Apple gets major upgrade, Lululemon, Ulta and Tesla face headwinds | Wilnesh News
(This is CNBC Pro’s live coverage of Monday’s analyst call and Wall Street chatter. Please refresh every 20-30 minutes to see the latest posts.) Monday’s analyst call included an upgrade on Apple, a look at athleisure Giant Lululemon and electric car brand Tesla. Bernstein analyst Toni Sacconaghi said during a key conference call that concerns about Apple’s sales in China are overdone and he gave an aggressive price forecast for the iPhone giant’s stock. For Lululemon, though, things could get tougher due to changes in consumer spending and a more competitive business environment. Evercore lowered its target for Tesla as it expects continued headwinds to impact it. See the latest calls and chats below. All times are Eastern Time. 8:18 AM Barclays upgrades AT&T due to ‘mismatch’ between valuation and growth prospects Barclays said AT&T will continue to move forward based on a superior execution framework despite being constrained by “traditional” investor views. The firm upgraded the telecom stock to overweight from equal weight and reiterated its $20 per share price target. Barclays’ forecast implies a 19.4% upside for the stock from Friday’s closing price of $16.75. Analyst Kannan Venkateshwar said: “Unlike VZ and TMUS, AT&T’s total add growth needs to remain healthy to maintain the current postpaid net add trend, while AT&T will not face the same problem due to its customer churn. Outperforming peers “This was driven by the company’s handset offers to existing customers, which drove AT&T’s churn rate to an all-time low. Venkateshwar said the combination of clearer visibility of the company’s overall strategy and strong cash flow “provides a unique window of opportunity with real catalysts.” “As a result, AT&T’s ability to maintain its industry growth share is not really affected by its lower total additions. In fact, if anything, the lower additions help lower total subscriber acquisition costs and working capital requirements, thereby improving margins and free cash flow,” the analysts continued. AT&T shares were down less than 1% in 2024, but were up nearly 1% in Monday’s premarket. — Brian Evans 7:19 AM Citi upgrades Shopify, optimistic about company’s long-term growth Citigroup said Shopify is poised to grow thanks to a “more reasonable” valuation in 2023 and cost-cutting efforts. This is due to its strong product quality, unique business model spanning software/payments/e-commerce, etc., and its huge e-commerce TAM (total addressable market),” said analyst Tyler Radke. The firm upgraded the e-commerce stock to buy and raised its price target to $105 per share from $93. Citigroup expects the stock to rise more than 30% from Friday’s closing price of $71.33. “Relative to broader Q1 seasonal weakness, we are more confident that SHOP can surprise higher (especially after a disappointing Q4) as expectations are more subdued and e-commerce trends appear to be more resilient, channel checks Supporting SHOP’s move upmarket, our opinion analysts say on May 8 regarding upcoming quarter results, operating expenses guidance will likely be conservative 6:45 Barclays downgrades Ulta, says in-store competition is intensifying Barclays Nedbank said that while holding beauty stocks for the long term, Ulta Beauty will face more pressing difficulties in the near term as brick-and-mortar competition intensifies. “We are more cautious in the near term. In the long term,” analyst Adrienne Yih said. , ULTA is one of two specialist multi-brand retailers with a best-in-class business model in the long-term growth segment of beauty.” The firm downgraded Ulta stock to equal weight from overweight and lowered its price target to $434 per share from $612. Barclays’ forecast implies a gain of about 7% from Friday’s closing price of $406.39. “Our ratings are based on: 1) the shift to off-site shopping to facilitate curbside shopping and store pickup; 2) strategic investments in the business; and 3) a value proposition that combines mass and well-known brands,” Yih added. Ulta Beauty stock has retreated about 17% in 2024. Pull stock forecasts will be updated for vehicle companies. The firm reiterated its consensus rating on the EV stock but lowered its price target to $145 per share from $155. Evercore’s forecast implies an upside of about 14% from Friday’s closing price of $168.29. Analyst Chris McNally believes the three major “headwinds” facing Tesla stock are its difficulty in selling more than 1.7 million to 1.9 million vehicles per year, the delayed timeline for its affordable sedan and its The promotion of fully autonomous driving capabilities. “What’s not clear yet is: What is the ‘new model’ (updated Y?)? How will it fit into the existing production line/? What’s going on in Mexico?” McNally said. Tesla’s stock price has fallen by about 33% in 2024. Concerns about Apple weakness in China may be overblown, suggesting it’s time for investors to “buy fear,” according to Bernstein’s Toni Sacconaghi. On Monday, Bernstein, managing director and senior vice president, upgraded the iPhone maker to outperform and maintained a price target of $195 per share. Bernstein’s forecast implies an increase of more than 15% from Friday’s closing price of $169.30. “We believe the prevailing weakness in the China market is more cyclical than structural,” Sacconaghi said, noting that Apple’s China business has historically been weak given its very feature-sensitive installed base. Volatility is much higher than Apple’s overall business. He added: “We further believe that replacement cycle tailwinds and incremental generation of AI capabilities set Apple up well for a strong iPhone 16 cycle. ” Apple shares are down 12.1% in 2024, but are up nearly 2% in premarket trading Monday. — Brian Evans 6:20 AM Barclays downgrades Lululemon, says consumers are shifting spending away from athleisure Barclays The company on Monday downgraded the athleisure stock to equal weight from overweight and lowered its target price to $395 from $546. The forecast still sees an increase of 8.3% from Friday’s closing price of $364.70. Analyst Adrienne Yih pointed out that in addition to changes in spending trends and increased competition, headwinds related to Lululemon stock include limited future profit growth and U.S. sales. The slowdown led to a pullback in fixed cost leverage, Yih said: “We believe LULU remains one of the best positioned brands with one of the most reliable business models based on innovation, technology solutions and quality. ” The analyst added: “However, given that our industry thesis is to look for companies with accelerated sales growth in 2024, we believe companies with accelerated sales growth rather than decelerated sales growth are more likely to achieve sustained EPS growth. ” Lululemon shares have fallen nearly 29% in 2024 and were down 1.9% premarket Monday. — Brian Evans
