- The Grade
- Posts
- 9th September 2024
9th September 2024
Nick Barber
September 09, 2024
The information below is for entertainment purposes only and does not constitute financial advice. Always do your own research.
💬 ”The function of economic forecasting is to make astrology look respectable.” John Kenneth Galbraith.
ANALYST STOCK TIPS
Sweetgreen, Unity and “The Amazon of Korea” Get Upgrades.
aTyr Pharma has been given a Buy rating by Jefferies with a price target of $9. This represents a 379% upside over its current price of $1.88. The rating was based on the Phase 3 trial of efzofitimod, which Jefferies believes has the potential to become the first approved treatment for pulmonary sarcoidosis and may have applications for a broader range of interstitial lung diseases.
Forge Global, a company that allows investors and shareholders to buy and sell equity in pre-IPO companies, was upgraded to a Buy rating by UBS with a price target of $3. As it currently sits at $1.25, this implies a huge upside of 140%. Analyst Alex Kramm said in a research note:
"We have increased confidence in further improvement in FRGE's core private company shares trading business, while new cost-saving initiatives now present a path to profitability... With the environment improving and transaction volume up 180% y/y in the most recent quarter, we now forecast volume up 65% in FY24 and net revenue up over 17% y/y."
Teck Resources, a Canadian mining company, was upgraded to a Buy by UBS. The price target was C$78, representing a 79% upside over the current value. Analyst Myles Allsop thinks the company’s risk/reward profile is favorable and expects the company to benefit from higher copper prices.
Array Technologies, which sells tracking systems for solar panel projects, was given a Buy rating by Jefferies. Their price target was $11, a 72% upside over current value. The firm believes it has a “discounted valuation” and that its focus on building a higher-quality backlog, competitive prices, improving cost structure, and margin recovery should enable profitable market share gains.
Sweetgreen, the fast-casual salad restaurant chain, was upgraded to Buy by TD Cowen. Its price target was $43, which is 54% higher than its current price of $27.87. Analyst Andrew M. Charles said he sees more upside to Sweetgreen’s stock based on its strength in same-store sales.
Coupang, “the Amazon of South Korea,” was given a Buy rating by CLSA. The price target is $31, representing a 44% upside over its current price. CLSA's positive outlook stems from a projected 17% annual revenue growth over the next five years. This is attributed to industry expansion and Coupang's potential to gain more market share through consolidation and stronger customer loyalty.
Unity, the 3D graphics software company, was upgraded to Overweight. The price target was unchanged at $22, representing a 39% upside over its current price. Morgan Stanley analyst Matthew Cost cited significant price underperformance by Unity stock (down 58% over the last 52 weeks) as potentially "derisking" the stock for new buyers.
Sportradar was upgraded to Outperform by JMP Securities. The price target given is $16, a 38% upside over its current price. The company has made significant progress with several operational and strategic initiatives over the past 12 months, presenting an appealing buying opportunity ahead of the NBA season, the firm notes in a research report.
INDUSTRY FOCUS
Chinese electric car makers win praise.
NIO ET9
NIO, the Chinese electric car and battery company, was upgraded to Overweight by analyst Nick Lai at JPMorgan. His price target is $8, a 59% upside over the current price of $5.02.
“With the stock price halving YTD and hence expectations low, we believe NIO may well exhibit a relief rebound beyond year-end, driven by financial and operational turnaround...
We are upgrading Nio to OW [Overweight] from Neutral on the back of: 1) higher visibility on new model initiatives and pipeline into 2025; and 2) rapid improvement in cash position (e.g., JPMe Opt CF turns positive in 2H24) and hence removal of investors’ concerns of further fundraising or equity dilution risk...
Specifically, we project that a sharp decline in cash burn and better operating cash flow in 2H24 will greatly increase investors’ confidence in Nio’s financial status. Volume increase into 2025 also means operational leverage.”
XPeng was also upgraded to Overweight by JP Morgan with a price target of $11.50 (an upside of 35% over its current price). The company’s upcoming new models in Q4 – the Mona M03 and P7 Plus – are expected to boost quarterly deliveries from approximately 45K units in Q3 to around 80K in Q4, with full-year contributions expected in 2025, according to a research note. JPMorgan also notes that its store visits and test drives of the M03 have strengthened its confidence in the delivery momentum for Q4.
DOWNGRADES
And some to avoid...
Boeing CEO, Dave Calhoun
Boeing was downgraded to Underweight by Wells Fargo. Annual free cash flow target of $10 billion may be delayed by about two years to 2027-28 and it would have to raise $30 billion before developing a new aircraft, analyst Matthew Akers commented.
Airbnb was downgraded by Argus from Buy to Hold, as the firm highlighted slowing growth in room nights. Argus also cautioned that growing competition, softer demand, fewer extended stays, and higher marketing expenses are likely to affect the company's near-term earnings.
Starbucks was labelled as “too frothy for comfort” by The London Times. Starbucks is experiencing a decline in sales due to several factors: high prices, long wait times, increasing competition in China where younger rivals are gaining market share, and a boycott driven by social media over the company’s position in the Middle East. The article notes that while investors are optimistic about new CEO Brian Niccol’s strong track record, the challenges at Starbucks appear more complex than those he encountered at Chipotle Mexican Grill. With a forward earnings ratio of 26.6 times and Niccol’s controversial compensation package, The London Times suggests that Starbucks has much to prove.
PRESS STOCK TIPS
The Times of London thinks Nintendo is a Buy.
Over the last 6 months, Nintendo’s share price has dropped 7%. The Times of London thinks this could be a good buying opportunity.
“Much rests on the success of Nintendo’s next console — after its strong performance with the Wii in the 2000s, its successor, the Wii U, sold fewer than 14 million units. Nintendo then faced consecutive operating losses in 2013 and 2014.
But the group’s renewed focus on quality over speed appears to have worked in its favour so far. Industry pundits expect Nintendo will launch its new console some time next year, which should help to drive up appetite for the shares, alongside widely anticipated sequels to some of its most popular titles, Super Mario Odyssey, Pokémon, Animal Crossing and Zelda. With one of the most powerful intellectual property portfolios in the industry and an upcoming upgrade cycle, the recent pullback in the shares seems a compelling buying opportunity.”
EXTRA GRADE
