(This is CNBC Pro’s live coverage of Tuesday’s analyst calls and Wall Street chatter. Please refresh every 20-30 minutes to view the latest posts.) Netflix was in focus Tuesday after the streaming giant got a big downgrade. Citi lowered its rating on the stock to neutral from buy, noting expectations for the company have become too lofty. Shares fell slightly in the premarket. Elsewhere, Deutsche Bank upgraded JPMorgan Chase to buy from hold. Check out the latest calls and chatter below. 7:06 a.m. ET: Morgan Stanley downgrades PayPal, citing glacial strategic initiative cycles There’s reason for pause on PayPal as the digital payment platform shows slower-than-expected progress on strategic initiatives, according to Morgan Stanley. Analyst James Faucette downgraded the financial technology stock to equal weight from overweight and slashed his price target to $66 from $118. Faucette’s new target implies shares can advance just 6.9% from Monday’s close over the next year. “Product evolution and progress on key strategic imperatives, … which are key to supporting faster-than-eComm growth, are taking longer than we initially thought,” Faucette wrote to clients. PayPal is moving “too slowly” on key strategic initiatives like improving branded checkout and expanding Venmo, Faucette said. Any acceleration is difficult given the company’s relationships, the analyst added. He’s also less optimistic that PayPal can monetize Venmo as a checkout tool for younger shoppers. A larger share of these consumers would help the company grow at above-average rates, he said. More broadly, Faucette said he’s losing confidence that the company can investment enough to make meaningful improvements to its business in the near future. Still, he said the company should be able to grow revenue in line with other e-commerce peers, excluding Amazon. Shares slipped 2.4% in premarket trading on Tuesday. PayPal has fallen for three straight years. In 2023, the stock lost 13.8%. — Alex Harring 6:42 a.m. ET: HSBC says buy Citigroup, hold Morgan Stanley HSBC replaced Morgan Stanley with Citigroup on its list of buy-worthy bank stocks. Analyst Saul Martinez upgraded Citigroup to buy from hold, while giving Morgan Stanley the reverse treatment. His price targets of $61 and $96 suggest upside of 12.9% for the former and 2.7% for the latter. Despite noting that the revenue outlook still has challenges, Martinez said the fundamental backdrop for U.S. banks has improved in recent months. Namely, he said that moderating deposit cost pressure should help net interest income hit a bottom and earnings expectations are positive. Investors can add exposure to banks through Citigroup as management credibility increases and there’s more opportunity for buybacks, Martinez said. Still, he said Goldman Sachs is the “preferred way” to play a recovery in capital markets specifically. Elsewhere, he noted Morgan Stanley has seen cuts to earnings estimates even as the share price has risen. That’s created an increase to the price-to-earnings multiple while expectations for wealth management revenue soften. Citigroup advanced around 0.4% in Tuesday premarket trading, while Morgan Stanley slipped 1.6%. — Alex Harring 6:23 a.m. ET: Oppenheimer names Nvidia a top pick entering semi earnings Nvidia is one of Oppenheimer’s favorite names heading into semiconductor earnings. Artificial intelligence remains the top theme for semis in 2024, analyst Rick Schafer said, after it led growth in the prior year. A focus will be on how companies monetize their strategies in the space, the analyst added. Looking to 2024, he said picking the right names in the space is increasingly important after 2023’s “correction year.” In addition to Nvidia, he pointed to Marvell Technology, Monolithic Power Systems and Broadcom as top picks. Schafer said the best growth stories in the sector outperformed in 2023, with the top picks group surging 125% on average. By comparison, the iShares Semiconductor ETF (SOXX) gained a relatively modest 65.6%. Following an initial inflection, he said history shows that the group of best ideas should gain another 11% in 2024. Semiconductor earnings kick off the week beginning on Jan. 22, according to the analyst. — Alex Harring 6:07 a.m. ET: Goldman says Interactive Brokers is a buy that investors have overlooked due to interest rate concerns Investors should snap up Interactive Brokers as oversensitivity to potential interest rate cuts unnecessarily cheapens the stock, according to Goldman Sachs. Analyst James Yaro upgraded the brokerage to buy from neutral. His $102 price target, up from $88, shows a potential gain of 16.4% in the next year from Monday’s close. “We see current valuation as offering an attractive entry point, with risk skewed to the upside,” he told clients. Interactive Brokers has underperformed