Street reacts to Apple buybacks and Coinbase earnings
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(This is CNBC Pro’s live coverage of Friday’s analyst calls and Wall Street chatter. Please refresh every 20-30 minutes to view the latest posts.) Friday’s analyst calls included widespread reaction to Apple’s big buyback announcement along with some upgrades to Arista and Union Pacific. Wall Street reaction to the Apple announcement was mostly positive, with Morgan Stanley saying “it’s hard not to be bullish” after the iPhone giant’s earnings call Thursday. The reception wasn’t quite as positive for Coinbase, with some analysts wondering whether the digital currency firm can maintain its early-year momentum. Elsewhere, Jefferies lifted its target on Arista, admitting that its long-held “hold” call on the stock was wrong. Check out the latest calls and chatter below. All times ET. 7:43 a.m. Piper Sandler downgrades Expedia to neutral Expedia’s mixed first-quarter results and weak full-year guidance has Piper Sandler on the sidelines. Shares declined nearly 12% Friday before the bell after the company lowered its full-year guidance to a range of mid to high single-digit top-line growth, citing slowness in Vrbo and the rate of acceleration in business-to-consumer so far. Analyst Thomas Champion downgraded shares to neutral from overweight. Champion also lowered his price target to $145 from $175, implying about 21% upside from Thursday’s close. “With outgoing CEO Kern passing the baton to new CEO Ariane Gorin, management also lowered guidance for the year and confirmed what the stock has priced in for some time: bookings growth is deteriorating while the margin uplift from tech improvements and a recent RIF remain elusive,” Champion wrote in a Friday note. “We’re moving to the sidelines to regroup.” Bookings growth fell on a yearly basis due to weaknesses in the air and car segment, the analyst noted. Although the stock’s multiple remains low, Champion said the low bookings count and flat projected margins indicate Piper Sandler’s “original thesis is not planning out.” — Hakyung Kim 7:32 a.m. Morgan Stanley says Live Nation can rally more than 35% Morgan Stanley remains bullish on Live Nation coming out of earnings and sees a sizable upside ahead as concert-going remains popular. Analyst Cameron Mansson-Perrone reiterated his overweight rating on the Ticketmaster parent. Mansson-Perrone’s $120 price target implies shares can surge 36% in the next year from Thursday’s close. Live Nation on Thursday reported revenue that came in ahead of the consensus forecast from analysts polled by FactSet. Mansson-Perrone pointed to Live Nation’s big revenue increase and the double-digit growth outlook for adjusted operating income as reasons for optimism as interest in live events booms. “Our OW rating has been predicated on the view that the fundamentals in music and live events are the strongest across our coverage,” Mansson-Perrone wrote to clients “This was reinforced by 1Q results, increasing our conviction.” Mansson-Perrone said Live Nation offers “a unique way to play this strong and durable segment of consumer demand.” But the analysts noted that shares may trade range-bound amid a Department of Justice investigation. Live Nation shares advanced more than 3% in Friday’s premarket. But shares have slid more than 5% in 2024. — Alex Harring 7:01 a.m.: Bernstein downgrades Peloton as growth concerns mount Bernstein doesn’t think it’s wise for investors to take a ride on Peloton’s stock. Analyst Aneesha Sherman downgraded shares of the workout stock to market perform from outperform and slashed her price target to $3.80 from $8. Sherman’s updated target now suggests the stock can jump 21.4%, though that upside equates to less than $1 per share. Sherman’s call comes a day after Peloton posted a wider loss per share than analysts anticipated for its third fiscal quarter. She called growth “elusive” for the company, while noting that it can’t be achieved through mainly cutting costs. “The key question in the PTON investment thesis is: can this business ever grow again?,” Sherman asked following the release. “New [management], cost-cuts and looming debt concerns suggest that growth is not a priority short-term, with no clear plan or timeline for when it will be.” “It’s been a long and arduous ride, but it’s time to clip out,” she added, in reference to the company’s signature workout bikes. Peloton dropped more than 2.5% before the bell on Friday. Shares have dived nearly 49% in 