Here is your Pro Recap of the top takeaways from Wall Street analysts for the past week: upgrades at Yelp, Carnival, Cisco, and Harley-Davidson, and a downgrade for Carvana.
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Yelp Inc.
What happened? On Monday, Goldman Sachs upgraded Yelp (NYSE:YELP) to Buy with a $47 price target
What’s the full story? Yelp received a Buy rating at Goldman and a higher price target of $47, as the analyst argues the online review platform offers more upside potential at current levels.
Goldman believes Yelp can maintain high revenue growth in the next few years, thanks to a favorable local advertising market, improved ad technology, and new revenue streams. The analyst also believes Yelp can expand its margins by increasing its ad prices and controlling its costs.
Moreover, YELP can boost its earnings by buying back more shares. Despite the stock's strong performance this year, it is still undervalued compared with its peers.
A Buy at Goldman is described as follows:
Analysts recommend stocks as Buys... for inclusion on various regional Investment Lists. Being assigned a Buy... on an Investment List is determined by a stock's total return potential relative to its coverage universe.
How did the stock react? Yelp shares spiked on the upgrade from a low $38 handle in premarket trading, opening the regular session at $40 and ending the day at $42.02 - up just over 10% from the prior close.
Carnival Corp.
What happened? On Tuesday, Argus upgraded Carnival Corp (NYSE:CCL) to Buy with a $21 price target.
What’s the full story? Carnival Corporation (CCL) has been upgraded to Buy from Hold at Argus based on its increased marketing spending, improved liquidity, and efforts to reduce debt. Carnival is also making its fleet more efficient by disposing of older ships and replacing them with higher-yielding ones, according to the analyst.
The earnings-per-share estimates for fiscal years 2023 and 2024 have also been raised to $0.08 and $1.02, respectively. The target price of $21 implies a potential return of 17% from current levels.
A Buy at Argus is described as follows:
A BUY-rated stock is expected to outperform the S&P 500 on a risk-adjusted basis over a 12-month period. To make this determination, Argus Analysts set target prices, use beta as the measure of risk, and compare expected risk-adjusted stock returns to the S&P 500 forecasts set by the Argus Market Strategist.
How did the stock react? The equity spiked on our InvestingPro headline, gaining roughly $0.10 to $17.95 in the premarket. Carnival shares opened at $17.89 in the regular session to close at $18.25, gaining about 3%.
Cisco
What happened? On Wednesday, JPMorgan upgraded Cisco (NASDAQ:CSCO) to Overweight with a $62 price target.
What’s the full story? JPMorgan’s upgrade is based on the expectation that Cisco’s order trends will not worsen further after several quarters of decline. The analyst also believes that Cisco’s backlog and deferred revenue will help it achieve modest growth despite the macroeconomic challenges.
Cisco’s shares are trading at a low 12.5x price-to-earnings ratio for the next 12 months (NTM P/E), which should make them attractive for investors.
How did the stock react? Shares traded some 2% higher premarket before opening at $52.21, and closed the regular session up 2.3% to $52.43.
Carvana
What happened? On Thursday, RBC (TSX:RY) Capital downgraded Carvana (NYSE:CVNA) to Underperform with a $30 price target.
What’s the full story? CVNA, an online car retailer, has reduced its liquidity risks by restructuring its debt and raising equity capital. However, analysts at RBC Capital have lowered the rating to Underperform, citing concerns over long-term margins, growth prospects, debt costs and dilution.
How did the stock react? Shares slid more than 16% on the day, falling from the prior close of $55.80 to end the session at $46.73.
Harley-Davidson
What happened? On Friday, DA Davidson upgraded Harley-Davidson Inc (NYSE:HOG) to Buy with a $47 price target.
What’s the full story? RBC Capital analysts say HOG, the renowned motorcycle maker, has seen better-than-expected U.S. retail sales in the second quarter of 2023, as well as positive dealer feedback on its new product introductions.
The analysts have upgraded their rating to Buy from Neutral, as well as raised their price target to $47 from $38, based on a sum-of-the-parts valuation. HOG is expected to beat low expectations on this week's earnings and outlook, due out Thursday.
Further, HOG has seen strong pre-order demand for its new Custom Vehicle Operation (CVO) product launch in the second quarter of 2023. The new CVO models, which feature a new 121ci engine and a high price tag, were initially criticized for resembling an Indian model. However, dealers reported that customers were impressed by the product and the new engine when viewing it in person, per the research note.
The pre-order demand for CVOs surpassed HOG's initial expectations, according to the analysts.
How did the stock react? Shares of Harley gained nearly 2% from Thursday's $36.60 close, ending Friday’s regular session at $37.29.
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