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Investing.com — Here’s a roundup of key takeaways from Wall Street analysts last week: Updates for Procter & Gamble, Dollar General (NYSE:), UiPath (NYSE:) and Thor Industries (NYSE:); downgrade for Tesla (NASDAQ:)
InvestingPro subscribers always have the upper hand on rating changes that move the market.
Procter & Gamble
What happened? On Monday, Truist upgraded Procter & Gamble (NYSE:) to Buy with a $175 price target.
What’s the full story? Truist’s update is based on approximately 25.5 times its FY25 EPS estimate, compared to the large-cap HPC/personal care median of approximately 23 times and PG’s five-year average of approximately 23.5 times. The brokerage maintains its recently raised estimates.
The analysts’ recommendation and price target are based on the belief that investors in 2024 are shifting focus to consumer packaged goods (CPG) companies with volume growth (let’s be honest, who isn’t?).
Procter & Gamble, having returned to volume growth in the second quarter of 2024 (excluding China), recently provided encouraging comments on its operations in China. According to Truist, this signals a company-wide volume recovery in coming quarters as year-over-year comparisons for Procter & Gamble in China become more favorable.
Buy on Truist means that “the security’s total return is expected to exceed the relevant benchmark over the next 12 to 18 months (unless otherwise indicated).”
How did the title react? Procter & Gamble shares traded higher during the pre-market update from $160.23 to $161.71. PG opened the regular session at $161.43 and closed at $161.55, a gain of 0.75%.
Dollar General
What happened? On Tuesday, JPMorgan raised Dollar General to Neutral with a $159 price target.
What’s the full story? JPMorgan analysts model 4Q EPS of $1.87, above the Street at $1.74, and FY24 EPS of $7.42, slightly below the Street at $7.47. This is based on +1.9% same-store sales, with a flat buy-side bar up to +1% on management’s initial FY24 comp guidance.
Digging deeper, analysts’ fourth-quarter comp flat keeps the company’s third-quarter CAGR (compound annual growth rate) at +4.1%, noting year-over-year same-store sales tailwinds from from Winter Storm Elliott in late December and extra holidays. shopping day. This indicates a negative underlying trendline of the comp run-rate exit rate in the low single digits. Looking ahead, fiscal 2024 EPS is $7.42, driven by +1.9% same-store sales, beating consensus of +1.3%.
The bank expects sequential revenue improvement in fiscal 2024, supported by management’s key initiatives related to inventory, store standards, improved customer service and signage that highlights value to customers. However, analysts also see margin headwinds compared to 2019 related to shrinkage, consumable mix, markdowns and transportation.
Neutral for JPMorgan means “over the duration of the price target stated in this report, we expect this stock to perform in line with the average total return of stocks in the research analyst’s or research team’s coverage universe research analyst”.
How did the title react? Dollar General shares traded higher on premarket stock from $158.78 to $161.3, a gain of about 0.50%. DG opened the regular session at $161.24 and closed at $161.22, a decline of 1.19%.
Tesla
What happened? On Wednesday, Wells Fargo downgraded Tesla to Underweight with a $125 price target
What’s the full story? Wells Fargo’s downgrade is based on concerns about the declining impact of price cuts on sales volume and the possibility of negative EPS revisions. The bank’s EPS estimates for 2024 and 2025 are 32% and 52% below consensus, respectively. Analysts also highlight the economic difficulties of Tesla’s Model 2 as a mass-market compact vehicle, with Tesla shares trading at a significant premium – 58 times consensus EPS and 89 times Wells Fargo’s estimate (investors irrational?) – compared to his “Magnifico”. 7′ pairs at 31x.
Wells Fargo noted that Tesla’s growth in key markets has slowed, with sales in the EU and China remaining flat and in the US declining from the second quarter. Recent price cuts resulted in only a modest 3% volume increase despite a 5% price reduction, resulting in an average gross profit of $6.8K less per car.
Wells Fargo expects Tesla’s sales volumes to remain stable in 2024 and decline in 2025, with additional concerns about reduced lease residuals, customer dissatisfaction and the erosion of Tesla’s luxury brand premium.
Underweight in Wells Fargo means “The stock’s total return is expected to lag overweight and equal-weight rated stocks within the analyst’s coverage universe over the next 12 months. SELL.”
How did the title react? Tesla shares fell on premarket trading from $176.94 to $174.38, a decline of about 2%. TSLA opened the regular session at $173.14 and closed at $169.48, down 4.54%.
UiPath
What happened? On Thursday, JPMorgan upgraded UiPath to Overweight with a $28 price target
What’s the full story? JPMorgan highlights UiPath as a leader in robotic process automation (RPA), offering a suite of tools that significantly improve process efficiency through automation. The bank highlights UiPath’s ability to manage the entire automation lifecycle, which includes process discovery, development, management, governance and scaling, as well as measuring the business impact of these automations. Analysts praise UiPath’s vision and the robustness of its platform, which is complemented by intuitive tools that now allow business users to develop automations themselves.
The bank upgraded UiPath shares to Overweight (OW) from Neutral, predicting a shift from decelerating annual recurring revenue (ARR) growth to a stable growth trend, especially as the company engages in Generation AI automation projects ( GenAI) and continues to improve margins. JPMorgan had previously maintained a contrarian stance on UiPath, avoiding the stock during its decline from $80 to $20. However, following a more positive outlook on UiPath’s latest quarters, including the fiscal fourth quarter (FQ4), and the potential end to the rapid deceleration of ARR growth, JPMorgan views the current $20 share price as a ‘opportunity for accumulation, despite the subsequent flat period. -market trading influenced by weak first quarter revenue guidance and the current trend of Remaining Performance Obligations (cRPOs).
Overweight at JPMorgan means “(over the duration of the price target stated in this report, we expect this stock to outperform the average total return of stocks in the research analyst’s or research analyst’s team’s coverage universe) .”
How did the title react? UiPath opened the regular session at $25.22 and closed at $22.75, a decline of 6.88%.
Thor Industries
What happened? On Friday, Citi upgraded Thor Industries (NYSE:THO) to Buy with a $122 price target.
What’s the full story? Citi analysts describe Thor Industries as a quintessential example of the early recreational vehicle (RV) narrative. While investor concerns have led to premature investments in the past, the bank believes that, following the recent recession and market correction, the sector is poised for a recovery. Citi expects a more favorable outlook starting in April or May, which should instill confidence in dealers to place orders, stabilize original equipment manufacturer (OEM) guidance and subsequently boost the company’s stock value.
Citi also initiated a 90-day upside catalyst watch, forecasting a positive change in the RV industry in the April-May period, after enduring 32 months of year-over-year decline. This expected turnaround is in line with industry forecasts and will likely encourage dealers to increase orders, OEMs to firm up their guidance, and investors to re-engage with the THO narrative, potentially improving THO’s market valuations. ‘agency.
Buying Citi means “Buy (1) ETR of 15% or more or 25% or more for high risk stocks”.
How did the title react? Thor opened the regular session at $103.30 and closed at $103.81, a gain of about 2.86%.