Here is your Pro Recap of the top takeaways from Wall Street analysts for the past week: upgrades for Saia, JD.com, Amgen, and Confluent, and a downgrade for Lyft.
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Saia Inc.
What happened? On Monday, Wolfe upgraded Saia (NASDAQ:SAIA) to Outperform with a $418 price target.
What’s the full story? Wolfe has a positive view on SAIA, seeing it as one of the best stories to own in transports for the next several years. Wolfe analysts have lowered their 2024 and 2025 EPS estimates for SAIA, but they still think the stock is trading at a discount to its historical average forward price-to-earnings multiples.
The analysts expect SAIA to deliver strong organic volume growth, continued pricing gains, and solid margin and EPS growth despite near-term growing pains. Wolfe analysts also show that SAIA has the potential to achieve over $20 EPS by calendar year 2025 if it can reach a lower operating ratio.
Wolfe also highlighted that SAIA is still one of the smallest less-than-truckload shipping services (or LTLs, less-than-load), which handle smaller freight quantities of up to 15,000 pounds. The company, to wit, runs fewer terminals and has the lowest revenue per terminal among the non-union LTLs. Wolfe says that this gives SAIA the best multiyear growth story among the LTLs. The analysts also note that the stock has fallen more than 20% over the last two months, making its valuation more attractive.
Outperform at Wolfe means: “The security is projected to outperform analyst's industry coverage universe over the next 12 months.”
How did the stock react? Shares jumped on the headline from $343.81 to $357.28 in early premarket trading at 6:26AM in New York. Shares floated higher into the open, starting the regular session at $359.18. It closed at $357.25, gaining 3.8%.
Lyft
What happened? On Tuesday, MoffettNathanson downgraded Lyft (NASDAQ:LYFT) to Sell with a $7 price target.
What’s the full story? Moffett has a bearish view on Lyft, as it sees low profitability and high expectations for the ride-hailing company. Moffett’s analysts project Lyft to have a single-digit adjusted margin on earnings before interest, taxes, depreciation and amortization (EBITDA), and predict the company will fail to reach GAAP profitability or positive GAAP free cash flow in their modeling period.
Moffett’s analysts are significantly below the consensus on adjusted EBITDA for 2024 and 2025, and they think any long-term guidance provided by management will likely disappoint versus expectations. As a result, Moffett’s analysts downgrade Lyft from Neutral to Sell and lower their price target from $10 to $7 on lower estimates, implying a downside of around 25% for the stock.
Sell at MoffettNathanson means the following: “Sell recommendations typically offer 15% or more downside. Investment horizons are typically one year.”
How did the stock react? Shares dropped over 2% from $9.44 to $9.20 in under four minutes in the premarket. Lyft opened the regular session at $8.98 and closed at $9.17, making for a loss of 2.8%.
JD.com
What happened? On Wednesday, UBS upgraded JD.com (NASDAQ:JD) to Buy with a $39 price target.
What’s the full story? UBS’s analysts report that JD is in a year of transition with a new strategy based on three pillars:
1. cultivating a vibrant third-party ecosystem by expanding long-tail SKUs;
2. building low-price mindshare; and
3. streamlining its corporate structure to be more responsive to market change.
UBS’s analysts think that JD’s business recalibration is necessary in this dynamic and competitive market, but they also acknowledge that the process is unlikely to be smooth amid peaking internet user growth, a slowing economy and rising competition. UBS’s analysts note that JD’s margins continue to improve, but that its top-line growth is muted (at a low-single digit for the second half of 2023E, by their estimate) and that its business transition is uncertain.
The analysts say these factors have hurt the shares (which are down 55% year to date). They also expect JD to underperform its peers until there is more visibility on the business transition, but they also view its valuation as attractive at 8x 2024E P/E with net cash roughly equal to 50% of its market cap
Buy at UBS means: “Total return on stock expected to be 10%+ over the next 12 months. BUY.”
How did the stock react? Shares spiked off the premarket low of $25.20 at 6:08AM as the headlines spread. Shares closed at $25.33, down about 0.4%.
Amgen Inc.
What happened? On Thursday, Truist upgraded Amgen (NASDAQ:AMGN) to Buy with a $320 price target.
What’s the full story? Truist has upgraded AMGN to Buy from Hold, as the analysts see improved growth prospects for the biotech company. Truist’s analysts praise AMGN’s ability to grow mid-cycle assets, despite disappointing initial launches. They cite the record sales for mature brands, such as Repatha, Blincyto and Prolia, as evidence of AMGN’s commercial execution.
The analysts also point out the investment in dermatology and primary-care sales force and direct-to-consumer marketing as potential drivers of top-line growth. Truist’s analysts further anticipate positive data for GLP-1/obesity products as near-term catalysts that could lift the stock price.
The firm updated its model to include Tepezza and the other products from the recent acquisition of Horizon Therapeutics (NASDAQ:HZNP). They note that the acquisition and base business growth are starting to show top-line growth for AMGN.
Buy at Truist means: “The stock’s total return is expected to outperform the S&P 500 or relevant benchmark over the next 12-18 months (unless otherwise indicated)."
How did the stock react? Shares spiked off a $260 handle and pushed to a $263 handle. AMGN opened the regular session at $263.30 and closed at $266.59, making for a gain of 2.2%.
Confluent Inc.
What happened? On Friday, Wolfe upgraded Confluent (NASDAQ:CFLT) to Outperform with a $21 price target.
What’s the full story? Wolfe has upgraded CFLT to Outperform from Peer Perform, as it sees a disconnect between valuation and fundamentals for the cloud data company. The analysts note that CFLT’s shares are trading at a more-than-50% discount to when they initiated coverage in June, and they think the company has multiple growth drivers ahead, such as rising estimates, better execution, product catalysts, and potential M&A.
Wolfe’s analysts acknowledge that CFLT missed its cloud revenue guidance in fiscal Q3 and that it provided a lower-than-expected fiscal 2024 revenue outlook due to some customers reducing their cloud consumption and moving their workloads to their own data centers. The analysts attribute this slowdown to the macro cycle and the high priority of optimizing cloud-infrastructure spend, especially among digital natives.
Wolfe’s analysts do not see any fundamental issues with CFLT’s cloud offering, and they highlight the acceleration of CFLT’s self-managed platform offering and the transition to 100% of cloud-sales compensation based on incremental consumption and new logo acquisition. Wolfe’s analysts also expect CFLT to benefit from several tailwinds next year.
Outperform at Wolfe means: "The security is projected to outperform analyst's industry coverage universe over the next 12 months.”
How did the stock react? Shares struggled through the premarket, remaining relatively range-bound between $16.25 and $16.80 until minutes before the open when they rose to $17 and opened the regular session there. The stock closed at 17.75, gaining 9% on the day.
