Friday's analyst calls: Netflix earnings reaction, chipmaker to pop 20%

Published Fri, Jul 19 20245:47 AM EDTUpdated Fri, Jul 19 20248:08 AM EDT

(This is CNBC Pro's live coverage of Friday's analyst calls and Wall Street chatter. Please refresh every 20-30 minutes to view the latest posts.) Netflix and a semiconductor maker were among the stocks being talked about by analysts on Friday. Analysts around the Street gave their assessment of Netflix's second-quarter results. Meanwhile, Morgan Stanley raised its rating on Arm Holdings to overweight from equal weight. Check out the latest calls and chatter below. All times ET. 7:50 a.m.: Citi raises T-Mobile price target ahead of earnings Citi reiterated its buy rating for T-Mobile ahead of the telecommunications giant's next quarterly earnings announcement, due out after the closing bell on August 7. Analyst Michael Rollins also lifted his target price for the stock to $210 from $184. T-Mobile stock has risen nearly 14% this year. Rollins' updated forecast implies that there could be room for another potential 15% upside. "We still see a stabilizing wireless competitive environment, with solid postpaid phone growth and positive pricing actions," Rollins wrote. The analyst added he expected T-Mobile to report "solid" second-quarter results and expects wireless service revenue growth at 3.8% year-over-year, higher than the consensus prediction of 3.6%. This forecast would take the Mint Mobile acquisition into consideration. Meanwhile, Rollins forecasted that postpaid phone net adds would total around 665,000, higher than the consensus estimate of 645,000. "We estimate 500k other postpaid adds that is in line with management commentary with respect to some post-pandemic educational sector disconnects, albeit surprisingly below the consensus of 573k," he added. — Lisa Kailai Han 7:45 a.m.: Continued momentum for Carvana, says JPMorgan JPMorgan forecasts Carvana reporting another beat and raise in its upcoming second quarter earnings release. The firm inched up its price target on shares by $5 to $155 on Friday. The new price target suggests shares rallying around 20% from Thursday's close. Analyst Rajat Gupta believes there's more upside risk for the used car retailer from better gross margins. Even with the stock's 131% rally over the last 12 months, Gupta said share gains can continue as its margins grow versus its peers and the wider industry. "While CVNA has demonstrated a sharp turnaround in operations over the last 12-18 months, we believe the next phase of 'profitable growth' requires maintaining the recent high level of execution intensity," Gupta wrote in a Friday note. "That said, as we noted post 1Q results, the starting point on unit economics continues to move higher and with demonstrated operating leverage over this period and EBITDA/unit tracking at ~$2.7K/unit, we believe CVNA has given themselves wiggle room to add some slack to drive accelerated growth and demonstrate leverage on fixed costs," the analyst added. Carvana's investments in infrastructure and network are creating a competitive advantage that will allow it to sustain its margins against its competitors, per Gupta. — Hakyung Kim 7 a.m.: Oppenheimer raises price target on Meta Meta shares are now "de-risked for print" in spite of high investor expectations for the second half of 2024, according to Oppenheimer. The firm raised its price target on Meta shares to $525 from $500, suggesting shares could rise 10.3% from where they closed on Thursday. Analyst Jason Helfstein highlighted Meta's underperformance since the U.S. presidential debate held on June 27. Since then, the stock has lagged the Nasdaq by 850 basis points on tariff concerns for Chinese advertisers, TikTok's operations in the U.S. and Donald Trump and JD Vance's stances on regulating big tech companies. "As a result, we are less concerned with high 2H investor expectations, supported by a robust digital ad market," Helfstein wrote in a client note on Thursday. Year to date, Meta shares are up more than 37%. META YTD mountain META year to date — Hakyung Kim 6:24 a.m.: UBS believes this footwear company could surge more than 50% Footwear manufacturer Wolverine World Wide is "re-activating growth," according to UBS. The investment grade upgraded the stock to buy from neutral. Analyst Mauricio Serna also raised his price target to $20 from $13, indicating 57.6% upside potential from where shares closed on Thursday. Serna cited growing confidence that Wolverine's sales