2024, putting the stock on track for its fourth straight losing year. — Alex Harring 6:43 a.m.: Truist says to buy Ollie’s shares Investors should snap up shares of Ollie’s Bargain Outlet as growth trends normalize and value becomes increasingly important, according to Truist. Analyst Scot Ciccarelli upgraded the retailer to buy from hold and raised his price target by $6 to $86. Ciccarelli’s new target reflects the potential for shares to rally 15.2% from Thursday’s closing price. “After several years of significant sales/earnings volatility, we think that Ollie’s is settling back into a steady growth algorithm,” Ciccarelli said. “We think the company’s focus on extreme value/’Great Deals’ due to its closeout model will become increasingly powerful in a modestly slower economic environment.” Ciccarelli said the company has mostly normalized its sales trends and margin structures following a series of disruptions, and should now be back in a period of smooth growth. It also makes sense to buy the stock now because of its discounted valuation compared with history, he said. Ollie’s may also get a boost from its focus on value, which Ciccarelli said is increasingly important in “today’s somewhat uncertain/inflationary-pressured environment.” This comes as several major consumer names have begun seeing signs of stress among clientele. Shares popped nearly 2% in Friday premarket trading. But the stock has dropped more than 1% since the start of 2024. — Alex Harring 6:34 a.m.: Estee Lauder outlook leads to Morgan Stanley downgrade Weak guidance has caused Morgan Stanley to switch its bullish call on Estee Lauder . Analyst Dara Mohsenian downgraded the cosmetics stock to equal weight from overweight and slashed his price target by $24 to $140. Still, Mohsenian’s new target implies 3.7% upside over Thursday’s close. “Previously, we believed that EL made sense as a turnaround story,” Mohsenian wrote to clients. Mohsenian noted that topline recovery is now “clearly lower than expected” for the fourth quarter. Estee Lauder said to expect organic revenue growth between 6% and 10% in the quarter, which is smaller than the 12.7% estimate from analysts surveyed by FactSet. This revenue pressure “lingers longer-term” into the 2025 and 2026 fiscal years, he said. That’s because of external macro risk and category pressures, as well as internal market share problems. Shares retreated nearly 1% before the bell on Friday. The stock has dropped more than 7% in 2024, meaning it has diverged from the broader market’s ascent. — Alex Harring 6: 22 a.m.: Here’s what Wall Street thinks of Coinbase’s earnings Coinbase’s stronger-than-expected earnings have prompted analyst reactions. The crypto firm reported $4.40 in earnings per share on revenue of $1.64 billion for the first quarter. Analysts polled by FactSet had forecasted just $1.15 per share and $1.36 billion in revenue. Still, Coinbase shares slipped more than 3% before the bell on Friday as focus turned to what’s next for the digital currency company. Here’s what some of those analysts — who have very different expectations for the stock going forward — had to say following the print: Goldman Sachs’ Will Nance (neutral, price target cut to $255 from $295, 11.4% upside): “Taken together, we thought the moving parts in the quarter were supportive, although COIN’s strong YTD performance has largely reflected the stronger market already, hence a more muted stock price reaction. In the current environment, we believe COIN is well positioned to capitalize on the investments it has made during the Crypto market winter, allowing it to scale to new highs as it benefits from new products.” Barclays’ Benjamin Budish (underweight, $179 price target unchanged, 21.8% downside): “The biggest question going forward is, how sustainable are these trends? April looks clearly weaker than March (though better than Jan/Feb) based on exchange data, ETF flows, asset prices, and Base activity (per data from The Block and Bloomberg). With the Bitcoin and ETF launches behind us, there are a few broader catalysts that could drive another leg of activity (e.g., an approval of options on Bitcoin ETFs, approval of an ethereum ETF), but it is not clear if this would have the same magnitude as the factors that drove Q1.” Oppenheimer’s Owen Lau (outperform, price target to $282 from $276, 23.2% upside): “COIN reported strong 1Q adj. EBITDA of $1.01B versus our estimate of $699M and consensus’s $607M. We believe adj. EBITDA is a more appropriate comparison because COIN