The S&P 500 closed higher on Friday after Federal Reserve Chairman Jerome Powell said this week that “it's time to adjust policy,” signaling he may start cutting interest rates.
For the week, the Nasdaq (COMP:IND) fell 1.4% and the Dow (DJI) lost 0.5%.
Analysts on Wall Street have been busy with upgrades and downgrades. Here are some key predictions for the week:
Guggenheim upgrades to Roku citing accelerated future revenue
Guggenheim Securities upgraded Roku (ROKU) to Buy from Neutral, expecting “significant initiatives to drive revenue acceleration.”
“This expected development should further boost confidence in ROKU being a unique top-line acceleration story in 2025,” the analysts said, adding that the brokerage expects investor enthusiasm for the ROKU story to grow ahead of third-quarter earnings in November.
Chinese companies Baidu, Bilibili grab attention with quarterly earnings results
Baidu (BIDU) was in the spotlight following the company's second-quarter earnings report after Bernstein analyst Boris Van downgraded the stock to market perform from outperform and lowered his price target to $97 from $130 due to concerns about the company's search business.
The Chinese tech company also got attention after Nomura and Barclays raised its ratings on the stock, with Barclays raising the company's rating to overweight from equal weight and boosting its price-to-earnings multiple by $5 to $19 after the company reported second-quarter results that beat expectations by a wide margin.
Similarly, Nomura upgraded its rating to buy from neutral and set an $18 price target on the stock, citing Bilibili's “vibrant” community and strong user loyalty.
Piper Sandler to star in supporting roles at Dutch Bros and Shake Shack
Piper Sandler downgraded Dutch Bros. (BROS), Shake Shack (SHAK), and Sweetgreen (SG) to Neutral from Overweight, citing declining customer traffic and a lack of pricing power to counter the dining at home (“FAH”) trend.
Piper analyst Brian Mullan noted that looking at inflation trends between FAH and dining out (FAFH), FAFH inflation has outpaced FAH by about 300 basis points for 14 consecutive months, leaving fast-casual dining barely able to make incremental adjustments to menu prices.
Morgan Stanley downgrades HP as PC market recovery already priced in
HP (HPQ) was downgraded to equal weight from overweight by investment firm Morgan Stanley because it sees little room for upside in valuation and that a recovery in the PC market is already largely priced in.
The brokerage, which kept its HP share price forecast at $37, sees PC demand in the second half of 2024 as slightly weaker than expected.
Scotiabank is favorable on Newmont, AngloGold Ashanti downgrades
Scotiabank set a $59 price target on Newmont (NEM) and raised its rating to sector outperform from sector perform, saying the company is expected to demonstrate operational improvement and margin expansion in the second half of 2024.
However, the brokerage downgraded AngloGold Ashanti (AU) to Sector Underperform from Sector Perform with a PT rating of $30 due to the strong rise in the stock price.
The company raised its gold price forecast for 2024-25 to $2,300 an ounce from $2,200 previously.
JPM downgrades Peloton due to future growth challenges
Peloton Interactive (PTON) was downgraded by JPMorgan even though the company broke nine straight quarters of revenue declines and narrowed its quarterly loss, both of which beat Wall Street expectations.
JPM downgraded the company to neutral from overweight, citing limited visibility and a tough path to growth. Analyst Douglas Anmus noted that the FY25 revenue outlook is weaker than expected, taking into account a year-over-year decline in hardware sales, macroeconomic headwinds and lower marketing expenses.
Needham maintained a hold rating on Peloton, expecting revenue to decline over the next two years, while Morgan Stanley maintained an equal weight rating, saying it remains unclear when the subscriber base will reset and whether the company can simultaneously grow revenue and profit margins.
Northland Capital Positive about Palantir's Enterprise AI Market
Palantir (PLTR), a Denver-based big data company considered a leader in the enterprise artificial intelligence market, was initiated with Market Perform by Northland Capital, which set a $35 price target on the stock.
“But early efforts were piecemeal and experimental. Palantir's AI Operating System, powered by Ontology software, overcomes myriad adoption obstacles and accelerates the use of AI across the enterprise,” analyst Michael Lattimore wrote.
Apart from the companies mentioned above, there was some action from analysts. MoffettNathanson initiated coverage of Apple (AAPL) with a Neutral rating, mainly citing the difficulties of the AI upgrade cycle outside the US, a combination of regulatory hurdles and geopolitical considerations likely to constrain Apple's AI deployment and adoption. The brokerage set a target price of $211 for the stock. Loop Capital also reiterated its Buy rating, citing better-than-expected iPhone shipments.
Piper Sandler upgraded online pet retailer Chewy (CHWY) to Overweight from Neutral, saying the company appears to be at a turning point for profitability driven by expanding gross margins and leveraging SG&A expenses. The firm also raised its target price to $35 from $22.
