19th July 2024

Author

Nick Barber
July 19, 2024

💬”This might be the single most stunning example of the competency crisis we have ever seen.” Christian Heiens on the falling CrowdStrike share price.

ANALYST STOCK TIPS
Morgan Stanley makes retail calls.

GAP was upgraded to Overweight by Morgan Stanley with a price target of $29, representing a substantial 27% upside over its current share price. Alex Stratton from Morgan Stanley, after meeting with Gap's new management team, feels positive about their brand refresh and turnaround plans:

"More specifically, we left our June meetings with increased conviction that 1) the business’ recent inflection was not solely a function of momentum, but also new mgmt.’s intentional strategic changes (particularly in marketing & the digital channel), 2) mgmt.’s stance on the SG&A reduction opportunity had grown more urgent/confident, & 3) 2Q & FY GM guidance was set particularly conservatively."

At the same time, Morgan Stanley has downgraded Foot Locker.

Fortinet was upgraded to Buy at TD Cowen, with a price target of $75 representing a 29% uplift over its current value. TD Cowen has been conducting "channel checks"—essentially reaching out to various sources within the company's supply chain or sales channels—and described the results for Fortinet as "solid." These checks suggest that we are currently at the bottom of the market for security appliances.

e.l.f. Beauty was upgraded to Buy by Baird Capital with a revised price target of $230, representing a 34% upside. "Healthy brand momentum" was the main driver behind this call.

Six Flags Entertainment is now covered by Macquarie, who gave it an Outperform rating. Their price target is $64, a 26% upside on the current price of $50.74. Macquarie believes the merger with Cedar Fair, which brings the combined entity to 27 amusement parks, 15 water parks, and 9 resorts, will result in significant synergies over the coming years. However, they point out that this may take some time to realize due to factors such as customer seasonality and weather.

Grocery Outlet is now covered by Wells Fargo, who gave it an Overweight rating with a price target of $28 (a 31% upside). They acknowledged potential issues with the company's business model and predicted choppy waters in the second half of this year. However, they see the poor investor sentiment towards the company as a good buying opportunity for this "defensive, growth story."

Winnebago is now covered by Benchmark, with a Buy rating and a price target of $75 (representing a 29% upside). They were impressed by the company’s solid financials and growth opportunities, believing it can return to growth driven by its high margins.

PRESS STOCK TIPS
The Times tips Build-A-Bear workshop.

Build-A-Bear Workshop fell to almost a dollar in 2020 - it’s now north of $25. It had struggled for growth due to its focus on physical retail spots but has since thrived via its digital strategy and licensing deals. It has a P/E ratio of under 8, which The Times sees as cheap given its healthy gross margin, strong balance sheet, and growth potential. They think it could be a good long-term pick.

30 SECOND NEWS
Microsoft meltdown.

  • 🐛 There’s been a widespread Microsoft meltdown caused by a glitch with CrowdStrike.

  • 🖥️ Taiwan Semiconductor Manufacturing Company posted $7.6B in Q2 profit — a 5.4% beat over FactSet estimates.

  • 🍿 Netflix beat revenue expectations in Q2, but issued a gloomy outlook for Q3.

  • 📱 Nokia lost a third of its profit in a year as Indian sales plummeted.