All the market-moving Wall Street chatter from Wednesday
(This is CNBC Pro’s live coverage of Wednesday’s analyst calls and Wall Street chatter. Please refresh every 20-30 minutes to view the latest posts.) Two companies involved in leadership shake-ups were among the stocks being talked about by analysts on Wednesday. Several analysts raised their ratings and price targets on Starbucks a day after news that Chipotle CEO would take over at the coffee chain. Starbucks shares rallied on the news, while Chipotle shares fell. Despite the latter stock’s pullback, Bernstein sees it as a buying opportunity. Check out the latest calls and chatter below. All times ET. 7:32 a.m.: TD Cowen upgrades Illumina to buy Biotech company Illumina is about to begin a promising growth story, according to TD Cowen. Shares are down 14% in 2024, lagging the broader market. However, TD Cowen thinks some recent changes, including Illumina’s new management and guidance re-set, have improved the outlook on the stock. Analyst Dan Brennan upgraded shares to buy from hold. His new price target of $144, up from $126, indicates shares climbing 20% from Tuesday’s close. “We see ILMN as a combination of a self-help & product cycle story, where sentiment has been decidedly mixed (and the stock under-owned). Now, following the GRAIL spin the thesis is much simpler/cleaner with numerous attractive features,” Brennan wrote in a Wednesday note, referring to the company’s recent spin-off of its cancer test maker Grail. Cost cuts, combined with the new changes to Illumina’s management and outlook, will help Illumina’s earnings per share growth reach one of the best levels among large-cap names, according to Brennan.Shares added 1.4% Wednesday before the bell. —Hakyung Kim 7 a.m.: Citi raises price target on Palo Alto Networks In spite of some near-term questions for Palo Alto Networks , Citi remains constructive on the stock and raised its price target ahead of the company’s quarterly earnings announcement on Aug. 19. Analyst Fatima Boolani sees shares rising 15% from current levels to $385. That forecast is higher than a previous target of $345. She maintained her buy rating on the stock. “PANW’s compounding teens-level revs/FCF med-term growth (and 35%+ FCFM) against healthy secular factors + asset size/GARP-iness + asset profile scarcity value (within large cap cyber and broader software) should defend healthy terminal valuation,” Boolani said in a note on Wednesday. The stock has gained 13% in 2024. — Hakyung Kim 6:31 a.m.: Berenberg raises price target on Eli Lilly Eli Lilly’s blockbuster second-quarter results has Berenberg bullish on the stock. Berenberg reiterated its buy rating on shares and increased its price target by $50 to $1,050. The new price target suggests shares could gain nearly 19% from Tuesday’s close. The pharmaceutical giant hiked its full-year guidance while reporting quarterly earnings earlier in the month. Strong demand for its incretin drugs Mounjaro and Zepbound have powered the stock’s more than 50% surge in 2024. The company also noted supply constraints for the two drugs are easing. “Lilly remains our preferred U.S. pharma stock and obesity play,” analyst Kerry Holford wrote in a Tuesday note. He cited the company’s superior growth outlook, which he believes makes the stock worth buying even at it trades at a premium relative to its competitors. “Given Lilly’s superior [return on relationship investment], the market should be prepared to pay a bigger gap, in our view,” Holford said. — Hakyung Kim 5:59 a.m.: Morgan Stanley steps to the sidelines on Intuit Near-term risks are weighing on Intuit shares, according to Morgan Stanley. Analyst Keith Weiss downgraded the software stock to equal weight from overweight. He also lowered his price target on shares to $685 from $750, which implies just 6% upside from Monday’s close. Intuit has notched strong operating margin and earnings per share growth over the last four years and managed to outperform the median large-cap software stock by more than 50%, per Weiss. However, he thinks the company’s growth strategy shift toward pricing mechanisms have led to it losing ground across its portfolio. The company launched price increases on TurboTax. “Consistent solid growth has long sustained INTU’s multiple premium versus peers. Now along with the increased volatility from recently acquired CK and Mailchimp, we fear pushing too hard on price may be contributing to share losses at TurboTax and introduces risk at QuickBooks,” Weiss said in a research note on Wednesday. Intuit shares have lagged this year, rising just 3.3%. INTU YTD mountain INTU year to date — Hakyung Kim 5:52 a.m.: Bernstein lowers price target on Chipotle Chipotle CEO Brian Niccol’s sudden departure to Starbucks has created a buying opportunity into a stock that was already under pressure, Bernstein said Analyst Danilo Gargiulo lowered his price target on shares to $70 from $80. Still, his new price objective indicates 35% upside potential from Monday’s close. Chipotle shares pulled back of 7% comes as decelerating trends and a sector rotation already impacted Chipotle’s multiple. To be sure, he believes Chipotle’s growth story isn’t over as Niccol’s leaves. “We believe Niccol’s departure will create short-term volatility in the stock. … Yet Chipotle’s fundamentals are unchanged,” Gargiulo wrote in a Tuesday note. Since Niccol took the position of CEO in 2018, Chipotle shares surged more than 770%. CMG mountain 2018-03-01 CMG since 2018 “Net-net, while this news was a negative surprise for CMG investors, we do not think it materially alters the fundamental strength and LT course of the company, and this stock price reaction presents an attractive entry point for LT investors,” Gargiulo added. Year to date, shares are up around 15%. — Hakyung Kim 5:52 a.m.: Analysts upgrade Starbucks after CEO change Several analysts on the Street became more bullish on Starbucks a day after the coffee chain replaced CEO Laxman Narasimhan with Chipotle chief Brian Niccol. The company on Tuesday had its best day since its 1992 initial public offering, surging 24.5%. Take a look at what some analysts covering the stock are saying: Stifel upgrades stock to buy from hold; price target of $110 — up from $80 — implies upside of 14%: “We believe that Starbucks remains a healthy an relevant brand across most generational cohorts, but it lacks a coherent growth strategy an struggles with execution. Upon arrival, we assume Mr. Niccol’s top priority will be reversing the negative U.S. transaction trend.” Deutsche Bank upgrades stock to buy from hold; price target of $118 — up from $85 — implies upside of 23%: “This is a home run hire for SBUX – Mr. Niccol is a revered CEO with a proven track record of success in restaurants, most notably with the turnaround and outperformance at CMG. We believe Mr. Niccol’s strengths in operations, marketing and innovation … are particularly valuable as SBUX transitions its strategy to broaden its marketing appeal, improve operations, reinvigorate culture and enhance value messaging.” Evercore ISI raises rating to outperform from in line; price target of $120 — up from $80 — points to a 25% gain: “With the hiring of Brian Niccol as Chairman and CEO of Starbucks, the company has a good chance to deliver against old margin targets. … Importantly, we believe Brian’s hiring can mark the beginning of the company truly moving from Founder-led to Founder-inspired — and this will help the company strengthen its management bench while attracting top longterm investors that are currently underweight SBUX.” Baird analyst David Tarantino also upgraded Starbucks to outperform on Tuesday , noting: “We believe Niccol brings a skill set that will prove valuable in strengthening internal operating fundamentals for the company, and set the stage for healthier growth in the years ahead, and based on this outlook, we now expect sentiment on the shares to remain positive even if operating results are lackluster for the next few quarters stock struggles.” — Fred Imbert
