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Thursday’s analyst calls: One bank says sell Tesla, Goldman sees big Disney upside


(This is CNBC Pro’s live coverage of Thursday’s analyst calls and Wall Street chatter. Please refresh every 20-30 minutes to view the latest post.) Thursday started with a rare sell-equivalent rating placed on Tesla. HSBC initiated coverage of the electric vehicle maker with a reduce rating and a price target that implies more than 30% downside from Wednesday’s close. Meanwhile, Evercore ISI placed tactical outperform ratings on Five Below and Target. Analysts also reacted to Disney’s fiscal fourth-quarter results. Goldman Sachs sees more than 40% upside for the media giant. Check out the latest calls and chatter below. 7:19 a.m. ET: Citi upgrades Wish, highlights balanced risk-to-reward skew ContextLogic, which does business as Wish , can still find growth with a strong roster of assets despite higher competition, according to Citi. The firm upgraded shares to neutral from sell in a Wednesday note, and slightly increased its target price to $5.50 from $5. Citi’s forecast implies roughly 4% upside from Wednesday’s $5.28 close. “WISH still has a lot of operational improvements to make on a stand-alone basis. While management has worked to improve the user experience and merchant base on the platform, the pullback in advertising to help profitability has led to a significant decline in users,” analyst Ygal Arounian said. “That said, we do see some value in assets, particularly in logistical operations, particularly in a world where cross-border trade from China is growing in importance.” Shares have struggled in 2023, losing more than 63%. However, they’re up 23% this week on the back of a smaller-than-expected loss for the third quarter. — Brian Evans 7:11 a.m. ET: HSBC upgrades Anheuser-Busch InBev HSBC thinks Anheuser-Busch InBev can still grow in a smaller U.S. market. The firm upgraded the Bud Light maker to buy from hold. “Investors don’t need the US to work for the stock to rerate as the market seems to have fully priced in US softness for Bud Light. What we like is that the Middle America division has stepped up and supplanted North America as the group’s largest growing business unit,” analyst Carlos Laboy said. AB InBev shares are down more than 1% for the year. However, the stock is up more than 12% over the past month. BUD 1M mountain BUD 1-month chart — Brian Evans 6:52 a.m. ET: JPMorgan upgrades Montrose Environmental, highlights ‘pure-play’ on ESG JPMorgan is stepping up its outlook on Montrose Environmental after third-quarter results. The firm upgraded the environmental services stock to overweight from neutral in a Thursday note, albeit with a $41 per share price target down from $46. “We are increasing our 2023E adj. EBITDA to $81M from $78M to reflect the company’s performance in 3Q23,” analyst Stephanie Yee said. “We are also increasing our 2024E adj. EBITDA to $90M from $89M to reflect our higher margin expectation, while we are maintaining our 2025E adj. EBITDA at $98M.” “Montrose can be considered a pure-play ESG company as MEGs services are directed toward improving the environment,” the analyst said. “The company was founded in 2012 and has grown at a 20%+ CAGR over the years, with annual organic revenue growth of high single digits and considerable M & A.” 6:37 a.m. ET: Deutsche Bank upgrades Parker Hannifin, highlights maneuverability Deutsche Banks thinks Parker Hannifin’s ability to navigate macroeconomic headwinds will help boost the stock. The bank upgraded shares of the motion and control stock to buy from hold in a Wednesday note, and raised its price target to $506 per share from $462. Deutsche’s forecast implies more than 23% upside from Wednesday’s $410.66 close. “We believe Parker Hannifin is increasingly becoming a core holding within Industrials for PMs, and rightfully so – the company has proven its ability to deliver superior operational execution in many macro environments,” analyst Nicole DeBlase said. “This can certainly be attributed to the company’s Win Strategy, but also to significant portfolio change over the past decade, which has created better balance in PH’s revenue profile (and brought greater secular growth potential).” Parker Hannifin shares have outperformed this year, rallying 41%. PH YTD mountain PH year to date — Brian Evans 6:30 a.m. ET: Barclays upgrades Valaris after third-quarter results Barclays likes what it’s seeing from Valaris after the company’s third-quarter earnings print. The firm upgraded the offshore drilling company to overweight from equal weight in a Thursday note and raised its price target to $106 from $84. Barclays’ forecast implies nearly 60% upside from Wednesday’s $66.40 close. Despite missing estimates on the top and bottom line in the third-quarter, Barclays raised its full-year EBITDA forecast for 2023 and 2024 to $131 million and $549 million, respectively. “Our investment case is based on a DCF-based valuation which assumes that leading-edge day rates in the GOM are at $450k/d today, which increases to $500k/d by mid-2025,” analyst Eddie Kim wrote. — Brian Evans 5:55 a.m. ET: Here’s what some analysts are saying after Disney’s fourth quarter results Analysts on Wall Street are striking an optimistic tone following Disney’s fourth-quarter results. Questions surrounding both direct-to-consumer as well as ESPN’s full integration into streaming loomed large ahead of the report. Analysts are largely sticking by Disney stock and say they’ve seen adequate progress to continue growing the business, however. “Our key takeaway from the report and call is the same as last quarter, which is that DIS is making progress against management’s lengthy to-do list. The most notable area of traction, in our view, is against DIS’s cost savings initiatives,” Goldman Sachs analyst Brett Feldman wrote. The bank reiterated a buy rating on Disney with a $120 per share price target, or about 42% upside from Wednesday’s $84.50 close. Bank of America’s Jessica Reif Ehrlich also reiterated a buy rating on Disney, albeit with a $110 per share price target, which implies more than 30% upside. “While several strategic questions remain, we remain confident in Bob Iger’s ability to navigate the company through this transition period,” she said. — Brian Evans 5:49 a.m. ET: Evercore ISI says buy Five Below and Target ahead of earnings Evercore ISI added Five Below and Target to its tactical outperform list ahead the companies’ earnings reports: On regarding Five Below, analyst Michael Montani said the company has “been able to buck the industry moderation trend, with positive traffic, comps and a constructive outlook likely for its discretionary core business into the all important holiday season (35% of CY22 Sales, 65% of profit).” Meanwhile, analyst Greg Melich said Target’s “near term comp pressures are well understood, while Target’s ability to manage earnings can drive EPS upside.” “With TGT trading near pre-pandemic levels and down 28% YTD, we believe that the stock reflects much of the bad news of a softer consumer backdrop, mix headwinds, and operational missteps over the course of the past year and a half,” he said. Target reports earnings next week. Five Below is slated to post results in December. — Fred Imbert 5:49 a.m. ET: HSBC initiates Tesla coverage at reduce HSBC says Tesla may have gotten ahead of itself. The bank initiated coverage of the electric vehicle giant with a reduce rating accompanied by a $146 per share price target. HSBC’s forecast implies more than 34% downside from Wednesday’s close. “As outsiders, we struggle to challenge the feasibility of the group’s ideas. So, our caution stems from the uncertainty around the timing and commercialisation of its varied ideas,” HSBC head of European automotive Michael Tyndall said. “We see considerable potential in Tesla’s prospects and ideas, but we think the timeline is likely to be longer than the market and valuation is reflecting.” “Tesla delivers but rarely adhering to the promised timelines,” he said. “Whether it is a function of overly ambitious timelines … or delays with Gigafactory licenses and applications, production delays appear to be becoming the norm.” Tesla shares have surged more than 80% this year. TSLA YTD mountain TSLA in 2023 — Brian Evans

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