Tuesday's analyst calls: Solar stock downgraded, video game maker to surge going forward

Published Tue, Apr 23 20245:43 AM EDTUpdated Tue, Apr 23 20248:42 AM EDT

(This is CNBC Pro's live coverage of Tuesday's analyst calls and Wall Street chatter. Please refresh every 20-30 minutes to view the latest posts.) A solar energy company and a video game maker were highlighted by analysts Tuesday. KeyBanc downgraded Sunnova to sector weight from overweight. Meanwhile, JPMorgan upgraded Roblox to overweight from neutral, and its new price target implies upside of more than 35%. Check out the latest calls and chatter below. All times ET. 8:39 a.m.: Wolfe Research sees a double-digit decline ahead for Warner Bros. Discovery stock, cuts to underperform from peer perform The outlook is souring for Warner Bros. Discovery on several fronts, according to Wolfe Research. Analyst Peter Supino cut his rating on the stock to underperform from peer perform. His $7 price target suggests shares could fall 17.4% from Monday's close. The stock is already down more than 2% in premarket trading Tuesday. Supino said there are numerous risks for the company ahead as cost savings from its merger are behind it and it faces talks with TV distributors and the NBA. He anticipates the need to invest in the business is rising, whether you consider its direct-to-consumer operations or what it will take to offset a "deteriorating" linear business. The NBA is a good example. "Turner over-earning on aged NBA deal," he wrote. "Streamer interest will make rights more expensive in '25/'26." He estimates the company makes about $600 million or more in profits on the basketball rights, but the renewal process willl be fiercely competitive. — Christina Cheddar Berk 8:32 a.m.: Wells Fargo names Roblox, Uber as compelling long-term names As the first quarter earnings season picks up, Wells Fargo named Roblox and Uber as "the best tactical long setups." Analyst Ken Gawrelski referred to Roblox and Uber as "two stocks that need an earnings print to refocus investors on solid fundamentals." With regards to Roblox, in-line bookings print and guidance will be enough to drive shares higher, per Gawrelski. Uber has limited revisions potential, but the stock's 16 times forward free cash flow makes it a "durable compounder too compelling to ignore," he added. — Hakyung Kim 8:27 a.m.: Honeywell looks cheap ahead of earnings, JPMorgan's Tusa says Industrial stock Honeywell is worth a buy even if investors are skeptical that a big acceleration in growth is coming, according to JPMorgan analyst Stephen Tusa. The analyst said in a note to clients that Honeywell should beat first-quarter earnings expectations, but hitting its full-year guidance seems like a stretch. Still, Tusa kept his overweight rating on Honeywell. "With limited growth exposure to datacenter/AI/semi trends supporting the sector, and the stock now positioned as more of a 'macro play' (versus historically a premium 'defensive growth play'), we accept that this portfolio may not warrant a premium to the group but given long cycle visibility, above average organic growth in '24, and favorable mix into '25, still think it's too cheap in the context of the market," the note said. Honeywell is scheduled to release its first-quarter earnings on Thursday morning. The stock is down 6.7% year to date. — Jesse Pound 8:10 a.m.: Wells Fargo raises Disney price target, remains optimistic on long-term direct-to-consumer profitability Bullish on fiscal year 2025 and 2026, Wells Fargo analyst Steven Cahall raised his price target on Disney by $13 to $141. That implies shares of the overweight-rated stock could advance 25.9% over the next 12 months. This year, shares are up about 24%. "With the proxy fight over, we think DIS mgmt will focus on execution, incl. DTC margins and transitioning Sports," Cahall wrote in a Monday note. "Parks are humming, while creative and succession are the big To Dos." According to Cahall, Disney+ paid sharing will benefit net subscriber additions in fiscal year 2025 and 2025, de-risking subscriber sentiment. Strong sports viewership indicates that "investors can underwrite Sports seeing domestic top-line growth and stable OI in the medium term, incl. an expected NBA rights step-up," he added. — Pia Singh 7:15 a.m.: Truist upgrades Penn Entertainment to buy, says expectations are too low Penn Entertainment is an overlooked play with several potential upside avenues, according to Truist Securities. Analyst Barry Jonas upgraded shares to buy from hold and kept his $23 price target, which implies roughly 35.8% upside. Shares have fallen nearly 35% this year, since the company announced a licensing deal with ESPN in August to create sportsbook ESPN BET. "We're upgrading PENN…largely on risk/reward, given we effectively see zero to negative value ascribed for ESPN Bet at current trading levels," Jonas wrote in a Tuesday note. "At this point, we think expectations are too low, and the market is not only too bearish on ESPN Bet but also assuming no value for PENN's other profitable Interactive businesses." The analyst slightly expects Penn's first-quarter earnings, which are expected before the bell on May 2, to surpass current expectations, especially its Digital business. "We think the market is missing is that PENN Interactive is comprised of multiple businesses beyond just ESPN Bet," Jonas added. "In the event ESPN Bet fails … then we think Interactive would still have value for PENN," given its valuable online licenses from its extensive land-based casino footprint, its strong iGaming business, and a small social gaming business, he said. — Pia Singh 6:34 a.m.: Oppenheimer names Church & Dwight a top