Here’s a professional summary of the most important things Wall Street analysts have said over the past week, including a rare downgrade of Nvidia (NASDAQ:) stock.
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Intercontinental Exchange (NYSE:)
What happened? On Monday, Goldman Sachs upgraded Intercontinental Exchange (NYSE:ICE) to Buy with a $167 price target.
What is the full story? Goldman upgraded ICE from Neutral to Buy and set a 12-month price target of $167 per share, implying a 22% upside. After less than 10% EPS growth over the past three years, Goldman expects ICE’s EPS growth to pick up to low levels in 2025 and beyond. This is supported by:
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ICE’s supportive structural factors and global leadership in energy markets, which account for approximately 30% of earnings. These factors are expected to drive revenue growth of more than 25% in 2024, with growth of 8% to 10% expected after 2024.
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There are signs of accelerating growth in fixed income data and analytics, which accounts for about 22% of earnings. The value of assets under management is also recovering, as are inflows into fixed income funds since the start of the year.
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Cyclical decline in mortgage technology, which accounts for ~16% of revenue. Founding activity stabilizes and organic ICE initiatives take shape, driving high-single-digit to low-double-digit revenue growth in 2025 and 2026.
The research team expects the higher incremental margin from ICE’s fastest-growing revenue to support operating margin expansion of approximately 100 basis points annually. This, coupled with higher free cash flow conversion, is expected to accelerate the pace of debt reduction and increased share buybacks by the end of 2024.
Goldman believes these dynamics are undervalued, putting it above the mid-single digit consensus (visible alpha consensus data) of $6.14/$6.90/$7.88. With ICE’s revenue growth accelerating and the company deleveraging, Goldman sees scope to improve the valuation from the current 21x in the next 12 months to more than 22.5x, implying a 16.5x EV/EBITDA, in line with history.
A buy at Goldman means “to assign a buy or sell to an investment portfolio determined by the total return potential of the stock relative to its coverage universe.”
How did the stock react? The Intercontinental Exchange opened the regular session at $138.47 and closed at $136.93, up 0.19 percent from the previous day’s close.
Pure Storage (NYSE:)
What happened? On Tuesday, UBS downgraded Pure Storage (NYSE:PSTG) to Sell with a $47 price target.
What is the full story? UBS downgraded Pure Storage shares from Neutral to Sell, citing an unfavorable risk-reward scenario. UBS analysts estimate PSTG to grow at around 8% over the next five years, down from the 16% growth seen in the previous five years. They expect PSTG’s share of the all-flash storage market to stabilize at around 15%. Additionally, UBS’s revenue forecasts for fiscal 2026 and fiscal 2027 are 6% and 10% below consensus, respectively.
Analysts have noted PSTG’s share of the all-flash storage market has declined by about 80 basis points to 14.5% over the past 12 months, as competitors like NetApp (NASDAQ: NTAP)’s C-Series have gained traction with enterprise customers.
Despite a 1% revenue cut for both FY25 and FY26, PSTG shares are up about 83% year-to-date, outpacing the S&P 500’s 15% gain. This suggests that the stock’s appreciation has been entirely driven by multiple expansion to a high of about 6x EV/revenue.
UBS also noted that PSTG’s valuation was overly influenced by bullish sentiment around AI infrastructure investments driving growth. However, analysts believe that AI-related storage spending is likely to grow more slowly than the market expects, with a greater focus on inference — a market segment that has been growing more slowly than training.
Furthermore, private vendors such as Weka, VAST Data, and Hammerspace are gaining market share, as evidenced by Meta’s (NASDAQ:META (NASDAQ:)) partnership with Hammerspace to develop and implement a parallel network file system in its GenAI clusters. This trend is also supported by UBS’ decision to downgrade Pure shares to Sell.
A sell at UBS means “the stock price is expected to decline within three months from the time the rating is assigned due to a specific catalyst or event. The stock’s return is below the average return of the stock by >6%.”
How did the stock react? Pure Storage opened the regular session at $61.21 and closed at $62.74, down 4.20 percent from the previous day’s regular close.
Charter Communications (NASDAQ:)
What happened? On Wednesday (a shortened trading day in U.S. markets), Citi downgraded Charter Communications (NASDAQ:CHTR) to sell with a $255 price target.
What is the full story? Citi analysts have expressed concerns about Charter’s financial outlook, citing increased risks to earnings estimates and market valuation. They note that the organic broadband landscape is very challenging and proving to be tougher than previously anticipated, which could weigh on subscriber numbers and revenue growth over the next year. The analysts believe Charter’s consensus 2025 EBITDA forecast may be overly optimistic given these headwinds.
In response to these concerns, the bank revised its price target downward, reflecting a contraction in the fair value to EBITDA multiple to 6.0x. The revision is based on Citi’s own forecasts, which expect lower EBITDA numbers than the market consensus for 2025. However, Citi analysts acknowledge the potential for free cash flow to recover in the future once Charter passes its current phase of increased capital investment.
Looking ahead, Citi sees Charter’s upcoming Q2 and Q3 results as potentially unfavorable catalysts. Citi expects these earnings reports to highlight the challenges facing Charter, particularly in broadband pricing and subscriber volumes. The recent demise of its ACP (all-channel programming) service is highlighted as a contributing factor to these headwinds, with analysts expressing skepticism that this will turn around in the near term.
Selling at Citi means “Investment classification definitions are: Buy ETR of 15% or more or 25% or more for high-risk stocks; Sell for negative ETR.”
How did the stock react? Charter Communications stock opened the regular session at $299.19 and closed at $301.25, up 1.72 percent from the previous day’s close.
Thursday – US Market Closed
Nvidia
What happened? On Friday, New Street Research downgraded Nvidia (NASDAQ:NVDA) stock to Neutral with a price target of $135.
What is the full story? New Street analysis suggests that consensus forecasts point to a strong 35% increase in GPU revenue by 2025, which is closely in line with their previous earnings forecast.
However, the brokerage sees the potential for further upside as limited, citing insights gathered from the industry value chain. As a result, New Street downgraded the stock to Neutral, stressing that significant further gains will depend on a bullish scenario where the outlook beyond 2025 improves significantly, a development the brokerage finds uncertain at present.
Looking ahead, consensus forecasts are for revenue growth to slow to the mid-20s, a trend that could be jeopardized by the moderation of massive capital spending and potential market share gains from ASICs and AMD (NASDAQ:). In this flat-forecast scenario, New Street expects little further upside for the stock, and could even face the risk of a valuation revision.
The stock is currently trading at 40 times forward earnings per share, having previously seen its multiple drop to 20 times during the 2019 growth slowdown, and then rise to 35 times recently.
New Street values Nvidia at 35 times earnings, reminiscent of valuation levels in late 2019 and early 2020. With expected EPS of $4.1 by 2027 in their base case, implying a target price of $143 by 2026, New Street’s annual target price is set at $135.
Despite these metrics, the brokerage firm recognizes the enduring quality of Nvidia’s business franchise, expressing its willingness to recommend buying the stock again, especially during extended periods of market weakness.
How did the stock react? Nvidia opened the regular session at $127.41 and closed at $125.83, down 1.91 percent from the previous day’s close.
