Investing.com – Here’s a quick look at the key takeaways from Wall Street analysts over the past week: Intel, Robinhood (NASDAQ:) and Boston Beer (NYSE:) upgrades; Downgrade of SunPower (NASDAQ:).
InvestingPro subscribers are always the first to know about ratings changes that affect the market.
MasterCard
What’s happened? On Monday, Piper Sandler initiated coverage of MasterCard as Overweight with a $531 price target.
What’s the whole story? Piper forecasts Mastercard (NYSE:) is on track for revenue growth of 11.0% this fiscal year, with even stronger performance expected in FY25, where growth of 12.7% is expected. This growth is primarily driven by the payment network sector, which is forecast to grow revenue by 9.5% this year and 13.5% in FY25, accounting for about 62% of Mastercard’s total revenue. However, value-added services and solutions are expected to grow 13.7% in FY24 and 11.5% in FY25, accounting for approximately 38% of total revenue.
The brokerage highlights the significant potential of consumer payments as a key growth catalyst for Mastercard. The company’s current transaction volume is a staggering $9 trillion annually and its total addressable market (TAM) exceeds $250 trillion across various revenue channels, including domestic and international transactions, processing and value-added services.
Moreover, Piper expects Mastercard to maintain its margin growth trajectory, forecasting 20 basis points (bps) expansion in FY24 and a notable 80 bps. in FY25 as the company continues to innovate and disrupt traditional cash transactions by expanding into new services and technology offerings.
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Overweight in Piper means “A stock is expected to outperform the median of the group of stocks covered by the analyst.”
How did the stock react? MasterCard opened the regular session at $456.44 and closed at $457.76, up 0.10% from the previous day’s regular close.
Boston Beer Company
What’s happened? On Tuesday, Jeffries upgraded shares of Boston Beer to Buy with a $360 price target.
What’s the whole story? Jeffries reports a positive outlook for flavored malt beverages (FMB) and ready-to-drink (RTD) products, expecting 4-5% growth expected to come from seltzers and domestic beers. Strong teas are becoming the dominant category in this space, with key brands receiving 43% of honorable mentions. The leader is Twisted Tea, which accounts for 19% of all mentions and now surpasses Truly in market size. This shift indicates a significant trend reversal for SAM (segment-addressable market).
The brokerage notes that while the malt seltzer industry is trending downward and Truly continues to lose market share, Boston Beer’s cider and beer portfolios are also in steady decline. However, Twisted Tea’s strong performance in the flavored malt beverage segment provides protection against this decline. Despite this, overall declines in seltzer, beer and cider volumes are contributing to a delay in the recovery of gross profit (GM) percentages.
“Buy at Jeffreys” means “Describes a security that we expect to produce a total return (price growth plus yield) of 15% or more over a 12-month period.”
How did the stock react? Boston Beer opened the regular session at $288.32 and closed at $284.78, up 0.34% from the previous day’s regular close.
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SunPower
What’s happened? On Wednesday, Wolfe Research downgraded shares of SunPower to underperform with a $2 price target.
What’s the whole story? I wholeheartedly agreed with this call since the company was involved in meme stock speculation that was predictably irrational. The stock traded as high as $5 on Tuesday. The company does not have the ability to issue an offering at such a high and insane price level. Additionally, Gordon Johnson of GLJ Research wrote an excellent review that I posted to Investing.com premium members when it went out at noon on Tuesday, link here. It was a simple and confident challenge at a great time, like catching the last good set while surfing.
Wolfe Research singled out SunPower as a prominent example of the recent meme phenomenon in the cleantech sector. Despite the lack of positive fundamental news, SPWR stock is up about 100% since the beginning of the week, driven by a significant short squeeze. This market move was driven by the company’s high short interest (around 95%), which caught the attention of retail investors, resulting in 65% of the outstanding shares being sold on Tuesday alone. Adding to the volatility, SPWR announced a delay in filing its 10Q 2024 report due to ongoing internal control issues and past financial misstatements.
The brokerage remains optimistic about the home solar market, supported by incentives such as the Inflation Relief Act and rising utility bills. Wolfe Research praises certain aspects of SPWR’s business strategy, which provides stronger financial performance and less exposure to interest rate fluctuations than its peers. However, the lack of a contracted revenue base or cash flow poses challenges, especially as home sales have slowed since 2023. Although SPWR has overcome the risks of bankruptcy due to violations of debt covenants, it may need additional capital in 2024. The CEO further increases the uncertainty surrounding the company’s strategic direction.
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Underperforming Wolfe means: “The stock is forecast to underperform industry analysts’ forecasts over the next 12 months.”
How did the stock react? SunPower opened the regular session at $3.44 and closed at $3.11, down 29.16% from the previous day’s regular close.
Intel
What’s happened? On Thursday, Wolfe Research upgraded Intel (NASDAQ:) to Peer Perform. The firm does not have a price target for Peer Perform shares.
What’s the whole story? Wolfe Research maintains a cautious stance on Intel despite the stock’s 38% year-to-date (YTD) decline, which trails the Semiconductor Index (SOX) by about 60% year-to-date and 40% since the brokerage opened in July. The recent foundry event and earnings reports supported Wolfe Research’s thesis, consistent with the current low market sentiment regarding INTC. The brokerage’s main concern is that server processor sales growth is not sufficient to cover the significant capital expenditures and depreciation associated with INTC’s ambitious 5N4Y manufacturing strategy. This view was supported by INTC’s own forecast that the manufacturing division would not break even until CY27, with profitability dependent on expansion of the foundry business by the end of the decade.
Challenges aside, Wolfe’s team expects some incremental improvement in INTC’s gross margins in CY25 as startup costs are projected to decline and the company begins to internalize more manufacturing processes. However, these improvements are expected to be modest. Now that these factors have been factored into investor expectations, Wolfe Research has taken a more neutral stance on Peer Perform.
Peer Performance in Wolfe means: “Over the next 12 months, security is projected to perform roughly in line with industry analyst forecasts.”
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How did the stock react? Intel opened the regular session at $31.61 and closed at $32.04, up 2.46% from the previous day’s regular close.
Robinhood Markets
What’s happened? On Friday, BofA twice upgraded Robinhood to Buy with a $24 price target.
What’s the whole story? BofA Securities views the current entry point as a reversal from 2021, when they started with “Underperform” after the IPO, given (1) increased retail activity and accelerating organic growth; (2) positive operating leverage following significant cost reductions; (3) attractive valuation after EBITDA/EPS expansion. Interactive Brokers (NASDAQ:) remains the leading Buy broker, and Virtu Financial (NASDAQ:) remains their behind-the-scenes way of interacting with the retail trade by paying for order flow.
The research team is making no changes to its recently revised earnings per share but moving to a pure EBITDA valuation method (15x vs. 7x+excess cash), raising its PO to $24 from $14. Following significant improvements in operating efficiency, organic growth and product offerings, they now employ an EBITDA multiple of 15x, which is near the lower end of the range in which IBKR/Charles Schwab trades (15-20x). BofA Securities’ 2025 adjusted EBITDA forecast is more than 40% above consensus.
Regulators could file a case against HOOD’s cryptocurrency practices in the second half of 2024. Robinhood has been conservative in its cryptocurrency offerings, so BofA Securities is less concerned about potential results.
Buying on BofA means: “The stock being purchased is expected to have a total return of at least 10% and is the most attractive stock in the coverage cluster.”
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How did the stock react? Robinhood opened the regular session at $18.94 and closed at $20.08, up 12.18% from the previous day’s regular close.