Tuesday's analyst calls: New General Electric spinoff a buy, dating stock to surge more than 35%
(This is CNBC Pro's live coverage of Tuesday's analyst calls and Wall Street chatter. Please refresh every 20-30 minutes to view the latest posts.) A newly spun-off company and a dating stock were in focus as part of Tuesday's analyst chatter. Grinder was initiated with a market outperform rating at JMP, calling for strong gains ahead. Meanwhile, RBC began coverage of GE Vernova as outperform. Check out the latest calls and chatter below. All times ET. 8:30 a.m.: Wedbush downgrades Lennar, D.R. Horton The homebuilders are about to hit some seasonal weakness, according to Wedbush. Analyst Jay McCanless downgraded a slew of companies including Lennar and D.R. Horton to underperform from neutral, saying the homebuilders are about to see some demand weakness heading into the summer months. "No year in homebuilding ever follows a precise timeline of perfectly rising demand in the spring followed by a seasonally normal decline in demand into the summer," McCanless wrote on Tuesday. "However, 2024 has been the most "normal" year we have seen for the home building industry since 2019 in terms of normal seasonality." "Consequently, we believe these names could see a normal seasonal stock price decline into the summer especially after the seasonal trade window (Figure 4, page 4) closes in April/May," McCanless added. Lennar shares have risen more than 12% this year. But the analyst's $144 price target, unchanged from previously, represents a 14% fall from Monday's closing price of $167.81. Shares were down by 2.3%. D.R. Horton shares have advanced more than 6% this year. The analyst's $130 price target implies a more than 19% drop for the stock from Monday's close. Shares dropped more than 2%. Other names downgraded to underperform are Century Communities, Meritage Homes and LGI Homes. — Sarah Min 7:40 a.m.: CFRA upgrades DoorDash to buy DoorDash is continuing to grow and improve its fundamentals even as the pandemic gets further in the rearview mirror, according to CFRA. Analyst Shreya Gheewala upgraded the delivery stock to buy from hold, saying in a note to clients that DoorDash was showing strength across the board and should deliver positive earnings by the end of 2024. "We upgrade our view on DASH due to our increased conviction in the company's accelerating growth trajectory across almost all of its business segments, driven by stickiness of its delivery ecosystem," the note said. Current economic conditions should also boost gig economy companies like DoorDash in general, according to CFRA. "We also see a positive secular trend emerging within the gig economy, thanks to ample supply of labor and rising consumer demand. DASH's asset-light business model is well positioned to capitalize on this trend," the note said. — Jesse Pound 7:36 a.m.: Bank of America lowers price target on FedEx following contract loss The end of FedEx's and the U.S. Postal Service's 23-year long partnership will be a headwind for FedEx in the second quarter of 2024, according to Bank of America. On Monday, USPS announced it would switch its air cargo contract to UPS from FedEx. The previous contracts had amounted to as high as $1.5 billion in annual revenues before falling to around break-even levels in the last year. As a result, analyst Ken Hoexter reduced his price target on shares to $340 from $346. Meanwhile, he maintained his buy rating on shares. "We expect a near-term negative impact (F2Q25) at FedEx as it winds down excess assets used to operate its day sort (pilots, employees)," Hoexter wrote in a note. — Hakyung Kim 7:25 a.m.: Sell Figs amid tough consumer landscape, BofA recommends After a pandemic-induced boom in scrub demand, Bank of America sees a tough environment for Figs . Analyst Lorraine Hutchinson downgraded the scrub maker to underperform from neutral and chopped her price target by $4 to $4.50. Now, Hutchinson anticipates shares will slip 7.2% in the next year. "The healthcare worker is now squeezed by inflation and focused on spending on other areas instead of replenishing their uniforms," Hutchinson wrote to clients on Tuesday. "Without a line of sight into an improving macro environment for the core customer that would drive stronger sales, we see few catalysts for multiple expansion." Hutchinson said the pandemic created a "pull-forward" environment for demand, leading to large growth and margins. This high-margin profile has been a "bright spot" for the company, though Hutchinson cautioned of a short-term impact due to duplicative costs. At the moment, Hutchinson said there's better opportunity elsewhere in her coverage. While the analyst said a returned focus on marketing should help Figs, it will take time for that