Investing.com – Here’s a professional summary of the most important pieces of information Wall Street analysts said over the past week.
InvestingPro subscribers always get the first guess on rating changes that move the market.
Holding confirmation
What happened? Goldman Sachs on Monday initiated coverage with a new analyst rating on Affirm Holdings Inc (NASDAQ:) stock at buy with a $42 price target.
What is the full story? Goldman sees AFRM as a pioneer in providing contemporary credit solutions to consumers, featuring a diverse range of products specifically designed to finance point-of-sale and everyday expenses. Analysts are particularly impressed by AFRM’s underwriting sophistication compared to its fintech peers, as well as the company’s consistent delivery of well-managed credit scores, even amid rapid growth that outpaces its peers. This success is attributed to AFRM’s approach to dealing with short-term receivables and underwriting at the transaction level, which enables the company to assess and cover different types of consumer spending individually. This includes everyday purchases (“pay now” via debit), cash flow management or short-term financing (such as paying within 4 months), and more extended installment financing options (spanning 6 to 12 months or more), all of which are facilitated by One card-based product is the Affirm Debit+ card.
In contrast to traditional card issuers who have historically offered a single revolving line of credit to cover these needs, the AFRM method incurs much lower costs to the consumer and reduces credit risk to the lender by avoiding large balances open for purchase. Goldman believes AFRM’s rigorous underwriting gives it a competitive advantage, enabling the company to delve deeper into the credit spectrum and make inroads into the sub-prime/sub-prime market segment – an area that is challenging for many established players to participate in sustainably. Analysts expect that this accuracy in underwriting will strengthen AFRM’s position in the market and facilitate its continued growth and success.
Buying at Goldman means “analysts recommend stocks to buy or sell for inclusion in various regional investment lists. Buying or selling in an investment list is determined by the total potential return of a stock compared to its coverage universe.”
How did the stock react? Affirm Holdings opened the regular session at $31.02 and closed at $33.70, up 12.82% from the previous day’s regular close.
Pennsylvania Entertainment
What happened? On Tuesday, Raymond James downgraded PENN Entertainment Inc (NASDAQ:) to market perform and removed its $20 price target.
What’s the full story? The recommendation change follows a 21% increase in the company’s stock price since May 20, which was affected by activist pressure and merger and acquisition rumors. Initially, when coverage was initiated, Raymond James assumed that the stock’s potential was limited to about $20 per share. This ceiling was attributed to ongoing discounts related to the interactive segment and a “penalty box” situation, which was expected to continue until a clearer path to profitability in the interactive space was established or a major strategic shift occurred.
However, the path to profitability in PENN’s digital space remains unclear, and no major changes in strategy, such as a full sale of the company, appear imminent. As such, Raymond James advises investors to capitalize on recent gains and look for more risk-adjusted investment opportunities within the sector. The brokerage highlights Caesars (NASDAQ:) as its preferred option, suggesting that it offers a more attractive investment profile compared to PENN under current market conditions.
Raymond James’ assessment reflects a cautious stance on PENN’s short-term prospects, emphasizing the need for clarity in its digital strategy and profitability outlook.
Raymond James Market Performance means that “the security is expected to perform broadly in line with the S&P 500 Index over the next 12 months and could be used as a source of funds for higher-rated securities.”
How did the stock react? Penn Entertainment stock opened the regular session at $18.85 and closed at $18.26, a gain of 5.58% from the previous day’s regular close.
Tesla
What happened? On Wednesday (well, Tuesday after business hours) Stifel initiated coverage of Tesla Inc (NASDAQ:) stock at a buy level with a $265 price target.
What is the full story? Stifel believes TSLA is very well positioned for strong multi-year growth in 2025-27+. In the near term, the revamped Model 3 and upcoming refresh of the Model Y should boost sales, followed by the start of production of the next generation of the car (Model 2), which will likely have very strong demand. Stifel analysts also believe TSLA’s AI-based full self-driving initiative has the potential to generate significant value through FSD sales, potential licensing agreements, and as a critical driver for its long-term RoboTaxi initiatives.
Near-term risks to watch include delivery levels following lackluster Q1 2024 results, as well as near-term headwinds to EV adoption and the U.S. election. Stifel initiates coverage at Buy with a $265 price target.
Buying into Stifel means “we expect a total return of more than 10% over the next 12 months with a total return equal to the percentage price change plus the dividend yield.”
How did the stock react? Tesla opened the regular session at $186.69 and closed at $196.37, up 4.81% from the previous day’s regular close.
Qiagen
What happened? On Thursday, Wolfe Research upgraded Qiagen (NYSE:) to Outperform with a $50 price target.
What is the full story? Wolfe Research has expressed growing confidence in QGEN’s prospects following the company’s impressive presentation at its Corporate Management Day (CMD) on June 17. The brokerage company is optimistic about QGEN’s ability to outperform its competitors in the coming year, as management has presented a reliable strategy to achieve organic growth of more than 7% and an operating margin of more than 31% between 2024 and 2028.
The current portfolio is particularly attractive due to the high proportion of recurring revenue of approximately 85%, coupled with several medium-term growth catalysts and a strong market position. Additionally, Wolfe Research expects QGEN’s underlying TB segment to remain unchallenged by new competitors in the near term, and they are confident in the company’s disciplined execution, as evidenced by initiatives such as NeuMoDx.
Despite these positive indicators, QGEN stock currently trades at less than 20 times its P/E ratio for the next 12 months, which is more than 5 times higher than its peers. This assessment leads Wolfe Research to believe that the shares are undervalued, representing an attractive investment opportunity with limited downside risk. In light of this assessment, the brokerage has decided to revise its estimates for 2025 and beyond, reflecting a stronger belief in QGEN’s path towards enhanced growth and profitability.
Wolfe Research analysis suggests that QGEN is well positioned for future success, and its current share price provides a favorable entry point for investors.
Wolf’s outperformance means “the security is expected to outperform analyst coverage of the industry over the next 12 months.”
How did the stock react? Qiagen opened the regular session at $41.02 and closed at $41.10, up 1.02% from the previous day’s regular close.
the alphabet
What happened? On Friday, Rosenblatt downgraded Alphabet (NASDAQ:) to Neutral with a price target of $181.
What’s the full story? Rosenblatt downgraded Alphabet to Neutral, citing several areas of transitional risk that warrant cautious observation. Key concerns include the potential impact of AI on search functionality, particularly AI Overview, which could temporarily disrupt search ad revenue. Additionally, there are signs of competition from Bing, which could lead to a loss of search market share. Furthermore, the shift in search ad revenue toward retail media networks is expected to accelerate, under the influence of Amazon (NASDAQ:) and other companies entering the space, creating further uncertainty.
Another important factor is Amazon’s aggressive foray into video advertising, including the integration of ads on Prime Video and an aggressive upfront sales strategy, which could change the dynamics of ad sales, particularly impacting Alphabet’s YouTube platform. The research team also highlights the potential for increased capital spending on AI, driven by competitive pressures within the industry.
In light of these transitional risks, Rosenblatt suggests taking a cautious approach to Alphabet until more clear outcomes emerge from these developments. Watching how Alphabet handles these challenges will be crucial in reassessing its investment outlook going forward.
Neutrality at Rosenblatt means “we believe this stock’s performance will be in line with the average return of others in its industry over the next 12 months.”
How did the stock react? Alphabet stock opened the regular session at $184.17 and closed at $182.15, down 1.76% from the previous day’s close.