Investing.com — Here is your Pro Recap of the biggest analyst cuts you may have missed since Friday: downgrades at Charter Communications, Take-Two Interactive , Tractor Supply, and GlobalFoundries.
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Charter Communications cut at two firms after Q4 miss
Charter Communications (NASDAQ:CHTR) was downgraded by two Wall Street firms following the company’s reported Q4 miss last week, which resulted in a share price drop of more than 16% on Friday.
Wells Fargo downgraded Charter Communications to Equal Weight from Overweight and cut its price target to $340.00 from $460.00.
Similarly, JPMorgan downgraded the company to Neutral from Overweight with a price target of $370.00 (from $445.00).
The bank explained the downgrade is motivated by several concerns: 1) deteriorating broadband subscriber trends, with projected losses extending through 2025; 2) decelerating EBITDA growth stemming from a mix of slowing unit growth, decreasing average revenue per user (ARPU), and escalating costs; 3) increased capital expenditures; and 4) uncertainties related to the ACP program.
We were surprised by the material slowdown in subscriber momentum in 4Q relative to peers - particularly the sharp drop in “core” (non-rural subsidized) markets. Management attributed the slowdown to increased FWA availability as well as heightened promotional activity from both FWA and fiber which weighed on gross additions. However, competition from FWA and fiber has been building for some time which makes it difficult to explain the relative underperformance in 4Q23.
Take-Two Interactive cut to Neutral
MoffettNathanson downgraded Take-Two Interactive Software (NASDAQ:TTWO) to Neutral from Buy, adjusting the price target slightly to $167.00 from $169.00, ahead of the upcoming Q3/24 earnings announcement on Feb 8.
Conflicted is a good way to describe how we feel about the stock here, but we’re moving to Neutral. Could GTA 6 end up blowing away already lofty expectations? Yes, it could. That’ll be hypothetical for at least a year, though. A delay wouldn’t be the end of the world. But it’s hardly an upside catalyst. And routine for Rockstar’s biggest and best products.
The stock's impressive performance over the past year makes shifting to Neutral seem like a potential missed opportunity. However, the analyst explained that this optimism is tempered by the broader challenges facing the gaming industry, such as job losses and increasing costs that impact overall revenue growth.
For Take-Two's valuation to further increase, unexpected successes from its portfolio or a groundbreaking GTA Online are necessary. Yet, the market's certainty on these outcomes is still far off. Despite the risk of exiting too early, the analysts noted that the absence of matching long-term fundamental estimate increases with the stock's expanded multiples suggests it might be a decent time to hit pause on the stock.
Tractor Supply downgraded to Outperform at Raymond James
Raymond James downgraded Tractor Supply (NASDAQ:TSCO) to Outperform from Strong Buy with a price target of $250.00 (from $230.00), as reported in real-time on InvestingPro.
The firm’s rationale for the downgrade follows Tractor Supply's Q4/23 earnings announcement last week, conference call, and their follow-up call.
While we continue to like the long-term growth prospects of Tractor Supply’s business model, TSCO has surpassed our previous price target of $230, and 2024 appears to be a more muted earnings year.
This decision to adopt a slightly more cautious stance involves "taking a few chips off the table" without altering the 2024/2025 EPS projections significantly. The new price target of $250 underlines continued confidence in Tractor Supply's business strategy and growth potential. Despite challenges like adverse weather, rising interest rates, and inflation, the analysts mentioned that Tractor Supply has demonstrated resilience by expanding its market share and maintaining strong demand for its 'C.U.E.' (consumable, usable, and edible) products.
GlobalFoundries falls on JPMorgan downgrade
GlobalFoundries (NASDAQ:GFS) shares fell more than 2% pre-market today after JPMorgan downgraded the company to Neutral from Overweight and cut its price target to $56.00 from $65.00.
The downgrade stems from the ongoing decline in specialty and mature node foundry manufacturing activities across a broad market range, which the analysts anticipate will trail behind the semiconductor industry's recovery trends by one to two quarters. According to the firm, this trend has not been fully accounted for in the current consensus expectations for 2024.
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