to translate into sales. Shares tumbled more than 5% in Tuesday premarket trading following the downgrade. The stock has plunged more than 30% in 2024. — Alex Harring 7:07 a.m.: Meta can gain nearly 12% from current levels, BofA predicts Meta has more upside ahead as internet stocks see multiple expansion, per Bank of America. Analyst Justin Post upped his target price on the Facebook parent by $40 to $550. That new expectation reflects the potential for shares to climb another 11.9% over the next year. Post's price target increase is in line with his move on the GAAP price-to-earnings multiple to 22 from 21. While he said this multiple requires a "slight premium" to historical averages, it can be warranted if the big technology company sees growth in advertising tied to artificial intelligence improvements. More broadly, he said a decreased cost of borrowing money can help the multiples of Meta and other large internet names. "Large cap stocks have had multiple expansion in 1Q 2024, and a lower interest rate environment could drive further expansion," Post said. Meta has already jumped nearly 39% in 2024. That adds to the monster rally of more than 190% seen by the Magnificent 7 stock in the prior year. — Alex Harring 6:55 a.m.: Eli Lilly investors can keep 'riding the GLP-1 rocket', Citi says Weight-loss drug excitement can continue to propel Eli Lilly higher despite risks, Citi said. Analyst Andrew Baum increased his price target on the pharmaceutical stock to $895 from $675, now implying a 17.7% gain from Monday's closing level. Baum kept his buy rating. The hike follows growth in anticipated risk-adjusted peak sales for the oral small molecule GLP-1, Baum said. He noted that the risk of drug-related hepato-toxicity is shrinking. Still, Baum said it's important to keep an eye on competitive risks. While there are reasons to believe Eli Lilly and Novo Nordisk's competitive advantages could be lowered, the analyst said the pair should be able to retain their dominant market positions and grow into multiples. Ultimately, he said investors can continue "riding the GLP-1 rocket." Baum's call comes amid another strong year for Eli Lilly shares, with the stock up more than 30% in 2024. That puts the Indianapolis-based company's stock on track for its eighth straight winning year. — Alex Harring 6:39 a.m.: Melius moves to sidelines on Boeing Boeing has too many areas of concern, Melius Research warned. Analyst Robert Spingarn downgraded the plane maker to hold from buy and slashed his price target by $71 to $209. Spingarn's new target reflects the potential for just 10.3% in upside over Monday's close. "Overall, we believe Boeing is headed for, and in need of, a multi-year restructuring," Spingarn wrote in a note to clients. "Negative newsflow is also unlikely to abate and will continue to be an overhang on the stock." The reputational crisis following a midair panel blowout is just one issue for Boeing to deal with in the near- to medium-term, Spingarn said. Among the others: dealing with labor negotiations, finding a new CEO and de-leveraging the balance sheet. Given these challenges, he said the stock should be close to fair value compared with the firm's 2026 estimate for free cash flow at $8.9 billion. That's $1.1 billion below both the predictions of management and the consensus on Wall Street. Boeing has tumbled more than 27% in 2024, making it the worst performer in the Dow Jones Industrial Average. Still, the majority of analysts polled by LSEG have buy ratings on the stock. BA YTD mountain BA year to date — Alex Harring 6:20 a.m.: Citi names Coca-Cola a top idea Coca-Cola won the top-pick distinction among beverage, household and personal care stocks covered by Citi. Analyst Filippo Falorni said the soda maker was the top overall idea, replacing Clorox. He has a buy rating on Coca-Cola shares. Coca-Cola is a stock to like because of its stronger pricing power compared with peers and high exposure to emerging markets, Falorni said. The company's appeal to a tax case could be a "clearing event" that allows investors to refocus on fundamentals, he said. As a whole, the analyst noted beverage stocks have better pricing power over the long term. He also said concerns tied to blockbuster weight loss drugs have been "largely overblown." "At a sector level, after large HPC outperformance over the past year, we see the Beverage sector as starting to look more compelling with the valuation gap to HPC having widened," he said, using the acronym for household and personal care stocks. Coca-Cola shares have advanced about 3% in 2024, somewhat turning a quarter after sliding more than 7% in the prior year. — Alex Harring 6:07 a.m.: Citi moves off sidelines on Estee Lauder, citing inventory normalization Estee Lauder is