross-category purchases. "That said, we still see room for improvement," the analyst added. "The mix of incremental improvements and unforced errors is likely to translate to in-line comps in our view, with less upside potential than we'd need for a Buy rating given BJ's YTD outperformance." BJ's Wholesale Club stock has risen 13% this year. Champine noted that strong membership metrics stand to protect the stock's current valuation, which is trading around its fair price. — Lisa Kailai Han 7:23 a.m.: Tesla gets a downgrade from Deutsche Bank The tough times will continue for Tesla , according to Deutsche Bank. Analyst Emmanuel Rosner downgraded the electric vehicle maker to hold from buy. He also slashed his price target to $123 from $189. The new forecast implies downside of 20.9% over the next 12 months. The downgrade comes after a Reuters report earlier this month said Tesla had canceled plans to build a low-cost car, known as the Model 2, due to increasing competition in China. The car, according to the report, would have started at about $25,000. CEO Elon Musk said that that Reuters was "lying" but did not elaborate. "The delay of Model 2 efforts creates the risk of no new vehicle in Tesla's consumer lineup for the foreseeable future, which would put continued downward pressure on its volume and pricing for many more years, requiring downward earnings estimate revisions for 2026+," Rosner wrote. Tesla shares were down more than 1% in the premarket. For the year, the stock has fallen more than 35%. TSLA YTD mountain TSLA year to date — Fred Imbert 7:16 a.m.: BMO Capital Markets sees upside for SL Green Realty as NYC commercial real estate recovers With a recovery on the horizon for the New York City commercial real estate space, shares of SL Green Realty look poised to rise, according to BMO Capital Markets. The financial services firm upgraded shares of the real estate investment trust, which focuses on commercial properties in Manhattan, to an outperform rating. Analyst John Kim also lifted his price target to $58 from its previous $56. This updated price target is nearly 17% higher than where shares of SL Green closed on Wednesday. As a catalyst, Kim cited an improving backdrop for the New York City commercial real estate space due to higher utilization and relocation of tech workers and graduate students. "New York City office is one of the few REIT subsectors seeing improved demand," the analyst wrote. "SLG continues to exhibit strong leasing momentum, which we believe will lead to improved occupancy and Net Debt / EBITDA." While SL Green's biggest risk has been its exposure to a high amount of debt maturities and high leverage, Kim noted that the firm has been taking the necessary steps to address this issue through debt refinancing. Upcoming catalysts for the stock also include asset disposition of at least $4.5 billion, the closing of an opportunistic debt fund and a maturing lease. Shares of SL Green Realty are up 10% this year. — Lisa Kailai Han 7:12 a.m.: KeyBanc upgrades Zscaler to overweight, citing waning competitive pressures More favorable factors have painted a bright outlook for Zscaler ahead, according to KeyBanc Capital Markets. The firm upgraded the cloud security stock to overweight from its previous sector weight rating. KeyBanc also established a $220 price target for the stock, which corresponds to a 27% upside from Zscaler's Wednesday close. Analyst Eric Heath cited positive consumer sentiment towards the firm as a reason for the upgrade. He also believes that while Zscaler's competitive concerns are still valid, their potential impact on the company's sales cycles and win rates have lessened greatly. Additionally, the analyst sees catalysts to Zscaler's adoption of the Secure Access Service Edge cloud architecture model. The firm has made the model, also known as SASE, an increasing priority in the future. "Ongoing weakness in firewall suggests network security budgets may orient toward SASE," Heath wrote. The analyst compared the company's favorable risk/reward to being able to see the forest through the trees. Shares of Zscaler have slipped 22% this year. — Lisa Kailai Han 6:53 a.m.: Morgan Stanley double upgrades eBay, sees 25% upside ahead Generative artificial intelligence might be what's needed to reinvigorate eBay , according to Morgan Stanley. The bank double-upgraded the e-commerce platform to overweight from underweight and hiked its price target to $62 from $35. This updated price target implies that eBay could rise 25% from its current levels. Analyst Nathan Feather said eBay has reached an inflection point in terms of its current performance – and sees upside for the stock going forward. "We are turning more positive on EBAY as it appears to have found a trough with GMV [gross merchandise volume] growth, active customers, and margins stabilizing in FY24," he wrote. Besides evolving its underlying strategy to more "site-wide horizontal solutions," Feather also believes that generative AI features will help boost the stock. "We are turning more positive as we believe the shift to scalable horizontal solutions such as AI-assisted listings can enable a balance of slight GMV acceleration while maintaining or expanding margins," he noted. Shares of eBay have risen 13% in 2024. Feather added that eBay stock is currently trading at a discount versus peers, with Etsy trading around 35% higher. EBAY YTD mountain EBAY year to date "We believe this gap will narrow and EBAY can see positive estimate revisions and multiple expansion," the analyst