SUPERNEWS

Equities

Reddit's 6.4% Upside, Coty Eyes 33% Surge: Analyst Calls

Morgan Stanley sees limited upside for Reddit at $45/share, while Coty could surge 30% according to Canaccord Genuity.

By Alex P. Chase

ᐧ

4/15, 05:55 EDT
Bank of America Corporation
Avis Budget Group, Inc.
CDW Corporation
Coty Inc.
NVIDIA Corporation
Ferrari N.V.
Reddit
Synopsys, Inc.
Block, Inc.
Synchrony Financial
article-main-img

Key Takeaway

  • Morgan Stanley sees a limited 6.4% upside for Reddit at $45/share, cautioning on growth needs; Coty rated buy by Canaccord with a 33% potential surge.
  • Analysts are divided on tech and consumer stocks: Nvidia remains a top pick for AI dominance, while Block faces growth headwinds with a downgrade.
  • Financial sector sees mixed moves: Synchrony upgraded due to labor market benefits, Bank of America downgraded anticipating rate challenges.

Analyst Perspectives on Reddit and Coty

Morgan Stanley initiated coverage of Reddit with an equal weight rating, setting a price target of $45 per share, which represents a 6.4% upside from Friday's close. Analyst Brian Nowak described Reddit as a "unique" platform but expressed caution, emphasizing the need for the company to demonstrate significant user and revenue growth. Since its public debut in March at $34 per share, Reddit's stock has seen over a 24% increase. On the other hand, Canaccord Genuity initiated coverage on Coty with a buy rating, seeing a 33% upside to their $14 price target. Analyst Susan Anderson highlighted Coty's potential to outpace total market growth due to its focus on fast-growing beauty categories and strong brand presence, despite the stock's 15% decline in 2024.

Wall Street's Varied Calls

Several firms made notable analyst calls across different sectors. Bernstein initiated Reddit with an underperform rating, citing multiple headwinds for the social media company. Raymond James initiated coverage on Grindr with an outperform rating and set a price target of $14. Conversely, the firm downgraded Bumble to market perform from outperform due to near-term challenges. Citi added a positive catalyst watch on CDW, anticipating growth in AI total addressable market. Barclays downgraded Ferrari to equal weight from overweight, suggesting a pause ahead of upcoming earnings. Mizuho reiterated Nvidia as a top pick, emphasizing its dominant position in the AI landscape.

Sector-Specific Analyst Insights

In the technology sector, Morgan Stanley downgraded Block to underweight from equal weight, pointing to growth headwinds. Piper Sandler initiated Synopsys with an overweight rating, citing margin opportunities. In the financial sector, Wolfe upgraded Synchrony to outperform from underperform, seeing benefits from a healthy labor market. UBS downgraded Bank of America to neutral from buy, anticipating a "rate trap" ahead. In the consumer sector, Evercore ISI upgraded Wayfair to outperform from in line, expecting revenue acceleration. Goldman Sachs upgraded Avis to neutral from sell, stating that their thesis had now played out.

Street Views

  • Brian Nowak, Morgan Stanley (Neutral on Reddit):

    "In our view, it is still early in Reddit’s user growth story and in the near-term we see RDDT benefitting from growing top of funnel, deepening engagement by improving relevance and driving international user growth."

  • Susan Anderson, Canaccord Genuity (Bullish on Coty):

    "With management focused on investing and growing in fast-growing beauty categories, we believe Coty can outpace growth in the total market and has multiple levers to achieve this in the long term... Despite concerns around an overall slowdown in the beauty market in the U.S., we believe Coty can outperform due to significant whitespace growth opportunities, exposure to high-growth global beauty markets, and strong brands keeping consumers interested."