Stock analysts can provide valuable insight into the sentiment around a certain stock or sector and shed some light on what is possible or likely for a stock. Stirring in the analyst community can sometimes be early signs of stock movement. Which is why our team reviews dozens of analyst research reports each and every day with the goal of finding new investment ideas for our readers.
Of the hundred of reports we reference weekly, some stand out among the others for various reasons. Our team has sifted through this week’s reports and whittled it down to the most pertinent moves.
Read on for the details on some of the most impactful actions taken by brokerage firms over the past week.
Monday, October 25th
Scotiabank analyst Rodrigo Echagaray upgraded e-commerce giant MercadoLibre (MELI) to Outperform from Sector Perform with a price target of $2,100, up from $2,050. The shares are down about 20% since he initiated coverage and given his view that the long-term growth opportunities across retail and fintech “remain very appealing” he sees the year-to-date underperformance versus the Nasdaq as “a good entry point,” Echagaray tells investors. He has also adjusted his estimates to reflect higher than expected GMV and take-rates in recent quarters, which results in his estimates having increased “slightly,” the analyst noted.
Tuesday, October 26th
Analysts scrutinized Beyond Meat (BYND) for their poor Q3 performance. Credit Suisse analyst Robert Moskow downgraded Beyond Meat to Underperform from Neutral with a price target of $75, down from $123. The revenue miss in Q3 reinforces the view that Beyond Meat is “reaching market saturation faster than expected and will miss its internal growth targets,” Moskow tells investors in a research note. The analyst says that while the meat alternatives category still has potential upside for the next several years, he’s lowering long-term forecasts for Beyond’s sales and market share. This year’s spate of management departures and many factors cited for the revenue shortfall “suggest deeper problems that won’t be quick to fix,” Moskow said.
Canaccord analyst Bobby Burleson lowered the firm’s price target on Beyond Meat to $100 from $125 and keeps a Hold rating on the shares. The analyst cited its reduced Q3 net revenue outlook which was well below prior guidance. The company said weakness was attributed to several factors, including the COVID-19 Delta variant’s impact on US foodservice customers, lower-than-expected distribution orders, and shelf reset delays from labor shortages.
Wednesday, October 27th
Several firms made positive revisions to their price targets for UPS (UPS) after its Q3 earnings call. Oppenheimer analyst Scott Schneeberger raised the firm’s price target on UPS to $236 from $222 and keeps an Outperform rating on the shares. The analyst notes UPS’s strategic objectives translated to favorable Q3 performance as adjusted EPS of $2.71 exceeded his estimate/consensus of $2.50/$2.55, respectively.
KeyBanc analyst Todd Fowler raised the firm’s price target on UPS to $250 from $235 and keeps an Overweight rating on the shares. The analyst also raised estimates to reflect current-quarter upside and a modestly higher margin outlook. Overall, Fowler is “encouraged” by favorable near-term execution despite various cost headwinds, increasing his conviction around margin improvement and higher returns intermediately.
Raymond James analyst Patrick Tyler Brown raised the firm’s price target on UPS to $260 from $240 and keeps a Strong Buy rating on the shares following the “solid” Q3 results. Brown sees industry tailwinds anchored by a shift toward e-commerce and a solid pricing landscape, and tells investors in a research note that he believes the elixir of new management and new volume paradigm as a result of COVID is fueling an improved margin and free cash flow profile, possibly even beyond what UPS detailed at its recent analyst day, longer term.
Feedback from analysts wasn’t all positive following the call. Loop Capital analyst Rick Paterson downgraded UPS to Hold from Buy with an unchanged price target of $226. The analyst cites the company’s Q3 earnings beat and increased operating margin guidance but adds that while he is positive on all air freight stocks, after the recent share price rally, the potential upside on UPS is “getting a little underwhelming in the near-term”.
Thursday, October 28th
Robotics company, Teradyne (TER) was the recipient of multiple upgrades and positive price target revisions after providing encouraging guidance during their most recent earnings call.
Piper Sandler analyst Weston Twigg raised the firm’s price target on Teradyne to $141 from $137 and kept an Overweight rating on the shares after the company delivered a Q3 earnings beat and offering “strong” Q4 guidance as “test and automation tailwinds remain strong.” Twigg said that supply chain constraints are limiting robotics shipments, a moderate near-term headwind. The analyst also noted that he continues to view Teradyne as a “compelling” test and automation play exiting the pandemic.
Craig-Hallum analyst Christian Schwab upgraded Teradyne to Buy from Hold with a price target of $138, up from $120. The analyst notes Teradyne reported better-than-expected results and guidance. With the company’s core semi-test business continuing to execute well, management outlined how they expect strength to continue, Schwab adds. The stock was also upgraded at Cowen. Analyst Krish Sankar upgraded Teradyne to Outperform from Market Perform with a price target of $150, up from $135.
Friday, October 29th
Zendesk (ZEN) was downgraded by Jefferies, Piper Sandler, Oppenheimer and B of A Securities after the Q3 earnings call on Thursday. The company reported solid earnings and provided encouraging guidance but they also announced plans to acquire Momentive (MNTV).
Piper Sandler analyst Brent Bracelin downgraded ZEN to Neutral from Overweight with a price target of $122, down from $175. He sees near-term integration risks and potential shareholder dilution with Momentive shareholders poised to take a 22% ownership stake in the combined Zendesk business post the deal close. He’s comfortable moving to the sidelines pending better visibility into the combined growth trajectory of the combined business models.
Jefferies analyst Samad Samana downgraded Zendesk to Hold from Buy with a price target of $120, down from $175. The company reported “solid” Q3 results and provided an “encouraging” outlook for Q4, suggesting the momentum from Q3 has carried forward, Samana tells investors in a research note. However, Zendesk’s “sizable, all-stock acquisition of Momentive is thesis-changing,” says the analyst. As a result, Samana moves to the sidelines to re-evaluate his long-term view. He notes that Momentive is growing at a slower rate than Zendesk, which he says suggests the two companies will have to drive meaningful synergies to reach the $3.5B target for 2024.
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