said. — Lisa Kailai Han 6:50 a.m.: Evercore ISI names GE Vernova the 'key player' of electrification Evercore ISI has big hopes ahead for GE Vernova . The investment firm initiated the energy business — which spun off from General Electric earlier this month — at an outperform rating. Analyst James West's $174 price target implies that shares could rise 29% from Wednesday's close. Going forward, West thinks that GE Vernova could prove itself as "the key player in the mission to electrify and decarbonize the power system." The company can leverage its existing customer base and relationships to take advantage of its increasing total addressable market, which West estimated would grow to around $435 billion by 2030 from $265 billion. "Investors have been waiting for a company like GE Vernova given its scale, competitive moat, positive adjusted EBITDA generation, and leverage to the electrification of everything mega theme," he wrote. West added that the company stands to benefit from rising demand and significant capital spend towards the energy transition and electricity grid in upcoming years. Not even counting rising data center and artificial intelligence usage requiring more power, the world will need 55% more electricity generation in 2040 compared to 2022, the analyst added. — Lisa Kailai Han 6:08 a.m.: JPMorgan upgrades JetBlue JPMorgan likes what it's seeing from JetBlue . The bank upgraded the airline to neutral from underweight. Analyst Jamie Baker has a $7 price target, which indicates upside of 2.5%. While JetBlue has rallied 23% this year, Baker wrote that the stock is the second least-liked airline, according to sell-side ratings. But as the airline's catalysts become even more clear in its upcoming earnings report and guidance, he expects sentiment around the stock to improve. Jetblue is slated to report earnings next week. JBLU YTD mountain JBLU year to date "Simply put, for airline investors intrigued by the notion of a potential domestic turnaround, we expect JetBlue to largely monopolize the spotlight going forward," the analyst wrote. As one reason for the upgrade, Baker highlighted the company's new management, which lacks the "high tolerance for loss production" as JetBlue's previous CEO. Additionally, an activist shareholder has also joined the company. Additionally, the airline also has some solid fundamental business practices that are working in its favor. "JetBlue's DNA aligns with our broader preference for loyalty, premium, and international exposure ... albeit with less vigor than the Big 3," the analyst wrote. "While we continue to expect JetBlue margins to trail those of the Big 3, in turn limiting our enthusiasm for the stock, we believe the combination of JetBlue's New York real estate, established brand and management resolve may yield more turnaround momentum than elsewhere in the beleaguered domestic space." — Lisa Kailai Han 5:47 a.m.: TD Cowen reiterates Nvidia as top pick The future looks even brighter for Nvidia , and TD Cowen expects the company's upcoming results to reflect that. The firm highlighted Nvidia as its top pick in a recent note. Analyst Matthew Ramsay reiterated his buy rating and $1,100 price target on the name. This implies that shares of Nvidia could rally 31% from its Wednesday close. Share of the tech titan and Magnificent Seven darling have already rallied 70% this year. But Ramsay said its "full speed ahead" for the chipmaker. "Significant revenue and EPS growth are now largely expected following three consecutive quarters of the print coming in > $2B above previous company guidance," the analyst wrote. Although some investors will question the sustainability of demand for Nvidia, Ramsay is much more confident that "all signs continue to point up" for the stock. He pointed to Nvidia's March GPU Technology Conference, which highlighted its competitive advantage versus its peers, as well as its market-leading position as proof of its staying power. "NVIDIA remains the top franchise in accelerated compute and AI ... and we are in the early innings of both paradigm shifts," he wrote. "While valuation is above core semis, the suite of superior technology, long pedigree of innovation, and extensive growth-oriented investments should allow for strong, sustained, above-peer growth across a widening set of verticals." Nvidia is slated to report earnings next month. — Lisa Kailai Han 5:47 a.m.: Morgan Stanley downgrades Match Growth in online dating is slowing, spelling trouble for Match Group , according to Morgan Stanley. Analyst Nathan Feather downgraded the Hinge and Tinder parent company to equal weight from overweight. He also cut his price target to $37 from $53, implying upside of 14.6%. "After 2 years of underperformance, we step to the sidelines on online dating as user growth remains cloudy," Feather wrote. "We believe that soft user growth is more attributable to a lack of innovation than saturation as ~70% of US singles actively looking for a relationship do not currently use online dating." "We are cautiously optimistic that innovation could reaccelerate user growth at Tinder and Bumble, especially as they have a wide slate of improvements to the core user experience planned for 2024," he added. "However, visibility into the potential success of these initiatives is low and, as online dating is a momentum business, it will likely take some time to sustainably reaccelerate growth." Match Group shares are down more than 11% year to date. Last year, the stock dropped 12%. MTCH YTD mountain MTCH year to date — Fred Imbert