Airbnb Skepticism, Shopify Upgrade in Analyst Calls

Key Takeaway

• Airbnb faces analyst skepticism over growth, while Shopify gets an upgrade from JMP Securities post-price drop.
• Cheesecake Factory upgraded by Raymond James due to attractive valuation and potential margin improvements.
• After-hours trading sees tech and travel stocks like AppLovin and Airbnb move on earnings reports and forecasts.

Analysts React to Earnings Reports

Thursday's market activity was marked by a flurry of analyst reactions to recent earnings reports from several high-profile companies. Airbnb's latest quarterly results raised concerns among some analysts regarding the company's growth prospects. In contrast, Shopify received an upgrade from JMP Securities following its significant price drop, which was triggered by weaker-than-expected guidance for the second quarter. The mixed responses highlight the varying degrees of optimism and caution among Wall Street analysts in the face of recent financial disclosures.

Cheesecake Factory's Valuation Attracts Attention

Raymond James upgraded Cheesecake Factory to outperform from market perform, citing an attractive valuation and potential for improvement in growth brands' store margins. Analyst Brian Vaccaro pointed to "encouraging comp resilience and strong relative outperformance" as key factors behind the upgrade. With a price target of $42, Vaccaro sees a 23.6% upside from Wednesday's close, despite the stock's underperformance relative to the broader market this year.

Shopify and Airbnb: Diverging Paths

Shopify's stock received a vote of confidence from JMP Securities, with analyst Andrew Boone upgrading the e-commerce platform to market outperform and setting a price target of $80. Boone's optimism is driven by the potential for new merchant cohorts to contribute in the future, upcoming Plus subscription price increases, and Shopify's position as a leading e-commerce platform. Meanwhile, Airbnb faced scrutiny from analysts following its weaker-than-expected forward guidance. Morgan Stanley's Brian Nowak reiterated an underweight rating on Airbnb, citing concerns over room night deceleration and execution risk in new product extensions. Bank of America and Goldman Sachs also expressed caution, adjusting their price targets and maintaining a cautious stance on the company's growth outlook and margin trajectory.

After-Hours Movers: Tech and Travel Stocks

The after-hours trading session saw notable movements in both the technology and travel sectors. AppLovin and Magnite Inc. experienced significant share price increases following positive earnings reports, while Arm Holdings faced a decline due to a lukewarm revenue forecast. Airbnb's shares tumbled after its revenue forecast for the current quarter missed analyst expectations, highlighting investor concerns over the company's near-term growth. Conversely, Robinhood Markets enjoyed a share price increase after posting its second consecutive quarterly profit, driven by higher interest rates and cryptocurrency trading.

Street Views

• Brian Vaccaro, Raymond James (Bullish on Cheesecake Factory):

  "With these dynamics improving, we see upside to the stock’s low valuation (P/E ~11x), and would also note the stock’s elevated short interest at ~15% of the float."

• Andrew Boone, JMP Securities (Bullish on Shopify):

  "Our upgrade is driven by the potential for new merchant cohorts to contribute in 2025 and beyond, Plus subscription price increases coming on in 2H24, and our belief that the company remains a best-in-class eCommerce platform that is taking share and has multiple adjacencies across financial services, advertising, and merchant services."

• Brian Nowak, Morgan Stanley (Bearish on Airbnb):

  "While ABNB remains a unique travel company, we … see this steady room night deceleration becoming a headwind to the multiple investors are willing to pay for the company... especially as forward EBITDA/FCF growth is likely to be more predicated on ADRs, take rate, and new product extensions (with inherently higher execution risk)."

• Justin Post, Bank of America (Neutral on Airbnb):

  "The company’s disappointing second quarter outlook is consistent with [a] slowing travel sector in 2024." "Whether management’s initial FY24 Adj EBITDA margin guidance of at least 35% turns out to be conservative will be an important indicator of forward margin trajectory in the coming years."

• Eric Sheridan Goldman Sachs (Bearish on Airbnb): > "[Moved] his price target slightly higher to $130 from $123."