Investing.com – Here’s a quick look at the key takeaways from Wall Street analysts over the past week: Netflix downgraded, Crocs and Etsy; update for Lockheed Martin .
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Lockheed Martin
What’s happened? On Monday, JPMorgan upgraded shares of Lockheed Martin (NYSE:) to Overweight with a $518 price target.
What’s the whole story? JPMorgan noted that Lockheed Martin has not kept pace with the broader market, remaining flat year-to-date compared with the market’s 8% gain and 5% decline over the past year, while the market is up 26%. The bank points to a combination of macroeconomic factors, such as slowing defense budget growth and political unrest, as well as company-specific challenges, that have made the defense sector less attractive in a market fueled by artificial intelligence and other leading sectors.
Despite these headwinds, the defense industry recently received the budget it needed for FY24, easing some concerns, and JPMorgan expects additional funding to support defense initiatives in Ukraine, Israel, Taiwan and other countries. While political uncertainty is expected to persist, especially in an election year, heightened geopolitical risk underscores the importance of this sector. JPMorgan suggests that any change in market sentiment could benefit defense stocks, with LMT positioned as a key indicator that could potentially benefit in relative terms.
Overweight in JPMorgan means “(we expect this stock to outperform the average total stock return within the coverage of the research analyst or team of research analysts over the life of the target price stated in this report)”
How did the stock react? Lockheed shares traded higher in premarket trading from $451.47 to $457.44, up about 1.50%. Lockheed opened the regular session at $458.57 and closed at $453.08, up 0.60%.
Crocs
What’s happened? At 10:05 a.m. Tuesday morning, Williams Trading downgraded Crocs (NASDAQ:) to Hold with a $125 price target.
What’s the whole story? Williams Trading downgraded Crocs from Buy to Hold, lowered estimates and lowered its price target from $135 to $125. The decision follows recent audits that showed Crocs’ business was performing at or slightly better than planned. However, the firm’s checks also show that HEYDUDE sales, while improving, particularly among men’s products, are not robust enough to support year-on-year growth in 2024.
Additionally, Crocs announced that HEYDUDE President Rick Blackshaw will step down effective immediately. Terence Reilly, current president of Stanley 1913 and former senior vice president and chief marketing officer of Crocs, has been named the new executive vice president and president of HEYDUDE, effective April 29. While Mr Reilly has demonstrated success at Stanley and fits into the Crocs culture, Williams Trading believes HEYDUDE will take some time to gain traction. The firm believes it is difficult for Crocs shares to perform well until HEYDUDE sales demonstrate sustained growth.
Holding Williams Trading shares means that “the stock’s total return (price growth plus dividend yield) is expected to exceed 15% over the next 12-month investment horizon.”
How did the stock react? Crocs shares opened the next session at $122.62. The stock rose and fell at 10 am. Once the downgrade occurred, shares fell from $123.19 to $120.27. Crocs closed at $120.68, down 2.17%.
Outside
What’s happened? On Wednesday, Maxim initiated Buy coverage on Beyond (NYSE:) with a $50 price target.
What’s the whole story? Maxim’s optimistic outlook is driven by Beyond’s potential to leverage key trends identified in Maxim’s industry report, “Consumer Internet: 24 Trends for 2024,” which include international expansion, blockchain integration and mobile adoption.
The firm will closely monitor the interest rate situation, recognizing that lower rates could improve performance in the home e-commerce sector. Maxim’s support reflects confidence in Beyond’s strategic position to capitalize on evolving market dynamics and drive growth.
Buy on Maxim means: “There are fundamentals and/or identifiable catalysts that we expect the stock to outperform its index over the next 12 months.”
How did the stock react? Beyond shares traded higher in premarket trading from $25.53 to $24.43, up about 3.52%. Beyond opened the regular session at $24.31 and closed at $23.86, up 1.27%.
Etsy
What’s happened? On Thursday, Morgan Stanley downgraded Etsy (NASDAQ:) to underperform with a $55 price target.
What’s the whole story? Morgan Stanley acknowledges that Etsy has been a major beneficiary during the COVID era, supporting gross merchandise sales (GMS) growth of approximately 165% since 2019. However, the bank believes Etsy is approaching market saturation, making it difficult to add new customer groups.
Despite attracting 57 million new buyers and reactivating 51 million since 2021, Etsy’s core GMS was down 5% year-over-year, while total GMS from past buyers remained unchanged. This decline was due in part to a 7% year-over-year decline in GMS per customer, driven by a challenging macroeconomic environment for discretionary purchases. While Morgan Stanley models GMS acceleration amid easing macroeconomic policies, it expects GMS compound annual growth rate (CAGR) to reach only about 3% between 2023 and 2026 due to reduced opportunities for new business creation.
This results in the bank’s 2025/2026 GMS forecasts being below consensus. Given the expectation that much of GMS’ growth will come from customer growth fueled by marketing, the company sees an inherent trade-off between GMS growth and profitability. As a result, it’s hard to imagine Etsy delivering significant GMS growth and earnings growth at the same time unless it can sustainably increase frequency.
Underweight at Morgan Stanley means that “the stock’s total return is expected to be below the average risk-adjusted total return of the analyst’s (or industry team’s) coverage over the next period.”
12-18 months.”
How did the stock react? Etsy opened the regular session at $65.37 and closed at $67.15, down 0.27% from Wednesday.
Netflix
What’s happened? On Friday, Canaccord downgraded Netflix (NASDAQ:) to Hold.
What’s the whole story? Canaccord said Netflix’s revenue increased due to a significant increase in membership driven by an expansion of its paid exchange offering. Profitability also exceeded forecasts. Looking ahead, second-quarter revenue was in line with expectations and operating profit guidance beat consensus.
Netflix provided FY24 revenue guidance of 13% to 15% year over year, slightly below mid-consensus, and raised its FY24 operating margin guidance to 25% from 24%. Despite these generally strong results and outlook, Canaccord sees limited growth catalysts for the next few quarters. With shares up about 90% over the past 12 months and about 25% year-to-date, the brokerage suggests investors may be better off looking elsewhere for growth potential and is downgrading the stock to Hold.
A hold in Canaccord means: “The stock is expected to return -10% to 10% over the next 12 months.”
How did the stock react? Netflix opened the regular session at $567.90 and closed at $555.04, down 9% from Thursday.