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HomeStocks in FocusUpgrades and Downgrades: Ulta Beauty, American Eagle Outfitters, CAVA Group Receives Upgrade;...

Upgrades and Downgrades: Ulta Beauty, American Eagle Outfitters, CAVA Group Receives Upgrade; Arista Networks Faces Downgrade.

Upgrades and Downgrades by Wall Street analysts are PepsiCo, Riot Platforms, and Kingsoft Cloud, while downgrading Nuscale Power.

Ulta Beauty

Loop Capital Upgrades Ulta Beauty

  • Upgraded to Buy.
  • Price target: $540.

Loop Capital’s Market Outlook for Ulta Beauty

  • The brokerage firm views the recent market downturn as an overreaction, especially considering Ulta Beauty’s challenging Q1 2024 comparison.
  • Loop Capital predicts a rebound in Ulta’s fortunes throughout the fiscal year due to favorable year-over-year comparisons and new product launches.
  • Ulta Beauty’s stock repurchase at reduced prices is seen as a strategic advantage, contributing to greater EPS growth.
  • The initiation of a regular cash dividend by Ulta Beauty could trigger a significant positive trigger for the stock’s value.
  • Loop Capital’s price target is anchored on a multiple of 20.3x the forecasted diluted EPS for FY24.
  • Ulta Beauty’s stock traded higher on the premarket headline and closed at $452.78, a gain of 1.81%.

American Eagle Outfitters

JPMorgan Upgrades American Eagle Outfitters

  • Upgraded to Overweight.
  • Target price: $31.

JPMorgan’s Meeting with American Eagle Outfitters’ Executives

  • Management team expresses optimism about momentum across AE and Aerie brands.
  • 3-year financial plan projects consolidated revenue growth of 3-5% and mid-to-high-teens operating income growth.
  • Aerie’s revenue growth is assumed to be in the mid-to-high single digits, below its historical double-digit CAGR.
  • Analysts upgrade American Eagle to Overweight with a December ’24 price target of $31.
  • Price target is based on 15x their FY25 EPS, 1x PEG to their FY24/25 EPS growth, or 6.7x their FY25 EBITDA.
  • Overweight at JPMorgan means the stock will outperform the average total return of the stocks in the Research Analyst’s coverage universe.

CAVA Group

Argus Upgrades CAVA Group

  • Upgraded to Buy.
  • Set $70 price target.

Argus Upgrades CAVA Group Rating to BUY

  • Argus upgraded CAVA Group’s rating from HOLD to BUY, indicating confidence in the company’s potential in the fast-casual dining sector.
  • CAVA Group, specializing in Mediterranean cuisine, is well-positioned to capitalize on market opportunities.
  • Key strengths include profitable operations, solid financials, and seasoned leadership.
  • Despite recent public market entry, Argus finds the company’s valuation metrics mixed.
  • CAVA’s price-to-earnings ratio is 200x the estimated 2025 EPS, surpassing competitors like CMG, SHAK, and SG.
  • Argus sees the recent market dip as an opportunity for early investors to buy into a high-growth stock.
  • The BUY rating means the stock is expected to outperform the S&P 500 on a risk-adjusted basis over a 12-month period.

Nike

Nike Upgraded by BofA

  • Upgraded to Buy
  • Targeted $113 price.

Nike’s Stock Elevated to Buy from Neutral by BofA

  • Nike’s financial forecasts are within reach, and its transformation efforts are in full swing.
  • The stock is valued at a 10-year low in terms of relative price-to-earnings (P/E).
  • BofA’s analysis suggests mid-single-digit revenue growth and improved margins.
  • The analyst’s new $113 price target for Nike is based on a 25 times F26 P/E ratio, down from the previous 27 times.
  • Anticipation is building for Nike’s first Investor Day in seven years, scheduled for this fall.
  • Nike is predicted to follow suit this year, potentially leading to a resurgence in growth fueled by new product introductions and strategic changes.
  • Nike stock traded higher on the premarket headline from $89.03 to $91.18, a gain of around 2.50%.

Arista Networks

Rosenblatt Downgrades Arista Networks

  • Double downgraded to Sell.
  • Price target: $210

Rosenblatt’s Analysis of Arista’s AI Market Strengths

  • Arista’s strengths in Data Center Switch and 400G are questioned by Rosenblatt.
  • EOS, a network architecture software, may not be as effective for AI due to its repetitive nature.
  • AI requires RDMA, not an extensible operating system.
  • Nvidia has emerged as the primary Data Center competitor, posing significant advantages over Arista.
  • Arista’s stock underperformed in the next 12 months, with a 2.22% decline on the premarket headline and 8.54% decline in the regular session.

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