Upgrades and Downgrades by Wall Street analysts are PepsiCo, Riot Platforms, and Kingsoft Cloud, while downgrading Nuscale Power.
PepsiCo (PEP)
Morgan Stanley has upgraded PepsiCo (PEP) to Overweight with a $190 price target, citing a fundamental inflection expected to drive stock outperformance.
The bank believes that PEP’s valuation is at a 22-year low and more than three standard deviations below its relative NTM 10-year P/E average. The bank is in-line with consensus on Q1, viewing their Q1 forecast as conservative, so upside is more likely than downside. The analysts expect the market to look ahead to a post-Q1 inflection that is clearly on the horizon. They downgraded Pepsi’s stock to an EW post Q2 of 2023 EPS, concerned that valuation was priced to perfection and consensus/PEP guidance on OSG was too high. Morgan Stanley will be aggressive buyers ahead of a powerful inflection in H2 after PEP bottoms fundamentally in Q1 and returns to above consensus and peer OSG.
PepsiCo stock increased by 2% in premarket session, reaching $167.90, and 4.01% in regular session, opening at $167.10 and closing at $171.26.
Nuscale Power (NYSE:SMR)
Wells Fargo has downgraded Nuscale Power (NYSE:SMR) to Underweight with a $4.50 price target.
The bank believes the strong year-to-date performance of SMR, which is up 207% compared to the S&P 500’s 8%, is linked to favorable developments for nuclear owners CEG & TLNE. However, the bank believes the investor excitement surrounding SMR is misplaced due to several reasons, including the absence of secured customers for SMR’s VOYGR product, the company’s weak financial condition, and non-competitive pricing of VOYGR technology compared to other energy sources. The bank’s price target of $4.50 per share is based on the assumption that NuScale’s annual New Plant Module unit sales will escalate to approximately 30 units by the mid-2030s.
NuScale stock fell 4% on premarket headlines to $9.4, while SMR opened the regular session at $8.73 and closed at $6.58, a 34.85% drop. This was a significant drop for the stock.
The Old Commonwealth
JPMorgan has upgraded Riot Platforms (NASDAQ:RIOT) to Overweight with a $15 price target,
Recognizing the company’s significant operations in bitcoin mining and potential for growth. RIOT, which operates the largest bitcoin mining facility in the U.S. at Rockdale and is developing a new 1 GW data center in Corsicana, stands out for its scale, strategic expansion plans, affordable power contracts, and financial resources. Analysts believe RIOT has a clearer growth trajectory compared to competitors who often need to purchase smaller sites or develop new facilities. JPMorgan’s $15 price target for December 2024 is based on a conservative bitcoin price assumption of $60,000, suggesting a 35% upside from current stock levels.
Riot Platforms stock rose 2% on premarket headlines to $11.32, while the regular session saw a 11.81% gain at $12.40, with the stock opening at $11.75 and closing at $12.40.
Kingsoft Cloud (NASDAQ:KC)
Citi has upgraded Kingsoft Cloud (NASDAQ:KC) to Buy with a $5.00 price target.
The company has started generating revenue from AI in the second half of 2023, with expectations for significant growth in 2024. This is partly due to the anticipated large-scale rollout of WPS AI by KOS and the upcoming launch of Xiaomi’s first EV, the SU7, on March 28. Citi maintains its revenue estimates for KC but has increased its margin forecasts for 2024 and 2025, anticipating continued revenue growth and margin enhancement as AI-related revenues rise. The analysts’ outlook is buoyed by better-than-expected margin improvements, suggesting a robust financial trajectory for KC in the coming years.
Kingsoft Cloud shares experienced a 2.94% decline in the regular session, dropping from $3.60 in premarket to $3.63, with the stock regaining its momentum after a surge from $3.82 to 3.88.
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