Street calls of the week
Investing.com — Here is your Pro Recap of the top takeaways from Wall Street analysts for the past week.
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Instacart
What happened? On Monday, Needham upgraded Instacart ( Maplebear Inc.) (NASDAQ:CART) to Buy, Adding to the Conviction List with a $56 price target.
*TLDR: Needham is optimistic about CART’s strong 2024 earnings and customer experience. They forecast substantial GTV growth and a compelling risk-reward profile.
What’s the full story? The analysts at Needham believe that CART’s stronger-than-expected 2024 earnings suggest fears over competition and total addressable market (TAM) pull-forward are likely exaggerated. They attribute this to CART’s superior customer experience in the grocery sector, which continues to improve. Needham’s cohort analysis indicates that COVID cohorts are stable, and the addition of large post-COVID cohorts is driving consolidated gross transaction volume (GTV) growth.
Based on this, Needham’s bullish outlook suggests CART can achieve low-teen GTV growth over the next two years, leading to a 30% adjusted EBITDA compound annual growth rate (CAGR). They find the risk-reward profile of CART shares compelling, with an $80 bull case and a floor supported by potential mergers and acquisitions (M&A) opportunities.
Advanced Micro Devices
What happened? On Tuesday, Loop Capital initiated coverage on Advanced Micro Devices Inc (NASDAQ:AMD) at Buy with a $175 price target.
*TLDR: AMD shares underperform, trade below SOX. Loop Capital analysts emphasize accelerated computing success.
What’s the full story? Loop highlights that AMD shares underperformed the SOX index in 2024, dropping by approximately 18% compared to the SOX’s 19% rise. AMD shares currently trade at 24.0x NTM non-GAAP EPS, significantly below the SOX at 29.0x. The analysts note that AMD’s stock has aligned more with peers exposed to mature end markets such as PCs, smartphones, and industrial sectors.
According to Loop, AMD shares should better reflect their success in accelerated computing, including GPU-based data center compute and XPUs, as well as unique market share expansion opportunities in PC and general server markets. The analysts emphasize that these opportunities have gained prominence recently due to Intel (NASDAQ:INTC)’s ongoing challenges.
Shyft Group
What happened? On Wednesday, DA Davidson upgraded Shyft Group Inc (NASDAQ:SHYF) to Buy with a $15 price target.
*TLDR: Davidson upgrades SHYF after investor meetings. CEO Barend Fruithof highlights deal’s benefits.
What’s the full story? Davidson upgraded SHYF following meetings with the company’s incoming CEO and investors. The firm expresses confidence in the strategic and financial aspects of the Aebi Schmidt deal, which is further bolstered by the stock’s ~30% decline since last month’s downgrade, presenting an attractive entry point.
Discussions with incoming CEO Barend Fruithof highlight strong customer enthusiasm about the deal. Additional details on synergies and long-term outlook enhance the firm’s positive stance, shifting the risk-reward balance in favor of investors.
Advanced Micro Devices
What happened? On Thursday, Wolfe Research downgraded AMD to Peer Perform
*TLDR: Wolfe Research sees AMD datacenter GPU underperformance. CY25 forecast cut from $10bn to $7bn.
What’s the full story? Wolfe Research initially highlighted that AMD’s datacenter GPU business is underperforming, prompting a reduction in their CY25 forecast from over $10bn to $7bn. The brokerage doubts AMD will offer CY25 guidance during their 4Q call. Following a recent visit to Asia, Wolfe Research anticipates AMD will face challenges in upcoming earnings. Original Design Manufacturer (ODM) plans indicate only modest growth from 4Q24 figures, predicting datacenter GPU revenue between $1.5-2.0bn for 4Q and $7bn for CY25, below prior estimates.
For 1Q25, Wolfe Research models $1.75bn in datacenter GPU revenue, with flat growth anticipated for the rest of the year. They forecast slow PC seasonality after a robust 4Q (client down 17% q/q in 1Q), continued gaming weakness (-20% q/q), and no embedded recovery until 2H25. However, Wolfe Research expects the MI350 series to be a significant catalyst for AMD in 2H25, with optimism extending into CY26. The MI350 is projected to be a more substantial redesign than the MI325, primarily enhancing memory loading.
Cloudflare
What happened? On Friday, Citi upgraded Cloudflare Inc (NYSE:NET) to Buy with a $145 price target.
*TLDR: Citi bull view tied to expected growth.
What’s the full story? Citi rates Cloudflare at Buy citing NET’s substantial evolution over the past five years. The bank notes that NET’s expansion has gone beyond its core competencies of content caching, web performance, and infrastructure protection, now offering fast, reliable, and secure Internet connectivity through its proprietary Cloud spanning 100 countries and 250 cities. This growth is in its early stages, with Citi optimistic about NET’s role in AI development, particularly as AI-training transitions to AI-inferencing. The collaboration with Apple (NASDAQ:AAPL) and the strengthened executive team enhance NET’s prospects.
Citi believes that recent changes in NET’s go-to-market strategies have stabilized, setting the stage for significant growth. With increased sales productivity and anticipated revenue growth of 27-30%, Citi sees NET as having a clear path to reaching approximately $5 billion in revenues by CY2028.
The bank underscores the potential for profitable scaling with expanding free cash flow margin, supporting a strong financial outlook.
