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As investors digest the latest inflation data and December earnings season begins, Wall Street analysts unveiled bold predictions for four portfolio stocks this week. Here we provide a summary of each report and the club’s latest views on each report. Morgan Stanley Wall Street View: HSBC on Monday downgraded Morgan Stanley’s rating from “buy” to “hold” citing weak guidance for the company’s wealth management business. “Despite rising stock prices, we have lowered our earnings estimates in recent months, particularly for Morgan Stanley, and despite a softening outlook for wealth management (multi-business growth) earnings. This led to a significant increase in P/E (c15x 2024e),” analysts wrote ahead of the bank’s January 16 earnings release. MS 1Y Mountain Morgan Stanley 1 Year Club View: I don’t blame analysts for being on the sidelines. Bank stocks have performed strongly over the past few months, and rising expectations for earnings could lead to selling. And to be fair, weakness in the wealth management division was the driving force behind the stock’s nearly 7% drop in October profits. Still, Morgan Stanley has strong growth prospects in its investment banking sector and expects the business to improve due to an improved macroeconomic outlook and increased trading activity. The company is scheduled to report fourth-quarter results before the opening bell next Tuesday. Apple Wall Street’s view: Redburn Atlantic downgraded Apple stock from buy to neutral on Wednesday, citing limited growth opportunities. “While we expect iPhone to return to growth in CY24, there is little upside scope in the coming years, with weaker-than-expected March quarter results impacting confidence in this outlook. At the same time, regulatory risks also appear to be increasing, which could impact Apple’s ability to monetize its ecosystem,” the analysts argued. AAPL 1Y Mountain Apple 1 Year The Club’s Take: After Apple’s nearly 50% rally in 2023, it’s reasonable to think the stock could cool down in the new year. In fact, we reduced our position in Apple along with seven other tech stocks in anticipation of investors moving to other high-quality areas of the market. Still, the company’s philosophy of “put up with it, don’t trade” remains unchanged. Continued service revenue growth and the upcoming Vision Pro launch could change the narrative surrounding the iPhone sales slump. Wall Street’s take on Palo Alto Networks: Morgan Stanley on Wednesday named Palo Alto Networks its top choice for banking cybersecurity. The company highlighted “multiple growth drivers” for the stock, with rising security threats, regulatory guidelines and generative artificial intelligence providing tailwinds for the sector overall in 2024. “Due to platform adoption and low expectations, valuations of 22x EV/CY25 FCF with FCF CAGR of over 20% are becoming increasingly attractive,” the analysts asserted in a research note. “Our latest checks show a notable increase in demand for CQ4 and CQ3, with next generation products (Cortex XSIAM, SASE) contributing more to sales growth. Given the poor performance and relatively mixed investor sentiment, we see a more favorable situation here.” PANW 1Y Mountain Palo Alto Networks 1 Year Club View: Providers that offer a complete suite of solutions for companies We’ve said many times that Palo Alto will outperform its peers and gain market share as it consolidates its security budget around . This multi-year theme enabled the company to become the first in the group to reach a market capitalization of $100 billion, a long-held goal of management. But $100 billion won’t be the ceiling, given Palo Alto’s leadership in one of the most important investment categories for IT spending. Salesforce Wall Street View: Baird analysts upgraded Salesforce stock from Hold to Buy on Thursday. “We underestimated the company’s willingness to deliver margin, which was the driving force behind last year’s strong performance. “With strong growth and expectations slowing (+11% over the next two years on the Street), we see room for upside “below current levels,” the analysts wrote. “Price increases, potential benefits on front-office spending, and faster sales execution should pick up.” CRM 1 Year Mountain Salesforce 1 Year Club View: Baird’s comments came too late. Cloud software stocks have already risen 98% in 2023 as CEO Marc Benioff & Company embraced activist investors and sought to boost margins. But investors shouldn’t jump in after such a historic rally. Because after a profit of this magnitude, there is always a breather. (Jim Cramer’s charitable trusts are long AAPL, PANW, CRM, MS, WFC. See here for a complete list of stocks.) As a subscriber to Jim Cramer’s CNBC Investment Club, Jim Receive trade alerts before making a trade. trade. After Jim sends a trade alert, he waits 45 minutes before buying or selling stocks in a charitable trust’s portfolio. If Jim talks about a stock on his CNBC TV, he will wait 72 hours before executing the trade after issuing a trade alert. The above investment club information is subject to our Terms of Use and Privacy Policy, along with our disclaimer. No fiduciary duties or obligations exist or arise from your receipt of information provided in connection with the Investment Club. 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Traders work on the floor of the New York Stock Exchange (NYSE) on December 13, 2023 in New York City, USA.
Brendan McDiarmid | Reuters
As investors digest the latest inflation data and December earnings season begins, Wall Street analysts unveiled bold predictions for four portfolio stocks this week. Here we provide a summary of each report and the club’s latest views on each report.
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