on the verge of a turning point as closely watched channel inventories stabilize, Citi said. Analyst Filippo Falorni upgraded the cosmetics stock to buy from neutral and hiked his price target by $15 to $175. Falorni's new target implies the stock can rally 15.1% from Monday's close. Falorni said the stock was hurt in 2023 because of sales and profit degradation. But the Tom Ford and Le Labo parent said it will balance inventories in the Asia Pacific travel retail unit by the end of the third quarter of this year. "We believe the company is nearing a topline inflection point as channel inventories in Asia Pac Travel Retail are normalizing and EL is closer to balanced sell-in/sell-through," he said. Elsewhere, Falorni acknowledged that Estee Lauder has expanded its profit recovery plan for the 2025 and 2026 fiscal years. This can set a baseline for earnings and help the market predict what a path to normalized financials looks like, he said. Shares rose more than 2% in Tuesday premarket trading. The stock has added about 4% so far this year, regaining some ground after sliding more than 41% in 2023 and almost 33% in 2022. EL YTD mountain — Alex Harring 5:52 a.m.: Prolonged real estate recovery can hurt Blackstone, says UBS A slow rebound for real estate can spell bad news for Blackstone , according to UBS. Analyst Brennan Hawken downgraded the investment asset manager to neutral from buy and cut his price target by $5 to $135. With that, Hawken sees an upside of 3% from Monday's close. Performance, net subscriptions and fee-related performance revenues within perpetual real estate strategies have not recovered as fast as some expected, Hawken said. Now, he said to expect 2022 levels in 2026, with "modest" numbers next year followed by a "low-conviction growth forecast." "The performance outlook for real estate remains challenged, in our view," Hawken told clients. As a result of the landscape, assets under management in the firm's real estate income trust have dropped. Hawken said the tough fee-related performance revenue numbers can weigh down fee-related earnings overall. He said to expect the margin for these earnings to come in around flat, with growth that's considered below average. Still, he said management should be able to grow fees on assets under management in the future. Blackstone is around flat in 2024 despite the broader market uptrend. That marks a pause following 2023's jump of 76.5%. Shares dipped 1% in thin premarket trading. — Alex Harring 5:45 a.m.: Grindr can rally more than 35%, JMP says Grindr shares can advance as the dating platform focused on LGBTQ+ men converts users to paying members, according to JMP. Analyst Nicholas Jones initiated coverage at market outperform. His $14 price target implies an upside of 36.9% over Monday's closing level. Jones said Grindr has a runway to expand monetization by getting users to pay for features. Grindr currently converts users to paying at a rate of 7.1%, which is about half of what other dating apps see. However, JMP expects the percentage of paying customers to tick up to 8% by 2026. The total addressable market can also continue to grow as the LGBTQ+ community does, Jones said. And Grindr's existing customer base is considered involved: Around 10% of users on the app between one and 10 hours a day, compared with 4% for other apps. "We expect its position to strengthen as it continues to convert its large network of highly engaged users to paying users," Jones wrote to clients. Grindr shares have climbed more than 16% in 2024, extending last year's gain of more than 88%. The stock, which went public in late 2022, won its first Wall Street initiation just last week. GRND YTD mountain Grindr in 2024 — Alex Harring 5:45 a.m.: RBC initiates GE Vernova as outperform A newly spun-off company is poised for solid gains ahead, according to RBC. Analyst Christopher Dendrinos initiated GE Vernova, General Electric's power business, with an outperform rating and a price target of $160, implying a gain of 13%. The company will begin trading under the GEV ticker at the New York Stock Exchange on Tuesday. "GEV participates across the electrification value chain providing the company with unique perspective and enables it to be an early mover in responding to the growing complexity and demand of electrical networks," Dendrinos said. He also said that, as a standalone company, "GEV will benefit from greater flexibility to pursue high-growth and margin-accretive strategies and will face increased accountability across its business lines with the more focused portfolio." "We believe this will help drive an acceleration in cost-out and simplification initiatives and should position the company to exceed its longer-term margin targets," the analyst said. — Fred Imbert