Investing.com — Here is your Pro Recap of the biggest analyst cuts you may have missed since yesterday: downgrades at American Express, GoPro, Hertz Global, and ZoomInfo Technologies.
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American Express cut at Morgan Stanley
American Express (NYSE:AXP) shares fell more than 1% pre-market today after Morgan Stanley downgraded the company to Equalweight from Overweight with a price target of $22.00 (from $212.00), as reported in real-time on InvestingPro.
The bank stated that the positive developments have already been factored into the stock's price. American Express shares have seen an 11% increase since their earnings announcement, driven by management's optimistic guidance for 2024 revenue growth—which surpassed the slowdown anticipated by investors—improved EPS guidance, and a 17% increase in the dividend, reflecting confidence in capital deployment despite new pending regulatory capital rules.
But now comes the harder part, with AXP needing to show it can indeed reaccelerate growth in its single-largest business line, discount revenues (55% of 2023 revenues). Discount revenues have slowed though all of 2023, exiting the year at just +5% y/y. The upper end of management's 9-11% revenue growth could be aspirational; we leave our revenue growth forecast towards lower end, at 9.5%.
GoPro downgraded to Neutral Following a Q4 miss
Wedbush downgraded GoPro (NASDAQ:GPRO) to Neutral from Outperform with a price target of $2.00 (from $4.00), following the company’s Q4 results, with revenue missing consensus estimates. As a result, shares dropped more than 12% pre-market today.
Wedbush explained the downgrade by pointing out that GoPro's previous sales growth targets seem unattainable for 2024 and potentially beyond, with limited opportunities for margin expansion. GoPro made strategic adjustments in response to macroeconomic challenges throughout 2023, including expanding its retail footprint, lowering prices, introducing more entry-level products, and ending bundled camera/subscription discounts in its DTC channel. Despite these efforts, unit sales from May to the end of the year only increased by 3%.
Given soft Q4 sales both domestically and in APAC, coupled with lower-than-expected Q1 guidance and 2024 subscription guidance, we no longer have confidence that GoPro can reach its prior growth targets.
Two more downgrades
Morgan Stanley downgraded Hertz Global (NASDAQ:HTZ) to Equalweight from Overweight with a price target of $10.00 (from $15.00) following the company’s reported worse-than-expected Q4 EPS. Shares are currently down more than 2% pre-market.
Following 4Q results, follow-up calls with management, channel checks, and further (negative) EV data points, we believe the risks to HTZ's business outlook is more in balance with the potential reward.
ZoomInfo Technologies (NASDAQ:ZI) shares fell nearly 4% pre-market today after Citi downgraded the company to Sell from Neutral with a price target of $13.00 (from $20.00).
The analyst's commentary highlighted concerns over the company's performance, noting that leading indicators such as web traffic and competitive inputs continue to show weakness. This trend diminishes confidence in ZoomInfo's ability to significantly boost growth in 2024, especially with growing challenges in the sales enablement category and a pick-up in tech sector layoffs.
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