growth rate will accelerate as it streamlines its portfolio. The portfolio changes have freed up resources and "supported inventory reduction and debt repayment," per Serna. "We believe WWW has a healthier foundation and leaner business, which should result in 1) higher gross margin due to less promotions, cost savings, and inventory management; and 2) SG & A leverage given ongoing efficiencies which should be partially reinvested to drive long-term growth," Serna wrote in a Thursday note. — Hakyung Kim 6:07 a.m.: Barclays downgrades Molson Coors to underweight A lack of compelling opportunities within the beverages and broader consumer staples sector has Barclays becoming bearish on Molson Coors . The investment bank downgraded the beer company to underweight from equal weight. Barclays also lowered its price target to $47 from $55, indicating 11.4% downside from Thursday's close. Year to date, shares are down by around 14%. However, a challenging industry backdrop and macro headwinds are likely to put more pressure on shares, according to Barclays. "On one hand, our sense is that the underperformance in TAP's stock over the last few months was enough to prompt some investors to ask 'how low is too low?.' But on the other hand, we struggle to wrap our heads around this stock working so long as the market doesn't view the company's medium-term outlook as credible," analyst Lauren Lieberman wrote in a note. BUD YTD mountain BUD year to date — Hakyung Kim 5:47 a.m.: Wall Street remains confident on Netflix Netflix's strong second quarter results and full-year outlook increase has analysts staying bullish in the streaming giant's growth outlook. The company reported an earnings and revenue beat in the second quarter. Global subscriber count and ad-supported memberships also rose more than analysts had forecasted. Morgan Stanley reiterated its overweight rating on the stock. Analyst Benjamin Swinburne has a $780 price target on shares, indicating shares could rise 20% from Thursday's close. "The stronger than expected 2Q results reinforce our confidence in Netflix's ability to deliver on our forecast for double-digit revenue," Swinburne wrote in a Friday note. JPMorgan's Doug Anmuth also reiterated his overweight rating and $750 price target on shares. He highlighted Netflix's shift to focusing on advertising monetization over membership numbers, which the company will stop providing quarterly updates on beginning in 2025. To be sure, Anmuth said there would likely be some pushback from the slightly below-consensus third quarter revenue guidance. "Still, NFLX's 3Q revenue outlook translates to +19% ex-FX, which we also project for the full year 2024. We continue to believe NFLX can drive solid subs through healthy organic/secular growth & ongoing Paid Sharing benefits while building advertising scale, with our estimates for advertising (ex-subscriptions component) reaching more than 10% of total revenue in 2027," Anmuth said in a client note on Friday. Wells Fargo, which is also overweight on Netflix, said the company "is still a clean story, consistent grower and share gainer." Looking ahead, analyst Steven Cahall believes Netflix's focus on revenue growth and margin expansion will help share gains continue. "We think simplicity+consistency makes NFLX an easier stock for long-term investors," he said in a note. Cahall raised his price target to $758 from $726, suggesting nearly 18% upside potential from the stock's close price on Thursday. — Hakyung Kim 5:47 a.m.: Morgan Stanley upgrades Arm Holdings Morgan Stanley expects Arm Holdings to build on its strong year-to-date performance. Analyst Lee Simpson upgraded the chipmaker to overweight from equal weight. His new price target of $190, up from $107, implies upside of 20% from Thursday's close. "We view Arm as a bunch of options on the emerging Edge AI space with potential for upside through custom silicon, new designs and extensions," Simpson wrote. "GenAI has surged into focus and semis has been seen as an enabler of cloud AI infrastructure needed to support AI data centres/servers. In the midst of this concentration on large scale AI, we believe the market could be missing the emerging Arm opportunity at the edge," he added. "We think of Arm products as fundamental to the successful emergence of edge AI - mobile, autos, PCs and more." Arm Holdings is up more than 100% year to date. Shares also gained more than 2% in the premarket following the upgrade. ARM YTD mountain ARM year to date — Fred Imbert