SUPERNEWS

Equities

Citi, BofA, Goldman Bullish on Tech & Retail, CVS Faces Downgrade

Wall Street's Tuesday calls boost Target, Gap, and Nvidia; spotlight on AI, retail momentum, and market trends.

By Bill Bullington

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5/7, 09:25 EDT
Apple Inc.
Ares Management Corporation
Cameco Corporation
CVS Health Corporation
Goldman Sachs Group, Inc.
Microchip Technology Incorporated
ServiceNow, Inc.
NVIDIA Corporation
Palantir Technologies Inc.
Target Corporation
Unilever PLC
VALE S.A.
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Key Takeaway

  • Citi upgrades Target and Gap to buy, reflecting positive retail momentum; Goldman Sachs reiterates Nvidia as a buy due to AI demand.
  • Bank of America bullish on Apple for iPhone cycle, adds Nike to US 1 list; Wells Fargo optimistic on Goldman Sachs in finance sector.
  • Analysts see growth in tech with Palantir's AI potential and caution in healthcare with CVS downgrade, indicating sector-specific trends.

Analyst Upgrades and Downgrades

Tuesday's Wall Street activity was marked by a series of notable analyst calls affecting a wide range of sectors, from retail and technology to healthcare and mining. Citi upgraded Target to buy from neutral, citing the retailer as one of the "winners" in the retail landscape with potential for EBIT margin improvement. Similarly, Gap received an upgrade to buy from neutral by Citi, with a raised target price, reflecting the clothing retailer's momentum. In the technology sector, Goldman Sachs reiterated Nvidia as a buy, adjusting its price target upwards due to robust AI server demand and improving supply. ServiceNow also maintained its buy rating from Goldman Sachs after its financial analyst day.

Sector Highlights

The metals and mining company Vale was upgraded to buy from neutral by UBS, despite concerns about iron ore fundamentals, due to improved operational performance and moderating ESG concerns. In the consumer electronics space, Bank of America reiterated its buy rating on Apple, anticipating a strong iPhone upgrade cycle facilitated by generative AI features. The testing, inspection, and certification (TIC) industry saw UL Solutions initiated at overweight by Wells Fargo, highlighting the company's leadership and growth in its software business.

Focus on Innovation and Market Trends

Bank of America reiterated Palantir as a buy, recognizing its potential in the rapidly growing demand for AI platforms across commercial and government sectors. Nike was added to Bank of America's US 1 focus list, alongside Cameco Corp, indicating strong market confidence in these companies. In the financial sector, Goldman Sachs was reiterated as overweight by Wells Fargo, with an increased price target reflecting positive outlooks on private equity and investment banking trends.

Market Adjustments and Risks

TD Cowen initiated coverage of Ares with a buy rating, seeing multiple avenues for the alternative asset manager to outperform. Conversely, CVS was downgraded to hold from buy by TD Cowen due to perceived downside risks and uncertainties, highlighting the dynamic nature of market evaluations and the impact of quarterly performances on analyst outlooks. The pre-market movements showed a mixed bag of earnings and forecasts, with technology stocks like Palantir and Microchip facing declines, while retail and healthcare sectors, including Gap and Hims & Hers Health, saw pre-market gains.

Street Views

  • Citi (Bullish on Target):

    "We believe TGT has emerged as one of the winners within the retail landscape with an opportunity to improve EBIT margin in the years to come."

  • Citi (Bullish on Gap):

    "We are upgrading shares from Neutral to Buy and raising our TP from $21 to $28."

  • Goldman Sachs (Bullish on Nvidia):

    "We reiterate our Buy rating on NVDA (also on the Conviction List) with an updated 12-month price target of $1,100 (up from $1,000 prior) as we increase our FY2025-27 non-GAAP EPS estimates, on average, by 8% to reflect intra-quarter industry data points indicative of continued robust AI server demand and improving supply."

  • Goldman Sachs (Bullish on ServiceNow):

    "We reiterate our Buy rating and $910 Price Target on ServiceNow after attending the company’s Financial Analyst Day at Knowledge 2024 in Las Vegas on 5/6."

  • UBS (Bullish on Vale):

    "While we remain concerned about iron ore fundamentals medium-term & see downside to the spot price, we believe the overall risk-reward for Vale has improved with operational performance strong into April & some of the key ESG concerns set to moderate."

  • Bank of America (Bullish on Apple):

    "Our Buy rating on Apple is based on: 1) expected strong iPhone upgrade cycle in F25 driven by the need for latest hardware to enable Gen AI features, 2) higher growth in Services revenue..."

  • Wells Fargo (Bullishon UL Solutions): > "A best-in-class industry leader in testing inspection certification(TIC)industry w/tailwinds from: Increasing product complexity regulations&growth higher margin software business"

  • Bank Of America(bulllish)on Palantir:> "we see palantir as a beneficiary rapidly growing demand Artificial Intelligence(AI)-platforms both commercial government end-markets"

  • Barclays(bulllish)on Omnicom:> "we would argue that omnicom too cheap growth offered"

  • Wolfe(bulllish)on Insulet:> "we rate PODD shares outperform have year-end target price$200"

  • TD Cowen(bulllish)on Ares:> "initiate coverage ARES contrarian buy conservatively built$15412-mo.price target"

    • TD Cowen(Neutral)on CVS:> "downgrade CVS hold lower PT$59,believe introduced further downside risk uncertainty"