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Let's cut through the noise of the past week with a Pro Recap of the top analyst takeaways that may very well forecast the next major market trend: AMD's rating slash at BofA, plus big upgrades for GM, Kellogg, Penn Entertainment, and Procore Tech.
All of these analyst calls were shot over to InvestingPro subscribers in real time. Start your free 7-day trial to make sure you always know first, too.
What happened? On Wednesday, BofA Securities downgraded AMD (NASDAQ:AMD) to Neutral with a $95 price target.
What's the full story? BofA clubbed AMD with a downgrade alongside a reiteration of a Buy rating on competitor Nvidia (NASDAQ:NVDA). BofA is negative on AMD, citing three headwinds approaching over the near and medium term:
1) Aggressive pricing/promotion pressure from main rival Intel (NASDAQ:INTC); 2) Riskier ~50% HoH data center growth outlook in 2H against a restrained cloud capex environment (and our NVDA C2H of +20% HoH est.); 3) Improving, but still only modest position in AI accelerators
How did the stock react? After InvestingPro's real-time headline on the downgrade, shares declined from just before 6 a.m. ET in the premarket session and ultimately slid 9.2% to end the regular session at $81.62.
What happened? On Monday, Morgan Stanley upgraded General Motors (NYSE:GM) to Overweight with a $34 price target.
What's the full story? Morgan Stanley sees a favorable risk/reward, noting primarily that the equity has maintained support at “the well-tested $30 support level." In addition to that technical support level, Morgan Stanley also likes the company's recent strong earnings report coupled with increased guidance. It would seem Morgan Stanley is really going in on betting GM shares will outperform their own benchmark, which consists of the average total return for all the analyst’s industry coverage over the coming 12-18 months. The analyst wrote:
We place General Motors within the top 5 of our 29 automotive and auto related stocks under our coverage as we believe the company presents an attractive risk reward on both a relative and absolute basis.
How did the stock react? Monday morning premarket shares jumped $1 within the first 10 minutes of the InvestingPro headline, from around $33 to $34. General Motors opened the regular session at $34 and closed down at $33.48 before following the broader markets lower for the week.
What happened? On Tuesday, Roth/MKM upgraded Penn Entertainment (NASDAQ:PENN) to Buy with a $40 price target.
What's the full story? The West Coast-based research firm previewed Penn’s earnings ahead of its Thursday earnings report, commenting:
With PENN trading near 3yr lows and below levels from the Jan 2020 Barstool acquisition announcement, we believe very little value is priced in for Barstool/Score's media and iGaming assets.
Roth/MKM suspects Penn’s management may decide to locate strategic alternative options for the recently acquired Barstool/Score assets, a potential sale that Roth/MKM speculated “could value digital segments at $3.3bn (3.0x 2024E sales, 35x EBITDA)" - that is, 35x earnings before interest, taxes, depreciation and amortization.
For your information, Roth benchmarks their Buy outperformance as follows:
Buy: A rating, which at the time it is instituted and or reiterated, indicates an expectation of a total return of at least 10% over the next 12 months.
How did the stock react? PENN shares traded higher in the premarket session before 6 a.m. following the news out of InvestingPro, rising to $31.14 from Monday’s regular-session close of $30.53, a gain of nearly 2%.
PENN opened Tuesday's regular session at $31.47 and closed 3% off that level at $30.48. Roth essentially left clients bag-holding on this one as shares opened after earnings on Thursday (2 days after the call) at $28.35.
What happened? On Thursday, Goldman Sachs upgraded Procore Technologies (NYSE:PCOR) to Buy with a $75.00 target.
What's the full story? This was a nice premarket upgrade that hit just about 7 a.m. in New York. Goldman wrote:
We highlight the following key reasons for the upgrade: 1) Gaining conviction that Procore can deliver breakeven profitability in F24 (relative to prior GSe for 2H25), benefiting from sustained revenue outperformance and higher marketing efficiency, 2) Ability to deliver upside to revised F23 guidance for 26% revenue growth, underpinned by strong cRPO growth (+32% in 1Q), a robust new business environment (+601 net new logos vs. prior four Q avg. of 574), and module upsell/cross-sell plus ACV expansion within the installed base, and 3) Durability of top-line growth, which we believe Street estimates currently underappreciated given low digitization and penetration in the construction industry
How did the stock react? Shares were rising following the earnings release in the after-hours session. Just prior to 7am, after InvestingPro alert on Goldman’s upgrade, the equity was pushed from a $56 handle up to $58 even, gaining roughly 3.5% on the upgrade headline.
Shares opened the regular session Thursday at $58.84 and closed at $56.74.
What happened? On Friday, JPMorgan upgraded Kellogg (NYSE:K) to Neutral with a $72.00 price target.
What's the full story? There wasn't a whole lot that was particularly exciting on Friday as everyone appeared rather exhausted. JPMorgan upgraded Kellogg and listed a lengthy reason why, writing:
When we downgraded K stock to Underweight in February of 2022, we saw a number of downside catalysts ahead, including lower pension income, higher interest expense, and the potential for valuation metrics to shrink. We also found financial results to sometimes be inconsistent. Then a few months later, the company announced the spin-off of North America cereal (and at the time, Morningstar Farms), which added another element of perceived risk.
Since our downgrade, however, many of these risks have faded (especially on pensions and interest, for which the headwinds have been quantified), fundamentals have improved and become more consistent, and the valuation relative to the group has shrunk. In addition, investors seem to be mentally baking in plenty of dis-synergies already.
If sales and earnings continue to perform well, then the next couple of catalysts could be another beat-and-raise, followed by an investor day that, if Mr. Cahillane’s prognostication today proves accurate, will allow shareholders to breathe easier regarding the spin’s financial implications.
JPMorgan defines its Neutral rating as follows:
Neutral [Over the next six to twelve months, we expect this stock will perform in line with the average total return of the stocks in the analyst’s (or the analyst’s team’s) coverage universe.]
How did the stock react? Kellogg opened at $70.82 and sold off from the early session high in a $71 handle to close at $70.35, down a measly 0.04%.
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