Investing.com — Here’s your professional summary of the key takeaways from Wall Street analysts from the past week.
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What happened? On Monday, Goldman Sachs launched new analyst coverage of Affirm Holdings Inc (NASDAQ:) at Buy with a $42 price target.
What’s the full story? Goldman views AFRM as a leader in offering contemporary consumer lending solutions, with a diverse range of products tailored for point-of-sale financing and everyday spending. The analysts are particularly impressed with the sophistication of AFRM’s underwriting processes compared to its fintech counterparts, as well as the company’s consistent delivery of well-managed credit results, even amid rapid growth that is outpacing its peers. This success is attributed to AFRM’s approach to receivables and transaction-level underwriting, which allows the company to individually assess and underwrite different types of consumer spend. These include everyday purchases (“Pay Now” via debit), cash flow management or short-term financing (such as Pay-in-4) and more extensive installment financing options (with terms of 6-12 months or longer), all facilitated by a single card-based product, the Affirm Debit+ card.
Unlike traditional card issuers who have historically provided a single revolving line of credit to meet these needs, the AFRM method significantly lowers costs for the consumer and reduces credit risk for the lender by providing large open-to-buy avoid balances. Goldman believes that AFRM’s precision underwriting gives the company a competitive advantage, allowing the company to delve deeper into the credit spectrum and penetrate the subprime/near-prime market segment – a challenging area for many established players to operate sustainably . The analysts expect that this underwriting accuracy will strengthen AFRM’s position in the market and facilitate its continued growth and success.
Buying from Goldman means: “Analysts recommend stocks as buys or sells for inclusion on various regional investment lists. Whether a stock can be bought or sold on an investment list is determined by the total return potential of a stock relative to its universe of coverage.”
How did the stock react? Affirm Holdings opened the regular session at $31.02 and closed at $33.70, a gain of 12.82% from the previous day’s regular close.
Penn Entertainment
What happened? On Tuesday, Raymond James downgraded PENN Entertainment Inc (NASDAQ:) to Market Perform and removed its $20 price target.
What’s the full story? The recommendation change follows a 21% increase in the company’s share price since May 20, which was influenced by pressure from activists and rumors of mergers and acquisitions. When reporting began, Raymond James initially stated that the stock’s potential was limited to around $20 per share. This ceiling was attributed to continued discounting related to the interactive segment and ‘punishment box’ status, which was expected to continue until a clearer route to profitability in the interactive space had been established or a significant strategic shift had taken place.
However, the path to profitability in the digital world for PENN remains ambiguous, and substantive changes in strategy, such as an outright sale of the company, do not appear imminent. Therefore, Raymond James advises investors to take advantage of the recent gains and look for more favorable risk-adjusted investment opportunities within the sector. The brokerage highlights Caesars (NASDAQ:) as its preferred pick, suggesting it offers a more attractive investment profile compared to PENN under current market conditions.
Raymond James’ assessment reflects a cautious stance on PENN’s short-term prospects, emphasizing the need for clarity in its digital strategy and profitability prospects.
Market Perform at Raymond James means: “The security is expected to perform generally in line with the S&P 500 over the next twelve months and may be used as a funding source for higher rated securities.”
How did the stock react? Penn Entertainment opened the regular session at $18.85 and closed at $18.26, a gain of 5.58% from the previous day’s regular close.
Tesla
What happened? On Wednesday (well Tuesday after business hours), Stifel initiated coverage on Tesla Inc (NASDAQ:) at Buy with a $265 price target.
What’s the full story? Stifel believes TSLA is very well positioned to deliver robust multi-year growth through 2025-27+. In the short term, the updated Model 3 and the upcoming Model Y refresh should boost sales, followed by the start of production of the next generation of vehicles (Model 2), which is likely to generate very strong demand. The Stifel analysts also believe that TSLA’s AI-based Full Self-Driving initiative has the potential to generate significant value through FSD sales, potential licensing deals and as a critical enabler for longer-term RoboTaxi initiatives.
Notable near-term risks include delivery levels following lackluster Q1-24 results, as well as near-term headwinds from EV adoption and the US election. Stifel initiates coverage with a purchase price and a target price of $265.
Buying from Stifel means: “We expect a total return of more than 10% over the next twelve months, with the total return equal to the percentage change in price plus dividend yield.”
How did the stock react? Tesla opened the regular session at $186.69 and closed at $196.37, a gain of 4.81% from the previous day’s regular close.
Qiagen
What happened? On Thursday, Wolfe Research upgraded Qiagen (NYSE:) to Outperform with a $50 price target.
What’s the full story? Wolfe Research has expressed increased confidence in QGEN’s prospects following the company’s compelling Corporate Management Day (CMD) presentation on June 17. The brokerage is optimistic about QGEN’s ability to outperform its peers in the coming year as management has presented a credible strategy to achieve organic growth of over 7% and operating margin of over 31% between 2024 and 2028 .
The current portfolio is particularly attractive due to its high percentage of recurring income, approximately 85%, in addition to several medium-term growth catalysts and strong market positions. Additionally, Wolfe Research expects QGEN’s latent TB segment to remain unchallenged by new competitors in the near term, and they rely on the company’s disciplined execution as evidenced by initiatives such as NeuMoDx.
Despite these positive indicators, QGEN stock is currently trading at a price-to-earnings ratio of less than 20x for the trailing twelve months, which is more than a 5x discount compared to peers. This valuation leads Wolfe Research to believe the stock is undervalued, providing an attractive investment opportunity with limited downside risk. In light of this assessment, the brokerage has decided to revise its estimates for 2025 and beyond, reflecting stronger belief in QGEN’s trajectory towards improved growth and profitability.
Wolfe Research’s analysis suggests that QGEN is well positioned for future success, and that the current share price provides a favorable entry point for investors.
Outperforming at Wolfe means: “The security is expected to outperform analysts’ sector coverage universe over the next twelve months.”
How did the stock react? Qiagen opened the regular session at $41.02 and closed at $41.10, a gain of 1.02% from the previous day’s regular close.
Alphabet
What happened? Rosenblatt downgraded Alphabet (NASDAQ:) to Neutral on Friday with a price target of $181.
What’s the full story? Rosenblatt downgraded Alphabet’s rating to Neutral, citing several areas of transition risk that warrant cautious observation. Key concerns include the potential impact of AI on search functionality, especially the introduction of AI summaries, which could temporarily disrupt search advertising revenue. Additionally, there are indications of emerging competition from Bing, which could potentially lead to a loss of search market share. Additionally, the shift in search advertising revenue to retail media networks, driven by Amazon (NASDAQ:) and others entering this space, is expected to accelerate, creating even more uncertainties.
Another key factor is Amazon’s aggressive push into video advertising, including the integration of ads on Prime Video and a robust upfront sales strategy, which could change the dynamics of ad sales, particularly impacting YouTube’s platform Alphabet. The research team also highlights the possibility of higher capital expenditure (capex) for AI, driven by competitive pressures within the industry.
In light of these transition risks, Rosenblatt suggests a cautious stance on Alphabet until clearer results emerge from these developments. Monitoring how Alphabet addresses these challenges will be critical as we reassess its investment prospects for the future.
Neutral at Rosenblatt means: “We believe this stock’s performance over the next twelve months will be in line with the average returns of other stocks in the sector.”
How did the stock react? Alphabet opened the regular session at $184.17 and closed at $182.15, down 1.76% from the previous day’s regular close.
