Investing.com -- Here is your Pro Recap of the top takeaways from Wall Street analysts for the past week: upgrades for Intel, HP, Take-Two Interactive, Generac, and Expedia.
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HP Inc.
What happened? On Monday, Citi upgraded HP Inc (NYSE:HPQ) to Buy with a $33 price target.
What’s the full story? Citi issued bullish research on HPQ Monday as the company sees continued improvements in the PC ecosystem, significant cost-takeout, and undemanding valuations for the PC maker. Citi’s analysts expect HPQ to benefit from inventory digestion, AI on PCs, margins and earnings recovery, along with higher free cash flow generation.
Citi raised their estimates and price target for HPQ from $10 to $33, based on 7 times EV/EBITDA and 9 times P/FCF. Further the investment bank notes that HPQ has underperformed peers, and Citi believes HPQ could trade at higher multiples as free cash flow generation improves in an improved PC environment.
Citi’s analysts also mention key risks to monitor, such as pricing pressures from Berkshire Hathaway (NYSE:BRKa) selling its position and margin degradation from macro pressures and rising component costs.
Buy at Citi means “Buy (1) ETR of 15% or more or 25% or more for High risk stocks.”
How did the stock react? Shares spiked from $27.60 to $28.10 in the premarket session as the upgrade circulated. Shares opened the regular session at $27.73 and closed at $27.78 making for a 0.60% gain.
Take-Two Interactive
What happened? On Tuesday, Deutsche Bank upgraded Take-Two Interactive Software Inc (NASDAQ:TTWO) to Buy with a $175 price target.
What’s the full story? Deutsche Bank is unapologetically positive on Take-Two as their analysts expect TTWO to benefit from a major product announcement and a strong development pipeline. Deutsche notes that Take-Two announced that Rockstar will release the first trailer for the next Grand Theft Auto title in early December, which the bank suspects will generate positive investor sentiment and serve as a catalyst for the stock. Deutsche’s analysts also anticipate initial announcements for other major releases from Take-Two’s pipeline, which includes 14 core immersive titles across 2025 and 2026 fiscal years.
The bank pointed out that Take-Two updated its multi-year guidance during its earnings report, and now expects slightly less than $8 billion in net bookings in FY25, versus over $8 billion previously. However, the analysts remain constructive on Take-Two’s ability to create and market top-tier content, and expects several additional titles to contribute meaningfully in the coming years, leading to sustainable growth beyond GTA 6.
Deutsche’s analysts lastly point out that the guidance update shows that the bulk of Take-Two’s pipeline remains on track versus six months ago, which is a positive sign that the development process is going well. The analysts raised their net bookings estimates for FY25 and FY26 to $7.9 billion and $8.4 billion, respectively, versus $5.5 billion in FY24.
Deutsche Bank believes Take-Two trades at an attractive valuation (at least as of Monday morning) and the company has multiple growth drivers ahead.
Buy at Deutsche Bank means “Based on a current 12-month view of TSR, we recommend that investors buy the stock.”
How did the stock react? Shares spiked instantly from $150 to $153 (a jump of 2.06%) and kept rising into the regular session open. Shares opened the regular session at $153.58 and closed at $153.40 making for a 2.21% gain.
Generac Holdings
What happened? On Wednesday, BofA upgraded Generac Holdings Inc (NYSE:GNRC) to Neutral with a $10 price target.
What’s the full story? BofA sees an easing backdrop and better execution for the generator maker. BofA’s analysts note that Generac has a leading market share in the US residential home standby generator business, and that it is working through inventory headwinds and relaunching its clean energy strategy.
BofA’s analysts also acknowledge that Generac’s exposure to consumer discretionary and cyclical patterns is underappreciated and that visibility into growth/recovery has dimmed. However, BofA wrote that Generac’s Q3 2023 results beat the bank’s expectations, led by better-than-expected performance in residential and commercial and industrial segments, where the meat of the change to their estimates was driven by improving home standby sales.
The analysts also cites management comments that suggest quarter-over-quarter and year-over-year growth in home standby revenues in 4Q23 coupled with the latest commercial and industrial results, make FY23 guidance more attainable.
Neutral at BofA means “Neutral stocks are expected to remain flat or
increase in value and are less attractive than Buy rated stocks.”
How did the stock react? Shares spiked higher as the upgrade circulated and shares gained $5 in the premarket session, rising from $109 handle to $114 handle (a gain of over 4%). GNRC opened the regular session at $113.41 and closed at $110.78 making for a 1.06% gain.
Intel
What happened? On Thursday, Mizuho upgraded Intel Corporation (NASDAQ:INTC) to Buy with a $50 price target.
What’s the full story? Answering the question "why now?", the analyst states that Intel is lining up significant new server product launches and Foundry customer announcements in the next six months
They cited five key reasons behind the upgrade:
- Mizuho analysts believe that Intel has a better product roadmap for Compute and Data Center (DC) in 2024 compared to its peers and historical rollouts.
- The analysts anticipate a positive upcycle in the PC and Data Center industry in 2024, contributing to Intel's potential growth.
- The spinoff of Altera FPGA is seen as adding significant value, estimated at $17 per share.
- The analysts highlight 2025 as a key transition year, particularly with the IFS/18A.
- The analysts suggest that the implied SOTP value for Intel in 2024-25E is around $84 per share.
The analysts further noted that INTC trades at ~3x P/S, a discount to AMD (NASDAQ:AMD) and NVDA at ~7.1x/~15x.
How did the stock react? Shares opened the regular session up 1% but closed up 6.75%. They added another 1% on Friday.
Expedia Group
What happened? On Friday, Evercore upgraded Expedia Inc (NASDAQ:EXPE) to Outperform with a $200 price target
What’s the full story? Evercore sees a fundamental inflection point and attractive valuation Expedia. Evercore’s analysts base their upgrade on an extensive series of industry checks and their own proprietary analysis, and they identify several key factors that support their bullish view on EXPE.
Evercore’s analysts expect EXPE to accelerate its revenue growth and expand its EBITDA margin in 2024, and they think that this is not reflected in the current Street estimates. They also point out that EXPE’s revenue growth acceleration is driven by a series of sustainable company initiatives and key developments, such as the recently completed tech re-platforming of its key brands, the roll-out of its OneKey brand loyalty program, and easing comps.
The analysts believe that these initiatives and developments will allow EXPE’s key growth KPIs (Bookings, Revenue, Room Nights) to roughly approximate those of ABNB and BKNG in the near-to-medium term, after materially underperforming them for years. Evercore also anticipates global leisure travel demand will remain reasonably robust into 2024, excluding the near-term shock associated with October 7th (Hamas attacked Israel).
Lastly, Evercore highlighted that EXPE’s valuation is both intrinsically and relatively highly attractive following a 30%+ rally after the Q3 earnings report in mid-October. Evercore’s price target is based on 12 times 2024 EV/EBITDA.
Outperform at Evercore means “the total forecasted return is expected to be greater than the expected total return of the analyst's coverage sector.”
How did the stock react? Shares spiked about 3% off the headline in the premarket rising from $129 to $134 before 6am in New York. Shares opened the regular session at $133.87 and closed at $136.38 making for a 5.05% gain.