pick ahead of earnings Church & Dwight has a solid earnings season ahead, making the outperforming stock a ripe investment, according to Oppenheimer. Rupesh Parikh kept his overweight rating on the consumer household products seller and maintained it as a top pick, raising his 12- to 18-month price target on the stock to $120. That implies 13.3% potential upside for the stock, which has added roughly 12% this year. According to Parikh, Church & Dwight should see another strong first quarter in terms of organic sales growth and earnings, and should also reaffirm its guidance for fiscal year 2024. He thinks the company will continue benefiting from its value positioning in key categories such as laundry and litter, and from ongoing momentum in newer brands such as TheraBreath. He expects management to reinvest any upside back into the business, as history indicates. "From here, we believe additional M & A and/or a stock split could represent positive catalysts for shares," Parikh wrote in a Tuesday note. "CHD shares have traded mixed following recent prints. We would take advantage of any profit taking should it materialize." The company's earnings will be out May 2. — Pia Singh 5:58 a.m.: DataDog shares could jump nearly 23%, according to Wells Fargo Wells Fargo thinks DataDog is headed for a period of outperformance in fiscal year 2024. Analyst Andrew Nowinski upgraded the cloud-based monitoring and analytics platform to overweight and raised his price target by $20 to $150, which suggests 22.9% potential upside for the stock. Shares are up 0.6% this year. "We believe Datadog has many ways to drive upside in FY24, including vendor consolidation, security cross-sell and Gen AI," Nowinski wrote in a Tuesday note. According to the analyst, the company is seeing an end to cost optimization as customers now focus on modernizing their infrastructure, which should begin to drive consumption. DataDog is winning larger deals as customers consolidate vendors, which has a larger impact on its bookings, he added. Other tailwinds to the stock include DataDog's opportunity to cross-sell security solutions to existing customers, generative AI workloads potentially accounting for 10% of the company's annual recurring revenue in fiscal year 2025 and management's plans to ramp up hiring in fiscal year 2024. — Pia Singh 5:56 a.m.: Loop Capital initiates MongoDB, says it is the 'de facto standard' developer platform for cloud apps The recent dip in MongoDB share price is an opportunity for investors, according to Loop Capital analyst Yun Kim. Kim initiated coverage of the database program with a buy rating and $415 price target, which suggests shares could climb 22% over the next year. The stock is down 16.8% year to date. "With our industry checks indicating the pace of new cloud deployments improving since the beginning of the year, we expect MDB growth to show accelerated growth in 2H of the year as these new deployments start to ramp into product in 2H of the year. We don't believe this scenario is fully captured in current Street estimates," Kim wrote in a note. "In our view, MDB has emerged as the de facto standard for development platform for cloud applications." Kim said his price target implies that the company's revenue multiples are consistent with other fast-growing cloud infrastructure names. MongoDB's growth trajectory remains strong at 20% overall and 30% just for its cloud Atlas business, which he expects to push the company's growth in the second half of the year as the pace of new cloud deployments continues to accelerate, he said. MongoDB shares ticked higher by just under 1% in the premarket. — Pia Singh 5:43 a.m.: KeyBanc downgrades beaten-down solar stock Sunnova Energy Heading into first-quarter earnings, KeyBanc Capital Markets is cautious on residential solar names, particularly Sunnova Energy . Analyst Sophie Karp downgraded the Texas-based residential and commercial solar energy company to sector weight from overweight and removed her price target on the stock. Sunnova shares have plunged nearly 75% this year, punished by a higher-for-longer interest rate environment that has been challenging for solar companies' project financing and cash flows. "The overall residential solar landscape in the U.S. remains challenging due to the combination of lower energy prices and elevated financing costs," Karp wrote in a Monday note, saying that a lack of encouraging data from the industry suggests that recovery remains elusive. "NOVA specifically is under pressure to demonstrate positive q/q cash movement and to define its capital allocation strategy going forward." Karp reiterated her sector weight rating on solar peers Sunrun, SolarEdge Technologies and Enphase Energy, meanwhile. — Pia Singh 5:43 a.m.: JPMorgan upgrades Roblox The sell-off in Roblox shares has created a big buying opportunity, according to JPMorgan. The bank upgraded the video game company to overweight from neutral. It also raised its price target to $48 from $41, implying a 37% rally over the next 12 months. "RBLX shares have been volatile since the company's direct listing in 2021, in many ways reflecting investor enthusiasm — and subsequent skepticism — around the durability of companies that saw usage spikes during the pandemic," analyst Cory Carpenter wrote. This year alone, shares are down more than 23% after a 60% rally in 2023. That pullback "presents a compelling entry point for a company growing bookings ~20%+, exiting a heavy investment cycle, and ramping two new revenue streams in advertising (2H24) & commerce (2025)," Carpenter said. Roblox shares popped 3% in the premarket following the upgrade. RBLX 1D mountain Roblox rises — Fred Imbert