5 Huge Analyst Calls: Tesla Slashed at Goldman; Pfizer Cut on 'Uncertainty'

Check out this Pro Recap highlighting the major points highlighted by Wall Street analysts during the previous week. Tesla and Pfizer saw their ratings decrease, while Nvidia and Pinterest experienced positive rating upgrades. Frontier Comms also received a promising initiation with an outperform rating.

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What occurred? On the night of Sunday, Goldman Sachs downgraded Tesla (NASDAQ:) to Neutral and set a price target of $248.

What's the whole situation? Tesla is becoming monotonous and truthfully quite uninteresting. Musk is allowing his ego to overshadow his rationality, but I'll refrain from elaborating.

On Monday morning, opportunists took advantage of the recent decline on Sunday evening to share the information very early in the morning, at both 4AM and 6AM. The reason behind the downgrade, according to Goldman Sachs, was not particularly impressive.

…we are confident that the current stock price more accurately represents our optimistic outlook on the company's future growth possibilities and strong market position.

Goldman holds the belief that their assessment, which stands at 187 times enterprise value compared to free cash flow for the following year, remains somewhat justifiable.

The concept of neutrality at Goldman Sachs is explained as follows:

Any stock that is not classified as a Buy or a Sell on an Investment List with a currently active rating (i.e., a stock that is not under Rating Suspended, Not Rated, Coverage Suspended, or Not Covered) is considered Neutral.

What was the response of the stock market? Tesla's stocks, which are known for their unpredictable swings, experienced a decline during the initial premarket trading, reaching a value of $253 before dropping to $249. However, as expected, they quickly bounced back and rose in value during the hours leading up to 6AM and 7AM, possibly in an attempt to deceive small individual traders.

The stock was traded throughout the day and finished at a price of $241, which was unexpectedly low for the week. However, it dramatically surged towards the end of the week, ultimately concluding at a price of $261.

What took place? On Tuesday, Wolfe began coverage on Frontier Comms (NASDAQ:) with a positive rating, setting a target price of $27.

What's the complete narrative? Wolfe is attempting to be ahead of the crowd in entering the market to acquire shares of Frontier Comms. The company stated:

Assessment - the foundation of a multi-level structure: If Frontier were to never install any more fiber cables, the worth of the current fiber could arguably be the same as the Enterprise Value (EBITDA of $1.2 billion over the past twelve months multiplied by eleven equals $13 billion) without considering the potential value from future customers, pricing benefits, and the potential to upgrade. The decline of FYBR's equity value by 36% or $2.3 billion so far this year greatly overstates the pressure of construction costs: upgrading 5 million homes at a cost of $100 each would only decrease the value by $500 million. Although we are concerned that costs may still rise, temporary increases in construction costs are not as important to return on investment capital as the number of customers reached and pricing strategies.

In addition to what Wolfe pointed out, this overly optimistic view relies on FYBR's advantage in providing services to meet the ever-growing demands for consumer data.

Wolfe defines outperform as:

The safety measures are expected to surpass the analysts' industry coverage range in the upcoming year.

What was the equity's response? FYBR experienced the typical unpredictable price movement, causing the stock to rise by $1.80, reaching a peak of $17. The day concluded with shares increasing approximately 8% to $17.53.

What occurred? During Tuesday night, Wells Fargo raised its rating on Pinterest (NYSE:) to Overweight and set a target price of $34.

What is the complete narrative? Besides Wells Fargo trusting a 25 times multiple on 2024 EBITDA as valid, the reason behind the change was the subsequent discussion. (It's also worth noting that Wells is a preferred platform for professional scalpers to gradually release ratings to news agencies.)

We think Pinterest is making a smart decision by letting other companies handle the money-making side of their platform. This will help them overcome the difficulties they face with keeping track of where their revenue comes from and growing on a large scale. They recently announced that they will be partnering with Amazon, and this partnership is expected to be up and running by the 2023 holiday season. They also plan to work with other big retail media networks in the future. By outsourcing the monetization part of their business, Pinterest can focus on making their platform more engaging and improving the overall experience for their users. This, along with some early positive signs of progress in engagement and ad load, should lead to higher revenue and better profit margins for the company.

A person who weighs more than the recommended healthy weight at Wells is referred to as:

Anticipated stock performance is predicted to yield a total return exceeding 10% in the upcoming 12-month period.

What was the equity's response? The announcement was released shortly before midnight on Tuesday and quickly spread across trading desks and chatrooms during the critical 4AM opening time. PINS shares experienced a roughly $1 increase by 5AM and were being traded at around the mid-$27 range during premarket. Ultimately, PINS finished the day with a 6.6% gain, reaching a closing price of $28.14.

What occurred? On Thursday, Pfizer (NYSE:) was downgraded by Credit Suisse to Neutral with a target price of $40.

What's the complete tale? Credit Suisse provided a pessimistic comment, stating that the coveted "catalyst" associated with these titles seems to have faded away. They expressed their opinion:

The value of the company is still good, but there are some uncertain factors that might affect it. As a result, our projected earnings per share for 2023 has decreased from $3.32 to $3.30, and for 2030 it has decreased from $3.25 to $3.09. Despite these changes, the company's valuation is still reasonable compared to its competitors, with a price-to-earnings ratio of 10.6x versus 16.3x for peers. Additionally, the stock offers a higher dividend yield compared to others in our industry, with a rate of 4.2% compared to 3.0% for peers. However, we have not seen the expected increase in the company's stock price due to anticipated positive events such as new products or business development. It will be challenging to improve market sentiment given the uncertainty surrounding factors like pricing during the COVID pandemic, a decrease in business development, and a lack of significant events on the horizon. We need to see the company's plans executed successfully in order to feel confident in their ambitious expectations for peak sales of their pipeline products as well as their ability to navigate the challenges of COVID and flu.

At Credit Suisse, being neutral means taking a balanced and unbiased approach.

The stock is anticipated to have a similar performance as the relevant benchmark in the coming year.

How did the stock market respond? Stocks were fluctuating in the early morning for the day trader, and by the end of the day the stock market was almost the same. If we ignore the big trade that happened at 4AM and affected the stock information provider as part of the updates on hidden trading platforms, the stocks mostly stayed within a range of $0.60 before slightly decreasing to around $36 by the end of the day.

What transpired? Last Friday, Daiwa raised its rating of Nvidia (NASDAQ:) to Outperform and set a price target of $475.

What's the complete narrative? "Increased application of artificial intelligence" appears to be the popular trend nowadays. Daiwa joined the NVDA long trade and expressed their thoughts on it.

We clearly overlooked the significant surge in the stocks, but this marks the commencement of what we perceive as a fresh chapter in technology. Every corporation will aspire not just to employ a tool like ChatGPT, which relies on accessible information, but also carry out similar operations with their proprietary data. Graphics processing units (GPUs) are vital for training and can be regarded as an emerging market.

What was the response from the stock market? The shares experienced a remarkable surge of almost 4%, increasing from $408 to $423.02 as the day concluded. Before the market opened at 4 AM in New York City, there was an enthusiastic rush to buy shares after the news broke, specifically from institutional traders who opted for long positions.