This Week, From The Analyst Community

Stock analysts can provide valuable insight into the sentiment around a certain stock or sector and shed some light on what is possible or likely for a stock.  Stirring in the analyst community can sometimes be early signs of stock movement, which is why our team reviews dozens of analyst research reports each and every day to find new investment ideas for our readers. 

Of the hundreds of reports, we reference weekly, some stand out among the others for various reasons.  Our team has sifted through this week’s reports and whittled it down to the most pertinent moves.   

Read on for the details on some of the most impactful actions brokerage firms took over the past week.  

Monday, December 6th

• Several Wall Street analysts initiated coverage of EV maker Rivian Automotive (RIVN) with mostly bullish ratings.   Morgan Stanley analyst Adam Jonas initiated RIVN with an Overweight rating and $147 price target, calling the company “the one” that can challenge Tesla (TSLA).  Voicing a similar opinion, Wedbush analyst Daniel Ives thinks that Rivian is in “the catbird’s seat” to take considerable market share in this EV arms race under its “visionary” CEO and founder RJ Scaringe.  Ives started coverage of Rivian Automotive with an Outperform rating and a price target of $130. 

• Meta (MVRS) formerly Facebook (FB) was cautiously upgraded at HSBC.  Analyst Nicolas Cote-Colisson upgraded Meta from Reduce to Hold, with an unchanged price target of $300.  According to the analyst, share price is under pressure after a “regulatory setback,” despite upside risks on advertising and rising interest in metaverse.  “The Meta investment case remains a fragile balance between risks of more regulation and new business opportunities” With the stock down 19% since the September 7 peak, Cote-Colisson upgraded the shares to Hold on valuation as he thinks the  price now better reflects Meta’s risks.

Tuesday, December 7th

• Starbucks (SBUX) was upgraded at MKM Partners to Buy from Neutral with a price target of $130, up from $114.  According to analyst Brett Levy, the decision to invest $1B across its system has created a short-term drag on fundamentals, but by solidifying the company’s operating model and putting its “partners” and customers first, it could further enhance the longer-term sales and profit streams over time.  Against the current backdrop, the analyst is taking a “more constructive view” of Starbucks’ long-term prospects.  

• JPMorgan analyst Cory Carpenter upgraded Bumble (BMBL) from Neutral to Overweight with a $55 price target after meeting with company management.  The analyst left the meetings with greater confidence in Bumble’s app trajectory and longer term positioning within “the dating/relationship ecosystem.”   He believes Bumble’s 2022 net subscriber additions will be greater than 2021.

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Wednesday, December 8th

• BofA analyst Andrew Obin downgraded Honeywell (HON) to Neutral from Buy, lowering the price target from $270 to $245.  The analyst noted that the company’s M&A and inorganic investments have shifted its portfolio to structurally higher growth rates and margins, but he thinks Honeywell is also likely to face revenue and margin headwinds in the first half of 2022.  Obin adds that his new price target still assumes a premium expected 2023 EBITDA multiple of 17-times vs. 16-times peer average on 2022 forecast considering the company’s defensive portfolio and above-peer margins.

• NXP Semiconductors (NXPI) was initiated with a Sell at UBS.  Analyst Francois-Xavier Bouvignies initiated coverage of NXP with a Sell rating and $170 price target.  While the analyst thinks the company will “remain a leader in its product categories with a solid business,” he sees the automotive division’s growth underperforming the automotive semis market, ” due predominantly to a relatively lower content opportunity in EVs  vs. its peers.”  Considering NXP Semiconductors currently trades at an 8% discount to the sector vs. 20% on average historically, the analyst believes “this potential underperformance is not priced in.”

Thursday, December 9th

• Southwest (LUV) downgraded to Hold at Jefferies.  Analyst Sheila Kahyaoglu downgraded Southwest to Hold from Buy with a price target of $45, down from $60 on lower operating leverage.  Kahyaoglu told investors that Southwest’s model seems to be more exposed to inflationary pressures, given a distributed network and fewer new efficiencies, giving it lower operating leverage than peers.  She feels that the company’s network remains a competitive advantage, industry capacity expansion is seen limiting the ability to drive the required revenue-per-available-seat-mile growth to offset the cost-per-available-seat-mile growth excluding inflation.  She also sees Southwest having a “subdued” free cash flow outlook relative to other airlines.

• JPMorgan analyst Bill Peterson initiated coverage of EVgo with an Overweight rating and $20 price target. The analyst sees the company as a leader in the fast charging electric vehicle space. The charging network provider is generating revenue streams from its installed charger base and “prudently added” capacity as utilization increases and in order to meet future demand, Peterson tells investors in a research note.  The analyst believes EVgo has “attractive and growing partnerships” across car makers, ride-share and autonomous driving fleets.  He anticipates an increasing portion of subscription-like revenue with potential margin upside through increasing software contributions and better energy rates.

Friday, December 10th

• Goldman Sachs analyst Catherine O’Brien downgraded Southwest Airlines (LUV) to Sell from Neutral with a price target of $36, down from $59.  The analyst expects the company to see higher-than-industry inflation over the medium-term, driven by its investments in upgrading its technology. Current inflation will drive a slower-than-industry return to profitability as Southwest’s revenue benefits from these initiatives will be offset by a weaker domestic pricing environment, O’Brien tells investors in a research note.

• Electronics manufacturer Jabil Circuit (JBL) was upgraded to Buy from Neutral on “fast growing” markets at Goldman Sachs.  Analyst Mark Delaney cited  the company’s exposure to the electric vehicle market, in particular, Tesla (TSLA) and Rivian (RIVN) as potential tailwinds for JBL.  Delaney upped the firm’s price target from $63 to $75, implying 22% upside, as the company continues to get more spending inside electric vehicles and raises its exposure to the cloud, both of which are “becoming an increasingly large percent of the company’s total portfolio,” the analyst wrote in a note to investors.

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