Investing.com — Here’s your professional summary of the past week’s key Wall Street analyst findings: Upgrades for Micron, Insulet, Cheesecake Factory and Bumble ; downgrade for ZoomInfo.
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Micron
What happened? On Monday, Baird upgraded Micron (NASDAQ:) to Outperform with a $150 price target.
What’s the full story? Despite jumping on the bandwagon a bit late, Baird sees significant upside potential for Micron, especially in light of the stock’s recent pullback. This view contrasts with the gradually positive trends occurring in DRAM, according to their latest channel checks. These developments lead to a somewhat unprecedented prediction for memory for the next twelve to eighteen months.
DRAM prices are proving to be more robust than previously expected, with an increasing mix of higher-end DDR5. This trend is a positive indicator of Micron’s financial performance and market position. The brokerage firm’s analysis shows that the shift to more expensive memory options is a strategic move that could pay off in the long run.
Finally, the potential of HBM3E (the fastest, highest-capacity, high-bandwidth memory to fuel AI innovation) should not be overlooked. Baird expects HBM3E could generate gross margins of more than 60% for Micron in the coming year. This potential margin indicates strong financial performance and further strengthens Micron’s position in the market. Considering these factors, Baird rates Micron as “Outperform”. This rating reflects the broker’s confidence in Micron’s future performance amid evolving market dynamics.
Outperforming at Baird means: “The broader U.S. equity markets are expected to outperform the broader U.S. equity market on a total return and risk-adjusted basis over the next twelve months.”
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How did the stock react? Micron opened the regular session at $119.04 and closed at $120.13, a gain of 4.73% from the previous day’s regular close.
Insulet
What happened? On Tuesday, Wolfe upgraded Insulet (NASDAQ:) to Outperform with a $200 price target
What’s the full story? Baird has learned over the years that to truly appreciate the appreciation of some of these high-flying, fast-growing, dream-the-dream stories, it must extend the duration of modeling rather than the comfort of just one, three or even five years . . As a result, Baird has a PODD DCF that is valid for 20 years until 2040+.
Baird independently models four key segments with different assumptions for market penetration and PODD share: US type 1, US type 2 intensive (bolus+basal), US basal and OUS type 1. In the long term, their market penetration rate is highest for US type 1 and lowest for US basal. In type 1, Baird frames PODD and earns a 40% market share in the US and OUS over time. In Type 2, given current leadership and a base product that is unique in its class, Baird sees PODD earning over 50% market share in Type 2 pumps over the long term. Their terminal margin and DCF growth are 30% and 3% respectively, and they discount cash flows at 9%.
More simply on the valuation, returning to the short-term numbers, Baird sees current levels as undemanding compared to sector growth rates and history. Based on 2025 revenue, PODD is trading around 6x here – which is the bottom quartile of history, according to the note. There are 15%-25% growth comps trading at 7x-13x 2025 revenue. On real EBITDA (including stock comp), PODD is around 30x here compared to 2025. Names like DXCM, ISRG and SWAV (using takeout) are clustered around 40x 2025.
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Outperforming at Wolfe means: “The security is expected to outperform analysts’ sector coverage universe over the next twelve months.”
How did the stock react? Insulet opened the regular session at $183.01 and closed at $184.28, down 4.47% from the previous day’s regular close.
ZoomInfo Technologies
What happened? On Wednesday, Goldman downgraded ZoomInfo (NASDAQ:) to Sell with a $12 price target
What’s the full story? Goldman is moving to a sell position due to the increased lack of visibility surrounding a reversal in the aforementioned trends. The company’s Q1 24 results indicate continued macroeconomic challenges and execution hurdles, with NER falling to 85% from 87% in Q4, and net new revenue continuing to decline (FY24e $12 million versus $142 million in FY23, $350 million in FY22). In addition, there is a declining growth of the cRPO (Current Remaining Performance Obligation), which was flat/-2% YoY/QoQ.
Against a challenging spending backdrop, softer macro signals and after two major renewal quarters in the fourth and first quarters, the banking house sees a lack of emerging catalysts that can support the renewed revenue acceleration. This leads Goldman to expect a more gradual recovery in revenue growth. Coupled with Street expectations for growth to accelerate by 600 basis points in CY25 (pre-print) (vs. GSe ~100 basis points), Goldman views downward estimate revisions as an overhang for the stock.
