Investing.com — Here’s your Pro Recap of the best takeaways from Wall Street analysts over the past week.
InvestingPro subscribers always get first dibs on market rate changes.
Advanced Micro Devices
What’s going on? On Monday, Morgan Stanley downgraded Advanced Micro Devices (NASDAQ: ) to Equalweight with a price target of $176.
What is the full story? Morgan Stanley acknowledges AMD’s strengthening position within its core markets. However, analysts expressed caution due to high expectations surrounding AMD’s AI capabilities, which could challenge the company’s eligibility for premium testing. Despite Morgan Stanley’s previous discussions about this concern-especially since the GTC event-the team believes that the expectations of investors have not been fully calculated on the possible consequences of the introduction of Nvidia’s Blackwell on competitors.
As AMD stock has experienced a post-rally quarter and is approaching Morgan Stanley’s price target, the company has decided to take a conservative decision. The research team is moving to Broadcom Inc. (NASDAQ:) as the best AI investment, ranked it second in preference, following a reassessment of AMD’s market position and potential in light of future industry developments.
Equalweight at Morgan Stanley means that “A stock’s total return is expected to be in line with the analyst’s (or industry team’s) industry-wide total return, on a risk-adjusted basis, over the next 12-18 months.” “
How did the stock react? AMD opened the regular session at $162.75 and closed at $160.34, a gain of 4.49% from the previous day’s regular close.
Cleveland-Cliffs
What’s going on? On Tuesday, JPMorgan downgraded Cleveland-Cliffs Inc (NYSE: ) to Neutral with a price target of $17.
What is the full story? JPMorgan has moved to the sidelines in the face of growing capex needs, replenished auto inventory, which has led to increased demand, and no growth projects are imminent. The bank values a leaner balance sheet now and a greater focus on shareholder returns.
Still, JPMorgan feels that many investors would prefer a potential M&A fundraiser to a debt-backed buyout. CLF’s mix of explosives and other EAF (electric arc furnace) assets, combined with its vertical integration of steel, scrap, and HBI (hot metal), drives a self-sufficient business model that should be highly protected against scrap hardening. forward in relation to peers.
Finally, CLF’s gain in automation with fixed annual contract prices can help smooth revenues through the cycle.”
Neutral in JPMorgan means that “over the period of the target price shown in this report, we expect this stock to perform in line with the total return of the stocks in the Research Analyst, or the Research Analyst team, covering the entire area.”
How did the stock react? Cleveland-Cliffs opened the regular session at $15.18 and closed at $15.13, a 3.32% decrease from the previous day’s regular close.
Paramount Global
What’s going on? On Wednesday, Wells Fargo downgraded Paramount Global (NASDAQ: ) to Underweight with a price target of $9.
What is the full story? Wells Fargo analysts report that Paramount Global faces near-term challenges due to possible downward revisions as management reconnects with investors, a lack of medium-term free cash flow, and a weakening digital advertising market. Long-term prospects include the elimination of small players in future sports distribution and greater competition for market share in broadcast subscriptions and profits.
Wells analysts believe Paramount’s best opportunities lie in the sale of core assets, such as Black Entertainment Television, and a significant shift from Paramount+ to licensing its high-quality content externally.
In comparison, Warner Bros. Discovery (NASDAQ: ) trades at a high 5x multiple to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) with similar ratios, but boasts a more streamlined business model and richer content. portfolio, including HBO and the studio.
Analysts adjusted their valuation for Paramount to 6.2x EV/EBITDA, broken down into 4.5x EV/EBITDA for TV Media + Studios and $1.5 billion for Direct-to-Consumer. Despite criticism that this measure falls short of the provisions for studio acquisitions and overly punishes DTC, analysts argue that without any mergers and acquisitions, the comparison of the sum of the parts is ineffective.
Wells Fargo set a new price target for Paramount at $9 and 25x price to FCF. They see a potential upside of $14 if the Skydance deal happens and a downside risk of $6.
Underweight in Wells Fargo means “The total return on a stock that is expected to underweight the Overweight and Equal Weight stock in the middle of the analyst’s forecast for the next 12 months.” “
How did the stock react? Paramount Global opened the regular session at $10.71 and closed at $11.12, a 0.72% gain from the previous day’s regular close.
Mereo BioPharma Group
What’s going on? On Thursday, Wednesday after the regular close, Baird started coverage on Mereo BioPharma Group PLC ADR (NASDAQ: ) at Outperform with a target price of $8.
What is the full story? Baird notes that Mereo has strategically built an impressive portfolio of rare diseases through a combination of in-licensing and out-licensing. The company’s two main products, setrusumab and alvelestat, come from large pharmaceutical companies (Novartis/NVS and AstraZeneca/AZN, respectively). From the brokerage’s perspective, each of these assets presents a compelling case in a rare disease area with a high level of unmet need.
Looking ahead, Baird expects growing excitement about the potential of setrusumab, especially since significant data is expected to emerge in late 2024 or early 2025. Additionally, the announcement of the alvelestat partnership could serve as an unexpected positive stimulus. Analysts remain attentive to these changes and their potential impact on the rare disease market.
A positive move at Baird means “The expected outperformance on the total return, risk-adjusted basis of the broader US equity market over the next 12 months.”
How did the stock react? Mereo BioPharma opened the regular session at $3.90 and closed at $3.99, a 4.18% gain from the previous day’s regular close.
Shopify
What’s going on? On Friday, Evercore was upgraded Company Shopify Inc (NYSE:) to Outperform with a $75 price target
What is the full story? Evercore upgraded shares of SHOP to Outperform, setting a $75 target price. The decision comes after a sharp drop in the stock price, nearly 30% from its 52-week high, presenting a compelling investment opportunity in the ecommerce flagship. The company maintains a strong long-term vision for SHOP, supported by an expanding Total Addressable Market (TAM) of approximately $850 billion, a strong competitive landscape, and high-quality market growth prospects. These factors are supported by recent channel evaluations, SHOP’s proven ability for new product development—as demonstrated by its increased Attach Rate—and the forecast for significant increases in profitability, with Free Cash Flow margins expected to increase from the current 12% to a potential and power. middle to upper youth in 2026.
The company also notes that recent downward revisions to the Operating Margin ratio, as shown in the last two Earnings Per share Per reports, have significantly reduced the risk associated with SHOP shares. Future market expectations for Operating and FCF Margins are considered reasonable by Evercore. In addition, as observers of the evolution of online advertising, Evercore supports SHOP’s strategic move to strengthen its social media marketing efforts, which is expected to accelerate its global expansion and align well with current marketing trends.
Outperform at Evercore means that “the amount of the forecasted return is expected to be greater than the total expected return of the analyst’s coverage sector.”
How did the stock react? Shopify opened the regular session at $65.83 and closed at $67.67, a 4.61% gain from the previous day’s regular close.
