Tesla Buy Rating, Carvana Surges, TJX Upgraded

Key Takeaway

• Cantor Fitzgerald initiates Tesla with a buy rating, bullish on full self-driving prospects; Carvana surges 50% post-JPMorgan upgrade.
• UBS upgrades TJX and Burlington, signaling strength in off-price retail; CVS downgraded by UBS amid profit outlook cut and Medicare challenges.
• Analyst calls significantly influence stock performance, highlighting investor sensitivity to ratings and future company prospects.

Analyst Upgrades and Downgrades

Thursday's Wall Street activity was marked by a series of analyst calls that influenced the stock performance of several key players across different sectors. Morgan Stanley reiterated its overweight rating on Ferrari, highlighting the luxury automaker's valuation parity with Hermès and its enduring appeal to investors. Mizuho maintained a buy rating on Nvidia, citing a significant revenue opportunity driven by AI adoption. UBS shifted its stance on Burlington from sell to neutral, acknowledging improvements in the company's outlook despite ongoing cost challenges. Jefferies continued to support Netflix with a buy rating, optimistic about revenue growth from advertising, price hikes, and password sharing crackdowns. Rosenblatt upgraded Extreme Networks to buy from neutral, pointing to a revenue and margin recovery. Jefferies also upgraded Trade Desk to buy, signaling an inflection point for the digital marketing company. UBS upgraded TJX Companies to buy, suggesting off-price retailers will increasingly take market share from department stores. Conversely, TD Cowen downgraded Wolfspeed to hold, citing uncertainties affecting the company's long-term potential. Raymond James upgraded Parsons to strong buy, expecting significant sales growth. BTIG upgraded Upwork to buy, anticipating further positive developments. UBS downgraded CVS to neutral, concerned about uncertainties affecting the stock. JPMorgan upgraded Ziff Davis and Carvana to overweight, recommending buying the dip and acknowledging Carvana's rapid progress post-earnings. Compass Point upgraded Tanger to buy, expecting earnings growth. KBW upgraded Synchrony Financial to outperform, seeing it as a straightforward play with upside potential. Susquehanna upgraded MGM to positive, seeing a favorable risk/reward balance. Bank of America downgraded Fastly to underperform, citing numerous negative catalysts. Piper Sandler upgraded New York Community Bank to overweight, impressed by the new management's forward plan. Cantor Fitzgerald initiated Tesla with a buy rating, bullish on its full self-driving prospects. Loop downgraded Etsy to sell, lacking a growth catalyst.

Retail Sector Dynamics

The retail sector witnessed significant analyst interest, with UBS upgrading TJX and Burlington, reflecting a consumer shift towards value-driven shopping experiences. This trend suggests that discount retailers are poised to capture more market share from traditional department stores, benefiting from the current economic environment where consumers prioritize value. The upgrades indicate a positive outlook for the off-price retail segment, despite ongoing challenges related to consumer spending and supply chain risks.

CVS Health's Challenges

CVS Health faced a downgrade from UBS following a disappointing earnings report that led to a reduction in its full-year profit outlook. The healthcare chain is grappling with rising medical costs, particularly in its Medicare Advantage business, compounded by the aftermath of the COVID-19 pandemic. The downgrade reflects concerns over CVS Health's ability to navigate these challenges, including competitive pressures in the Medicare Advantage market and the impact of lower Medicare star ratings on its insurance unit, Aetna.

Market Reactions and Future Outlooks

The market's response to these analyst calls was telling, with Carvana's shares surging nearly 50% after JPMorgan's upgrade, signaling investor confidence in the company's turnaround and focus on profitability. Conversely, CVS Health's shares declined sharply following its earnings miss and UBS's downgrade, highlighting investor apprehensions about the company's strategic direction and profitability challenges. These movements underscore the significant impact of analyst ratings on investor sentiment and stock performance, setting the stage for future developments in these companies' trajectories.

Street Views

• Morgan Stanley (Bullish on Ferrari):

  "For years, the pushback on RACE was its lofty valuation. Now that the stock trades near parity with Hermès (and is widely held in portfolios), the stock’s multiple is seen as more reasonable with the investor refrain: ‘Ferrari’s always been expensive and always will be.’"

• Mizuho (Bullish on Nvidia):

  "With the push for greater AI adoption, we believe NVDA could potentially see a ~$280B revenue opportunity by C27E, [calendar year 2027] up >6x from the $47.5B we saw in F24."

• UBS (Neutral to Cautiously Optimistic on Burlington):

  "We see risk rising, long-term supply chain, freight, and labor costs offset the progress BURL is making its business more efficient."

• Jefferies (Bullish on Netflix):

  "We are positive on NFLX, given our view that advertising, price hikes, and password sharing crackdown can sustain low- to mid-teens rev growth over the next few years."

• Rosenblatt (Bullish on Extreme Networks):

  "We downgraded EXTR to Neutral a few months ago on lack of near-term catalysts. We are now upgrading to Buy because 3Q24 (March) was the bottom for revenues and margins..."

• Jefferies (Bullish on Trade Desk):

  "In our view, the street’s FY24 rev ests...are conservative given...U.S. political elections and a significant amount of new programmatic CTV [connected TV] supply becoming available."

• UBS (Bullishon TJX Companies): > "We believe Off-Price retailers like TJX will take more share from Department Stores than previously thought."

• TD Cowen(Neutral/Cautious)on Wolfspeed:> "Factors In And Out Of Wolfspeed’s Control Have Weighed On Results..."

• Raymond James(Very Bullish)on Parsons:> "Raising rating to Strong Buy from Outperform...set[s]the stage forthe stockto approach $100 per share over thenext12months.”

• BTIG(Bullish)on Upwork:> "We are upgrading sharesof UPWKtoBuyfrom Neutral aftera very constructive1Q24 report.”

• JPMorgan(Cautiously Optimistic/BearishtoNeutral)on Ziff Davis & Carvana:> Ziff Davis: “Wear eupgradingZiffDavisfrom Neutralt oOverweight aheadof earnings.” Carvana:“Moveto OWfrom Nand Raise Dec2024 PTto$130After1Q24ResultsShowContinued RapidProgressOnAllFronts.”

• Cantor Fitzgerald(Very Bullish)on Tesla:> "Full SelfDriving,Ro botaxis,andPlanstoIntroduceLowCostVehicles.InitiatingCoverageonteslawithan OverweightRatinganda$230PriceTarget.”

• Susquehanna(Optimistic/Positive)on MGM Resorts International:> If you buyMGM,you betterberighto nLV[Las Vegas],andwefinallyhave enoughvaluationsupportinlightofthemoresignificantvaluedriversMG Mhasin LV.Maybe wear eearly,butweare onboardands eeafavorablerisk/rewardtrade-off.

• Bank of America,BearishtonFastly: > We downgrade FastlyfromBuyt oUnderperformasthen eartermrisksoutweighthelongertermpositivecatalysts.

• Piper Sandler,OptimisticonNewYorkCommunityBank: Moreimportantthanthe company'sreportedearningsthisquarter,the newmanagementteamatNYCBunveiledtheir muchanticipatedgoforwardplanforthebank.