While Goldman notes that ZI is seeing an improvement in underlying trends, with mid-market retention stabilizing and business improving, and is expected to introduce Gen-AI services in the second half of the year, the banking house is waiting for the next trends before it becomes more constructive: 1) indications of a recovering employment environment, 2) improved execution in terms of stabilizing workforce turnover, and 3) sustainable expansion. These factors will be critical in determining Goldman’s future stance toward the company.
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Selling at Goldman means: “Analysts recommend stocks as buys or sells for inclusion on various regional investment lists. Whether a stock receives a buy or sell option on an investment list is determined by a stock’s total return potential relative to its universe of coverage.”
How did the stock react? ZoomInfo opened the regular session at $12.12 and closed at $12.14, down about 25% from the previous day’s regular close of $16.02.
Cheesecake factory
What happened? On Thursday, Raymond upgraded James Cheesecake Factory (NASDAQ:) to Outperform with a $42 price target.
What’s the full story? Raymond James says CAKE’s first quarter results show promising signs of competitive resilience and significant outperformance in a weakening industry environment. Of particular note is the Cheesecake segment, which exceeded its 2019 margin levels for the second quarter in a row, easing previous concerns about margin pressure. This performance indicates a robust competitive position within a challenging market.
The brokerage notes that while retail margins at the company’s growth brands continue to fall short of unit economic targets, there is potential for margin improvement in 2024. This optimism is based on the expectation that prices will be in line with inflation rates, which could prompt investors to trade again. -evaluate the company’s long-term prospects for revenue growth, estimated at 7-8% per year. Such an adjustment could lead to a revaluation of the company’s value, especially given the current low price-to-earnings ratio of around eleven times.
Furthermore, Raymond James highlights that the company’s shares are undervalued, with a price-to-earnings ratio of around 11x, indicating room for growth. In addition, the high short interest of the stock, which is approximately 15% of the float, is also noted. The company’s updated guidance includes an element of caution due to the uncertain state of the industry. However, this conservative outlook could provide an opportunity for stock appreciation if industry trends remain stable or improve. Raymond James maintains a positive view on the stock and anticipates potential gains from current valuation levels
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Outperforming at Raymond James means: “The stock is expected to increase in value or outperform the S&P 500 over the next twelve to eighteen months. For higher-yielding and more conservative stocks, such as REITs and certain MLPs, an Outperform rating used for securities where Raymond James is comfortable with the relative safety of the dividend and expects a total return to modestly exceed the dividend yield over the next 12-18. months.”
How did the stock react? Cheesecake Factory opened the regular session at $36.47 and closed at $36.06, a gain of 6.15% from the previous day’s regular close.
Bumble
What happened? On Friday, BofA Securities upgraded Bumble (NASDAQ:) to Buy with a $14 price target
What’s the full story? BofA upgrades Bumble to Buy as the banking firm now feels more confident that Bumble can meet or exceed Street expectations, which they believe will fuel multiple expansions. BMBL exceeded first quarter revenue expectations for the first time in two quarters (EBITDA has outperformed, above 4 of the last 5 quarters) and consensus revenue estimates for FY24 are 80 basis points below the midpoint of expectations (range is +8- 11% YoY).
The banking house also sees an extensive share buyback program as supporting the valuation. At 6.4x 2025E EV/EBITDA, Bumble’s valuation currently represents a significant discount to expected growth (9.6/15.8% 3yr rev/EBTIDA CAGRs), rival Match (8.4x) and consumer subscriptions (16.4x ).
BofA raises estimates slightly and their PO remains $14 at 7x 2025 EV/EBITDA. This upgrade reflects BofA’s increased confidence in Bumble’s ability to meet or exceed market expectations and their belief in the company’s growth potential.
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Buying at BofA means: “Buy stocks are expected to have a total return of at least 10% and are the most attractive stocks in the coverage cluster”
How did the stock react? Bumble opened the regular session at $11.65 and closed at $11.45, a 0.26% gain from the previous day’s regular close.