rate-sensitive peers since six month before the first cut to the Federal Reserve funds rate, Yaro said. But the analyst warned that the market may have over-extrapolated the company’s connection to interest rates. Indeed, he said the company should be able to offset a hit from interest rate cuts by the Fed. That’s because it has balance sheet growth, a shift in mix and increasing commissions. The analyst also found that the company can likely keep earnings per share growth flat in a down environment. Yaro said upside can stem from a focus on capital priorities, which can drive dividend growth or acquisitions. A bank license in the European Union can also help unlock capital, he added. Interactive Brokers Group rose just over 14.5% in 2023, underperforming the broader market. — Alex Harring 5:47 a.m. ET: Morgan Stanley upgrades CrowdStrike, says cybersecurity tech provider is ‘firing on all cylinders’ Morgan Stanley said traders should flock to CrowdStrike shares. Analyst Hamza Fodderwala upgraded the cybersecurity software stock to overweight from equal weight and raised his price target by $101 to $304. His new target reflects the potential for shares to climb 16.4% from Monday’s closing level. “We are upgrading CRWD … based on improving demand, broader platform traction and multiple product cycles still ramping up, including the recently launched Charlotte AI,” Fodderwala said, adding that the company is “firing on all cylinders.” “We think these factors should result in more meaningful upside to ARR and FCF forecasts throughout the year,” he added, using acronyms for annual recurring revenue and free cash flow. That allows for “driving the stock higher despite significant outperformance over the last year.” CrowdStrike is the “leading beneficiary” as ransomware becomes more common given the company’s s incident response and endpoint security services, Fodderwala said. In fact, attacks grew by a clip of more than 70% last year, leading to growth in professional services revenue, according to the analyst. Elsewhere, Fodderwala pointed to multiple product cycles still ramping up. In particular, he pointed to the company’s “strong position” for leveraging and monetizing generative artificial intelligence. CrowdStrike’s Charlotte AI can add $100 million in annual recurring revenue by 2025 if there’s 10% penetration in the installation base, he said. To be sure, Fodderwala knows his upgrade comes after a strong year for the stock, with shares outperforming security peers and the Nasdaq Composite in 2023. While he admitted to being late to the party, he said investors aren’t too late to buy in given the reasons for optimism. CRWD .IXIC 1Y mountain CRWD vs Nasdaq in past year Shares rose 2% before the bell on Tuesday. — Alex Harring 5:32 a.m. ET: Citi downgrades Netflix, says streaming giant could underperform on some Street projections Investors should move to the sidelines on Netflix as Wall Street’s expectations have gotten too grandiose, Citi warned. Analyst Jason Bazinet downgraded the streaming giant to neutral from buy. His $500 price target implies an upside of 3.1% from Monday’s close. “Across 2024 and 2025, the Street has lofty expectations for Netflix. We see three potential risks,” Bazinet wrote to clients. “At prevailing levels, we find the risk-reward relatively balanced.” Bazinet said the first of those three reasons is that 2024 revenue expectations may be too high. Next, 2025 content investments should be higher than analysts anticipate. And finally, he said potential acquisitions can’t be ruled out. Given these risks, he said the risk-reward ratio is no longer compelling. Bazinet’s downgrade comes on the heels of a strong year for Netflix, making Bazinet’s upside expectations relatively muted. Shares rallied more than 65% in 2023, regaining some ground after dropping more than 50% in the prior year. Netflix stock slipped 2.1% before the bell Tuesday. — Alex Harring 5:32 a.m. ET: Deutsche Bank upgrades JPMorgan Chase JPMorgan Chase shares have more upside left in them after a stellar 2023, according to Deutsche Bank. Analyst Matt O’Connor raised his rating on the bank to buy from hold and raised his price target to $190 from $140 per share. The new forecast indicates a potential gain of 10.5% from Monday’s close. “Shares should benefit from upside to net interest income guidance (vs. downside risk at peers), good leverage to a pick up in capital markets revenues, and strong capital and loan loss reserve levels,” O’Connor wrote. “And while we wouldn’t argue JPM shares are cheap, they also aren’t expensive at 11.5x our 2024e or just a slight premium to the broader group multiple of 11.0x.” JPMorgan Chase rallied 24.6% in 2023. The stock hit a record high last week. JPM 1Y mountain JPM in past year — Fred Imbert
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