Investing.com – Here’s a professional summary of what Wall Street analysts said over the past week.
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South Korea .
What happened? On Monday, Mizuho downgraded shares of Southern Company (NYSE:) to Neutral with a $90 price target.
*Tilder: Mizuho sees limited catalysts for better performance despite a 21% price-to-earnings premium. Strong load growth and a strong capital plan are expected to support SO’s EPS growth rate of 5-7% and maintain a strong balance sheet through 2026.
What is the full story? Mizuho downgraded Southern Company to Neutral, having previously upgraded it in April 2023 when the shares were trading at a 4% premium to the group’s price-to-earnings. The firm had initially argued that the shares could be revalued at a double-digit premium as Vogtl 4 nears completion. However, with the shares now trading at a 21% premium to the electric utility group, Mizuho sees little incentive for further outperformance.
Despite the SO divestment, Mizuho believes that strong load growth in the SO service area, driven by data center demand and reshoring, will make the company’s 5-7% EPS growth rate more sustainable. The company also believes that management can maintain a strong capital plan and a strong balance sheet with a 17% EBITDA/debt ratio and minimum equity needs of $350 million per year through 2026.
Neutral at Mizuho means “The stock’s total return performance is expected to be in line with the unweighted total return expected by the analyst coverage universe for the industry over the next 12 months.”
Shopify
What happened? On Tuesday, Redburn-Atlantic upgraded Shopify (NYSE:) stock to Buy with a $99 price target.
*Tilder: Redburn-Atlantic highlights Shopify’s innovations, social media integration, and Shop Pay as key growth drivers. The company forecasts 29% CAGR in revenue and 40% EBIT margin by 2026.
What is the full story? Redburn-Atlantic highlights Shopify’s industry-leading innovation, social media integration, easy-to-use platform, and unique Shop Pay button functionality as key factors enabling it to capitalize on structural growth. The company’s comprehensive ecosystem and platform capabilities have cemented Shopify as the ecommerce provider of choice for merchants of all sizes, with significant gains expected for enterprise merchants in 2025.
Redburn-Atlantic upgrades its recommendation to Buy Shopify, citing the company’s multi-faceted moat of size, high switching costs and an impenetrable three-sided network. The firm forecasts a 29% CAGR in net revenue from 2023 to 2026 and a 40% EBIT margin by 2026, putting it 24% above the 2026 EBIT consensus. The price target is set at $99, based on above-consensus earnings and a fair multiple in line with peers in the Internet, FinTech and Software sectors.
“A buy from Redburn-Atlantic means that Redburn Atlantic claims the stock price will rise by at least 15% over one year. For stocks with high betas, the hurdle rate may be proportionately higher.”
Resmed
What happened? On Wednesday, Wolfe Research downgraded the stock. Resmed Company (NYSE:) is expected to underperform with a price target of $180.
*Tilder: Wolf rates RMD stock as underperform with a $180 target, citing disruption risks from Lilly’s GLP-1 drug. Analysts expect upside of 10% and downside of 30% to 40%, forecasting mid-single-digit growth.
What is the full story? Wolfe analysts rate RMD shares as Underperform with a $180 price target, applying a 20x P/E multiple to NTM’s EPS of around $9. This low multiple reflects the expected disruption risk to RMD’s business in 2025-26 due to the potential nightly launch of its GLP-1 drug terzepatide for the obstructive sleep apnea indication. Wolfe’s overall market analysis suggests a 15% to 25% long-term impact on the CPAP opportunity, leading to a more likely sustained growth rate in the mid-single digits rather than the high single digits.
Analysts offer two comparison groups: HSD medical technology producers with a P/E ratio of 25x-27.5x and MSD medical technology producers with a P/E ratio of 15x-20x. They believe RMD’s growth outlook is more in line with the high end of the MSD range. The physician survey forecasts a 6% negative impact on CPAP prescription volumes, framing a potential shift from HSD to MSD growth. Wolf sees upside potential of 10% with a downside risk of 30%-40% over the next 12-24 months.
Wolf’s underperformance indicates that “the security is expected to underperform analyst coverage of the industry over the next 12 months.”
DoorDash
What happened? On Thursday, BTIG upgraded DoorDash Inc (NASDAQ:) stock to Buy with a $155 price target.
*Tilder: BTIG raised its DASH stock estimate due to the stock’s near-term strength and long-term growth drivers. Positive EBITDA and net income are expected in the second half of the year; and the ride-hailing segment is showing secular growth.
What is the full story? BTIG has been keeping a close eye on DoorDash due to its positive category bias, strong execution, and upward pressure on estimates. The analyst highlights three key reasons for the upgrade: continued near-term strength and underestimated long-term drivers, significant milestones with expected EBITDA and net income in the second half, and the ride-hailing segment, which is a rare area of secular growth in the consumer-facing internet.
The analyst emphasizes the desire to increase exposure to DASH compared to more mature categories such as eTravel, online dating, and real estate services. BTIG sees significant potential in DASH’s continued growth and achievements, making it a compelling investment opportunity.
“Buy by BTIG means “securities that are expected to deliver a positive total return of 15% or more over the next 12 months following the recommendation. The Buy rating may be maintained as long as it is appropriate, despite price fluctuations that may cause the target to fall outside the 15% return.”
What happened? On Friday, B. Riley initiated coverage on Reddit (NYSE:) with a buy price and a $75 price target.
*Tilder: B. Riley sees Reddit’s unique platform and early monetization stage driving growth. Attractive risk/reward profile at 31x 2025 EBITDA, with significant upside potential.
What is the full story? B. Riley highlights the unique value that Reddit offers to users, advertisers, and content licensees through its platform, which supports tens of millions of users across more than 100,000 communities. This creates a massive and growing repository of curated content. The moderator believes that Reddit is in the early stages of monetizing its platform through advertising and data licensing, positioning it for healthy revenue growth and marginal gains in the coming years.
At around 31x estimated 2025 EBITDA, B. Riley finds the risk/reward profile attractive, given the above-industry growth prospects and significant leverage over the next several years. The broker sees Reddit’s potential for continued expansion and profitability as a compelling investment opportunity.
“Buy from B. Riley means “We generally expect stocks rated ‘Buy’ to deliver above-average risk-adjusted total returns over the next twelve months. We recommend investors buy the securities at current value.”
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