has adopted accounting rule ASU 2023-08. COIN beat on both top and bottom line, driven by strong trading volume which was up over 100% QoQ and YoY respectively.” — Alex Harring 6:12 a.m.: Wall Street reacts to Apple earnings Apple’s buyback announcement has caught the eye of Wall Street analysts. The technology giant announced its largest-ever share repurchase of $110 billion. That helped investors overlook the fact that iPhone sales slid 10% from the same quarter a year prior. Apple shares jumped nearly 6% in Friday premarket trading. Here’s what some of the biggest investment banks’ analysts told clients following the report: JPMorgan’s Samik Chatterjee (overweight, raised price target to $225 from $210, 30% upside): “The confluence of better-than-feared results in relation to F2Q (March-end) revenue and guidance for stronger than expected revenue growth in F3Q (June-end) are setting up a strong launch pad for the company in relation to results in FY24 as focus turns to the impending AI smartphone upgrade cycle in the coming years.” Morgan Stanley’s Erik Woodring (overweight, raised price target to $216 from $210, 24.8% upside): “Apple guided to an above-Street June Q, alleviated concerns about China iPhone, reached an all-time Services rev & GM record, authorized its largest incremental buyback in history, & hinted at Gen AI announcements to come in weeks. It’s hard not to be more bullish after that.” Goldman Sachs’ Michael Ng (buy, unchanged price target of $226, 30.6% upside): “F2Q24 provides demonstrable momentum across AAPL’s key categories and clears the way to a catalyst-rich NTM including increased clarity in AAPL’s generative AI initiatives (e.g., WWDC), new products (Let Loose event, iPhone launch), and ongoing Services momentum. We believe that the durability of AAPL’s installed base is underappreciated, and AAPL should improve revenue per user by increasing hardware units per iPhone user, Product price/mix, and Services attach & monetization as AAPL invests in its ecosystem.” — Alex Harring 6:08 a.m.: Jefferies upgrades Arista amid ‘extraordinary’ cloud capital expenditures Jefferies has turned bullish on Arista Networks as customers shell out for the cloud. Analyst George Notter upgraded the cloud networking stock to buy from hold and hiked his price target by $80 to $320. Notter’s new target implies 22.2% upside from Thursday’s close. Notter called capital-expenditure strength tied to the cloud “extraordinary,” while pointing to Arista as a “prime AI beneficiary.” On top of these optimistic views, the analyst said concerns about Nvidia as a competitor winning market share in the ethernet space have been “overblown.” “Now, it feels like the rush to deploy GPU-based infrastructure – including Ethernet-based infrastructure – will be lasting,” Notter said. “Moreover, it swamps concerns about spending choppiness or excess inventory among these customers.” Notter admitted the upgrade was a “mea culpa,” as he was previously concerned by customer concentration in Microsoft and Meta. “We’ve been carrying a Hold rating on Arista for a long time – of course, it’s been the wrong call,” he said. Arista shares rose about 2% in Friday’s premarket trading. The stock has climbed more than 11% this year. — Alex Harring 6:03 a.m.: Buy underperforming Union Pacific, Stifel says Stifel has moved off the sidelines on struggling Union Pacific shares, citing a “sweating-the-assets” mindset that can be good for business. Analyst Benjamin Nolan upgraded the railroad stock to buy from hold and increased his price target by $19 to $267. Nolan’s new target price implies the stock can advance 12.3% from Thursday’s close. Essentially, Nolan said the “sweating the assets” strategy involves driving increased productivity from owned business and pushing for higher prices, while cutting any unnecessary costs. He said service should still be key, but volume growth should be aided by the higher-margin industrial business rather than through attempting to win market share in lower-cost freight. “We are taking up our pricing assumptions and, consequently, our OR assumptions, which in turn drive higher EPS,” he said. “While still not as cheap as we would like, there is enough upside to justify upgrading.” Nolan’s upgrade offers a bright spot amid a tough period for Union Pacific. Shares have bucked the broader market’s climb and have actually slipped more than 3% in 2024. — Alex Harring — CNBC’s Michael Bloom contributed to this report.
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