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  • 💸 The top Wall Street calls you missed this week.

💸 The top Wall Street calls you missed this week.

Including reratings on Spotify and Coinbase.

Author

Nick Barber
July 29, 2024

💬 "People always forget that 50% of a stock’s move is the overall market, 30% is the industry, and maybe 20% from stock picking." - billionaire investor Stanley Druckenmiller

ANALYST STOCK TIPS
Coinbase given huge price target by Citi.

Coinbase was upgraded to Buy at Citi with a price target of $345, an implied upside of 42%. Key to analyst Peter Christiansen's rerating was a changing regulatory environment:

"Shifts in the U.S. Election landscape and the Supreme Court’s overturning of the long-standing Chevron precedent has changed our view on Coinbase’s regulatory risks...We surmise the upside opportunity from a more conducive regulatory environment to be too large to ignore.”

Christiansen also commented that a Trump administration may take a more pro-crypto stance, noting he is due to talk at an upcoming Bitcoin conference.

Shopify was rated as Overweight by KeyBanc. Analyst Justin Patterson set a price target of $80, an implied upside of 33% over its current price. Accrodring to him, Shopify's leading position as an e-commerce platform is likely to benefit from continued expansion into e-commerce by the retail sector. Patterson thinks Shopify's best-of-breed cloud-based solution, which offers retailers a quick way to launch backed by a comprehensive support system, will be key to them hitting a $10 billion run rate in the medium term. He also sees tailwinds for the company from the continued rise of mobile commerce, the potential for international expansion, momentum with offline and B2B clients, and partnerships with companies like SAP and Deloitte.

Spotify was upgraded to Buy at Goldman Sachs after overall solid Q2 results. It was given a $425 price target, an implied upside of 32% from its current price. The Q2 results showed revenue increased by 20.2% year-over-year, reaching €3.81 billion, primarily due to a 21% rise in premium revenue and steady growth in ad-supported revenue. Key to the upgrade was Goldman's view that:

"Spotify is the clear global audio platform leader," which could lead to "scaled compounded user growth, rising engagement across multiple format structures, and pricing power."

The company is also beginning to show momentum in its operating margin following a 2023 restructure. Goldman additionally foresees that with increased free cash flow, share buybacks could be a possibility. Goldman certainly seems bullish on the company, commenting that:

“We can see a scenario that even our newly raised forecasts might still be too conservative."

Estee Lauder was upgraded to Outperform by RBC Capital. Analyst Nik Modi gave the company a $131 price target, an implied upside of 31% over its current price. He believes the current price may have bottomed out, and while he may forecast modest growth, mainly due to slow growth in China, he believes the risk-reward ratio of the company is now favorable. The scope to improve margin is also "very tangible and has additional room to grow."

PRESS STOCK TIPS
The Motley Fools thinks Carnival may be one of the best growth stocks right now.

Carnival Corporation, a titan in the global cruise industry, has been selected as a standout long-term investment by David Jagielski at The Motley Fool.

The stock is currently “down 60%” from its pre-pandemic highs. However, as cruises are often booked far in advance by repeat customers, the company has a lot of visibility into its future and significantly:

When the company last reported earnings in June, it raised its full-year guidance for fiscal 2024 (which ends in November), citing "strong demand" for cruises. This is even as the company reported record second-quarter revenue totalling $5.8 billion for the period ending May 31, which rose by 18% year over year.

So the growth rate looks great. However, the company carries over $27 billion in long-term debt and interest payments which have been a “huge albatross” chipping away at earnings. While this is an issue, with the potential for rate cuts in the near future, Jagielski sees Carnival as one of the best growth stocks to buy right now.

THE WEEK AHEAD
Two rate announcements and a bumper week of earnings.

  • Monday - Pearson and McDonalds report earnings.

  • Tuesday - Microsoft, AMD, PayPal, Merck, Pfizer, Procter & Gamble, Mondelez and Starbucks report earnings.

  • Wednesday - Federal Reserve announces its latest interest rate decision. Meta, Arm, Qualcomm, Mastercard and Boeing report earnings.

  • Thursday - Bank of England announces its latest interest rate decision. Apple, Amazon, Coinbase and Intel report earnings.

  • Friday - Chevron and ExxonMobil report earnings.