(This is CNBC Pro’s live coverage of Wednesday’s analyst calls and Wall Street chatter. Please refresh every 20-30 minutes to view the latest posts.) An electric vehicle maker and a health insurance giant were among the stocks being talked about by analysts on Wednesday. Morgan Stanley raised its price target on Rivian to $17 from $13. Meanwhile, Jefferies upgraded UnitedHealth to buy from hold. Check out the latest calls and chatter below. All times ET. 6:46 a.m.: Barclays sees a challenging setup ahead of Tesla’s second-quarter earnings Investors shouldn’t count on Tesla’s recent outperformance to continue, according to Barclays. Analyst Dan Levy stood by his equal-weight rating for the electric vehicle manufacturer ahead of its second-quarter earnings call on Tuesday, July 23. He did raise his price target for the stock to $225 from $180, although this price hike still implies that Tesla stock could fall 12%. “We believe TSLA’s clear lead in both the global EV transition and the emergence of the software defined vehicle, as well as positive trajectory on volume, position it very well in the long term, but we believe near-term headwinds for the stock are being overlooked amid the recent rally in the stock, keeping us on the sidelines,” the analyst wrote. More specifically, Levy pointed to Tesla’s shift in investment thesis away from growth driven by vehicle manufacturing and instead emphasizing AV/AI businesses such as its robotaxi. “While we appreciate the potentially disruptive opportunity from these businesses, we believe they cast uncertainty on the path ahead for Tesla, making success of the stock dependent on bets with seemingly binary outcomes,” he added. Tesla stock has added 3% this year but have gained 81% since their April lows. Levy believes that Tesla’s upcoming earnings call will force investors to weigh the firm’s still-challenged fundamentals against its recent outperformance, especially given that the AV/AI excitement may soon fade. â Lisa Kailai Han 6:30 a.m.: UBS initiates Sweetgreen with a buy rating UBS sees a healthy outlook ahead for Sweetgreen . The bank initiated shares of the fast-casual salad chain with a buy rating and set a $31 price target. This implies nearly 16% upside for the stock. UBS analyst Dennis Geiger wrote he sees “significant unit growth runway” for the stock and believes Sweetgreen could generate revenue growth of 15% or more. “We anticipate strategic plans across kitchen automation, loyalty & menu innovation should support sss [same-store sales] and EBITDA margin expansion (200+ bps/yr) over the coming yrs, while key menu attributes are a core competitive advantage,” he added. More specifically, Geiger cited Sweetgreen’s automated Infinite Kitchens as a catalyst, writing that the average Infinite Kitchen location has maintained a margin of 28% versus the system average of 18%. “We view IK as transformational for the brand, potentially boosting margins by at least 60 bps annually, w/ upside potential from larger AUV urban IK locations,” the analyst elaborated. Geiger also sees opportunities for Sweetgreen to introduce new menu ideas, including further proteins such as its steak launch and additional beverages. The analyst also cited the company’s focus on throughput and its enhanced loyalty program as promising. Shares of Sweetgreen are up 137% on the year. SG YTD mountain SG year to date â Lisa Kailai Han 6:01 a.m.: TD Cowen downgrades American Airlines to hold ahead of earnings report Investors should stay cautious of American Airlines for now, according to TD Cowen. Analyst Thomas Fitzgerald downgraded shares of the airline carrier to a hold rating from buy ahead of American Airlines’ next quarterly earnings report, due out before the bell on July 25. The analyst also slashed his price target for the stock to $10 from $16 and lowered his second-quarter adjusted earnings estimate to the low end of the guidance issued in late May. American Airlines stock has lost 19% in 2024. Fitzgerald’s updated price forecast implies that shares could slide another 11%. AAL YTD mountain AAL year to date The analyst noted that American’s recent aggressive discounting could lead to downside risk on its earnings estimates for the second half of the year. “Our checks indicate the airline has been aggressively discounting this summer as fuel prices eased. American’s network leaves it more exposed to the markets currently most oversupplied and less able to offset the higher cost environment,” he wrote. To resolve these challenges, the airline will need to make large shifts in its strategy while also investing in its capital expenditures funds over multiple years. Fitzgerald noted that the company would also need to finalize a new flight attendant contract and hire a new chief commercial officer. “These factors likely will push off the possibility of generating free cash flow in the medium term as well as the chance for shareholder returns,” he said. Meanwhile, “significant investments” are necessary for American Airlines to close the gap with competitors Delta and United, the analyst added. â Lisa Kailai Han 5:44 a.m.: Jefferies upgrades UnitedHealth to buy on ‘superior ’25 setup’ UnitedHealth’s near-term setup is looking rosy, according to Jefferies. The bank upgraded the health insurance stock to buy from hold. Analyst David Windley also hiked his price target to $647 from $481. This updated forecast implies 18% upside for shares of UnitedHealth. Shares of UnitedHealth are up 4% on the year and rose 6.5% on Tuesday, after the company posted a second-quarter earnings and revenue beat. UNH YTD mountain UNH year to date The analyst applauded UnitedHealth’s efforts to beat its earnings estimates by pinching costs tightly, which could lead into a “superior ’25 setup.” Windley also wrote that accelerating gross sales growth could improve UnitedHealth’s relative multiple. Additionally, external factors have also fallen into the company’s favor. “A major reason for our Hold position was a growing list of political/regulatory/self-inflicted overhangs,” Windley said. “Over the past ~2 months, many have resolved or trended in UNH’s favor, notably the US Presidential election (most important, by far), competitors messaging conservative MA bid postures, Amedisys deal moving forward (key for capitated growth), Chevron Deference ruling, and UNH reportedly stopping pursuit of Steward’s Physician network (that was a bad look).” The analyst added that UnitedHealth looks best positioned to capture the full economic opportunity of growth in Medicare Advantage plans. â Lisa Kailai Han 5:44 a.m.: Morgan Stanley hikes Rivian price target A new partnership has injected new life into Rivian shares, but Morgan Stanley thinks gains will be limited from here. Analyst Adam Jonas raised his price target on the stock to $17 from $13. The new forecast, however, implies downside of 5.2% from Tuesday’s close. The change comes after Volkswagen announced on June 25 it will invest up to $5 billion in the EV maker, sending shares soaring. Since then, Rivian is up 50%. RIVN mountain 2024-06-25 RIVN since June 25 “VW’s cash reduces near term vol in the stock but it doesn’t change our view that Rivian may have a better future as a Tier 1 supplier/SDV ‘tech partner’ than as a stand-alone maker of EVs,” wrote Jonas, who kept his overweight rating on shares. “For Rivian to justify being an OW in your portfolio at this price, the company must show continued proof-points on capital discipline, improved visibility of earnings and a credible path to $1bn to $2bn of [free cash flow] before end of decade,” he added. â Fred Imbert
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