Investing.com – Here’s a professional summary of what Wall Street analysts said over the past week.
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Petrobras
What happened? Morgan Stanley on Monday raised its rating on Petrobras (NYSE:PET) to overweight with a $20 price target.
*Tilder: Morgan Stanley upgraded Petrobras ADRs to “overweight,” citing recent management’s positive returns and strategic continuity. Analysts expect a total return of 60%, including 37% appreciation, 16% regular dividends and 7% extraordinary dividends.
What is the full story? Morgan Stanley upgraded Petrobras from equal weight to overweight, while maintaining a positive outlook on the potential for compelling total returns. Although the stock is down 17% from its peak earlier in 2024 and has been subject to high volatility over the past five months, analysts suggest that recent management changes will lead to less market noise and thus some stability in stock volatility. Insights from recent conference calls and meetings with the new CEO and CFO have reinforced the belief in strategic continuity, with emphasis on a balanced approach to increasing investments and dividends, provided there is excess cash.
The analysts’ base case supports this narrative, with the analysts forecasting a potential total return of around 60%. This includes a 37% upside in the stock price, a 16% return in ordinary earnings, and a 7% return in extraordinary dividends. The reintroduction of extraordinary dividends appears to be a significant factor in this bullish outlook, reflecting Morgan Stanley’s confidence in the company’s strategic direction and cash flow management under new leadership.
Overweight at Morgan Stanley means “the total return of the stock is expected to exceed the total return of the MSCI country index in question, on a risk-adjusted basis, over the next 12-18 months.”
Hershey
What happened? On Tuesday, Citi downgraded shares of Hershey (NYSE:HHSH) to sell with a price target of $182.
*Tilder: Citi expects 2025 to be a challenging year for Hershey’s gross margins due to inadequate pricing to counter cocoa inflation. Volume trends and competitive pricing challenges could hamper immediate financial performance, despite potential earnings improvements in 2026.
What is the full story? Citibank expects Hershey’s gross margins to be challenging next year, driven by the company’s recent pricing plans for 2025, which may not be enough to counteract cocoa inflation, especially in the first half of the year. The investment bank notes that Hershey’s volume trends have been disappointing, in part due to continued declines in retail distribution. Moreover, the expected price elasticity could pose significant challenges for the company next year, especially if competitors in the chocolate segment do not adopt similar pricing strategies and other snack categories, such as salty snacks, cut their prices.
The investment bank acknowledges that earnings could improve in 2026; however, it warns that Hershey’s baseline growth may be lower than expected. This expectation stems from ongoing challenges in offsetting cost inflation and competition, which could hamper the company’s immediate financial performance.
Selling in Citi means “buying (1) ETR of 15% or more or 25% or more for high-risk stocks; and selling (3) for negative ETR.”
accident
What happened? On Wednesday, HSBC raised its rating on Moderna (NASDAQ:) stock to Neutral with a $62 price target.
*Tilder: HSBC lowered its 2024 revenue forecast for Moderna due to weak COVID-19 vaccine sales and competitive pressure on mRESVIA. HSBC upgraded Moderna to Hold, citing significant potential in its cancer vaccine program despite current uncertainty.
What is the full story? HSBC has revised its outlook for Moderna, noting that the company’s 2024 revenue guidance has been revised downward following weaker-than-expected sales of its COVID-19 vaccine in the second quarter. While Moderna’s second mRNA-based vaccine, mRESVIA, received FDA approval earlier this year, the bank notes that it does not appear to compete effectively with products launched earlier in the season. Additionally, updates from the Advisory Committee on Immunization Practices meeting in June on recommendations for a respiratory syncytial virus vaccine for the elderly have dampened the market outlook, underscoring HSBC’s previous cautious stance on the company.
Looking ahead, HSBC notes that Moderna’s future prospects are increasingly tied to its cancer vaccine program. Despite the ongoing uncertainty surrounding the company’s respiratory vaccine franchise, the bank sees significant potential in the cancer vaccine as a new revenue driver. HSBC maintains its price target on Moderna at $82.00, using an adjusted present value analysis with a weighted average cost of capital of 9.8%, implying a modest upside of 0.4%. All of this prompted the bank to raise its rating from down to hold.
“Neutral at HSBC means “For a stock to be classified as overweight, the potential return, which is equal to the percentage difference between the current share price and the target price, including the expected dividend yield where indicated, must exceed the required return by at least 5 percentage points over the next 12 months (or 10 percentage points for a stock classified as volatile*). For a stock to be classified as underweight, the stock was expected to underperform the required return by at least 5 percentage points over the next 12 months (or 10 percentage points for a stock classified as volatile*). Stocks between these ranges were classified as neutral.”
Take-Two Interactive
What happened? Redburn-Atlantic on Thursday initiated coverage of Take-Two (NASDAQ:T) stock at a buy price with a price point of $194.
*Tilder: Redburn-Atlantic highlights Take-Two as a leading publisher, expecting GTA VI to significantly improve financial outlook. It expects GTA VI to boost earnings per share by 20%, sets a target of $194, and trades at 22 times estimated earnings per share.
What is the full story? Redburn-Atlantic highlights Take-Two Interactive as one of the world’s leading video game publishers, with some of the industry’s most enduring franchises, including Grand Theft Auto, Red Dead Redemption, and NBA 2K. With GTA VI just a year away, the company expects it to be the best-selling video game of the decade, marking the first new release in the franchise since 2013. Redburn-Atlantic believes GTA VI will significantly alter Take-Two’s financial outlook and notes that current consensus forecasts have not fully taken this impact into account.
The firm highlights the strength of Take-Two’s existing franchises, growing investor enthusiasm ahead of GTA VI’s launch, and conservative market expectations as factors that could drive significant stock returns over the next 12 months. With a price target of $194, representing a 20% upside potential, Redburn-Atlantic asserts that this valuation requires Take-Two to trade at 22 times estimated calendar year 2026 earnings per share, reflecting an approximate 10% premium to its nearest peer, Electronic Arts Company (NASDAQ:).
1-800-Flowers.com Inc.
What happened? On Friday, DA Davidson promoted 1-800 FLOWERS.COM (NASDAQ:) to Neutral with a $7 price target.
*Tilder: DA Davidson turns 1-800-Flowers.com to Neutral on missed Q4 2024 forecast and lower 2025 EBITDA guidance. The firm lowers its price target to $7, citing risk-free estimates and continued weak consumer sentiment weighing on sales recovery.
What is the full story? DA Davidson reported that 1-800-Flowers.com (FLWS) missed its fiscal Q4 2024 guidance and gave fiscal 2025 EBITDA guidance of $85 million to $95 million, below the consensus of $99.4 million. The respected brokerage notes that with consumer sentiment still weak, there is a risk of delaying the expected return to positive sales growth. However, FLWS confirmed Bloomberg debit card data that suggests the year-over-year sales decline is likely to be less severe in the first quarter of 2025.
The brokerage believes that current Street estimates are now sufficiently risk-free in the near term. Due to recent double-digit declines, DA Davidson has moved to neutral. However, the firm is lowering its estimates and price target, cutting the price target to $7 from $8, based on a 5x multiple of calendar year 2025 EBITDA estimates of $97 million, down from $106 million.
Neutral at DA Davidson means “expected to produce a total return of -15% to +15% on a risk-adjusted basis over the next 12-18 months.”