Investing.com — Here’s your professional summary of the key takeaways from Wall Street analysts from the past week.
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Robinhood
What happened? On Monday, Piper Sandler upgraded Robinhood (NASDAQ:) to Overweight with a $23 price target.
*TLDR: The recent share price decline provides an entry point. Tailwinds for business on the horizon.
What’s the full story? Piper believes the recent downturn provides an attractive entry point into an innovative and fast-growing brokerage platform. In the near term, Piper expects negative net interest income (NII) resulting from future rate cuts to be largely offset by increased trading activity and margin lending growth. In addition, Piper expects HOOD to benefit from the launch of a new web-based trading platform and the rollout of index options and futures trading later this year.
Looking further ahead, Piper expects HOOD to benefit from several key factors: continued growth in global retail and derivatives trading, the generative wealth transfer from baby boomers to their children, a strong position in the cryptocurrency market, and international expansion, where HOOD continues to operate. in the early stages. These factors are expected to drive long-term growth and strengthen HOOD’s position in the market.
Overweight at Piper means “Expected to outperform the median of the group of stocks covered by the analyst.”
Hormel food
What happened? On Tuesday, Citi upgraded Hormel Foods (NYSE:) to Buy with a $37 price target.
*TLDR: Improving retail sales trends and a favorable input cost environment should boost earnings per share. Stocks trade at a discount to history.
What’s the full story? Citi analysts see slight upside potential for Hormel Foods’ Q3 24-24 earnings per share, with further upside potential for fiscal 25-26. Despite the headwinds from Planters downtime, the underlying trends appear to be in retail sales, and the input cost environment appears favorable with falling feed costs. Moreover, a decline in production in the turkey sector could soon push up prices. Sentiment toward the stock appears to be negative, as Citi’s Buy rating is alone among sell-side peers, and consensus estimates already assume that HRL’s targeted $250 million operating profit improvement in FY26 will not be successful are.
The shares trade at a premium to most food stocks, but at a larger discount to their historical price-to-earnings ratios and EV/EBITDA multiples compared to food peers. Citi analysts believe this presents an opportunity for investors, given the potential for better earnings and favorable market conditions.
Buying from Citi means “Buy (1) ETR of 15% or more or 25% or more for high-risk stocks.”
Chipotle Mexican Grill
What happened? On Wednesday, Wedbush upgraded Chipotle Mexican Grill (NYSE:) to Outperform with a $58 price target.
*TLDR: Wedbush says CMG can maintain market share gains as challenging macroeconomic conditions continue. The valuation is attractive.
What’s the full story? Wedbush reports that Chipotle remains in capable hands despite the impending departure of Brian Niccol, chairman and CEO, who will join Starbucks (NASDAQ:) on September 9. Scott Boatwright, currently COO of Chipotle, will serve as interim CEO, while Jack Hartung, who recently announced his retirement as CFO, will continue indefinitely as President of Strategy, Finance and Supply Chain. The company credits both leaders, along with Niccol, for Chipotle’s turnaround and believes the company is well positioned for the future.
Wedbush points to the factors behind the outperformance of same-store sales growth in the second half of the year compared to revised expectations, citing management’s observation of choppy sales trends in July. Third quarter menu prices are expected to be in line with second quarter prices, with no further price promotions planned until 2024. The return of popular menu items like Brisket is expected to boost third quarter prices . In addition, margin expectations have been adjusted after the second quarter, with food and labor costs adjusted. The company maintains its third-quarter growth estimate of 6.0% and sees opportunities for margin expansion as avocado prices fall and increasing comp growth translates into higher margins.
Outperforming at Chipotle means: “Expect the stock’s total return to outperform the average total return of the analyst’s (or analyst team’s) coverage universe over the next six to twelve months.”
Robinhood
What happened? On Thursday, Deutsche Bank upgraded Robinhood (NASDAQ:) to Buy with a $24 price target.
*TLDR: Earnings per share revisions were positive. Management operates in a favorable environment to maintain profits.
What’s the full story? Deutsche Bank’s decision was prompted by modestly positive earnings revisions and the recent stock sell-off, with HOOD shares down nearly 25% from a recent peak in July and down 18% in the third quarter to date. Despite being the worst performing stock in Deutsche Bank’s coverage this quarter, Robinhood remains the best performing stock year to date, up 46%.
The bank sees Robinhood building momentum for long-term earnings power, supported by an improving business diversification profile, a wide range of promising growth initiatives, solid cost control and favorable leverage on strong secular retail trends. Deutsche Bank is also seeing a growing willingness to price new products and initiatives more appropriately, along with ample capacity for capital return through share buybacks or acquisitions. While Robinhood was seen as the most speculative stock within Deutsche Bank’s large-cap capital markets coverage, the bank is now seeing a more sustainable earnings profile developing and some of its substantial risks waning. However, they still believe that HOOD shares could be among the most volatile in terms of their coverage in the short to medium term.
Buying Deutsche Bank means: “Based on a current twelve-month view on TSR, we recommend investors buy the stock.”
Nike
What happened? On Friday, Williams Trading double upgraded Nike (NYSE:) to Buy with a $93 price target.
*TLDR: The rehiring of Tom Peddie as vice president of Marketplace Partners signals potential changes for Nike. Expect a rise in share price as more investors take notice of company improvements.
What’s the full story? Williams Trading does not foresee an imminent major change in direction for Nike’s business, but believes that the recent reappointment of Tom Peddie as vice president of Marketplace Partners signals that change is afoot. Nike’s wholesale partners have expressed satisfaction with Mr. Peddie’s return and are starting to see more focused attention on their accounts. Given Mr Peddie’s departure in 2020 after 30 years with the company, Williams Trading believes he would not return without confidence that further changes are underway.
The broker notes that Nike’s Q4 ’24 results and FY ’25 guidance, along with the perception that Nike is losing its luster, necessitate changes. The percentage of Nike shoes, especially running silhouettes, found in high-traffic areas has declined from previous years, and core customers are less willing to purchase goods at full price. Williams Trading does not believe that Investor Day, scheduled for November 19, 2024, will be affected by these changes. The broker expects that it will take 15 to 18 months from the day a change occurs until the actual evolution is realized, possibly in the spring of 2026. Despite the challenges, Williams Trading believes that Nike shares will increase in value in anticipation of significant business improvements, indicating a return to price. the Swoosh.
Buying from Williams Trading means: “The share’s total return (price appreciation plus dividend yield) is expected to exceed more than 15% over the next twelve months. “
