Best Buy and Lululemon Upgrades By Investing.com

Investing.com — Here’s a pro rundown of key takeaways from last week from Wall Street analysts. Best Buy , Lululemon and Collegium Pharma; Downgrade of Maxeon Solar and Medifast.

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Best Buy

What happen? On Monday, Citi upgraded Best Buy (NYSE:) to Buy with a $100 price target.

What’s the full story? Citi doubled BBY stock upgrade from Sell to Buy. The research team believes the catalyst path here looks positive, with upside potential for both revenue and value. This is based on an ongoing technology refresh cycle, new AI innovations serving growing demand, and solid margin execution.

Last week’s 1QF25 results demonstrated that GM execution remains best-in-class, with company-specific drivers able to offset external pressures such as higher promotional activity. Simply put, this was a thesis changer compared to Citi’s previous negative thesis. The research team acknowledged the SSS risk in the second half of the year due to consumer uncertainty (election confusion, shortened holidays, etc.).

However, Citi believes it is prudent to look at multi-year opportunities ahead as the business returns to growth and an attractive margin expansion story unfolds. The research team is raising its price target from $67 to $100 based on higher EPS estimates (led by revenue and margins) and an increased target multiple of 14x FY26 EPS.

Buying from Citi means “buying (1) 15% or more or 25% or more ETR for high-risk stocks.”

How did stocks react? Best Buy opened regular trading at $85.96 and closed at $86.94. This is a 2.50% increase from the previous day’s regular closing.

Maxion Solar Technologies

What happen? On Tuesday, Goldman Sachs doubled down on Maxeon Solar Technologies Ltd (NASDAQ:) to Sell with a $1 price target.

What’s the full story? Goldman Sachs revised its position on MAXN following its 4Q23 and 1Q24 earnings reports released on May 30. The report found that both gross margin and EBITDA were below GSe/Factset consensus expectations, leading to weaker-than-expected guidance. Additionally, MAXN has yet to secure a DOE loan and surprisingly announced an equity investment from TZE. This investment, combined with the debt restructuring plan, is expected to significantly transform MAXN’s capital structure. The proposed new share issuance is likely to dilute the value of current shareholders, with ownership of TZE exceeding 50.1% following the transaction and approximately 350 million convertible shares becoming active.

Goldman Sachs’ research team points out that while equity investments and debt restructuring can alleviate liquidity concerns amid difficult market conditions, there is still increasing uncertainty about future financing, including DOE loan guarantees. Given the combination of market weakness, soft guidance, risks related to future capacity additions and timing, capital structure uncertainty, and potential dilution risk as MAXN addresses liquidity issues, Goldman Sachs downgraded MAXN from Buy to Sell. . The company also adjusted its 12-month price target for MAXN to $1. This represents a downside of 46%, as opposed to the roughly 22% upside previously expected across coverage.

Selling at Goldman means “a buy or sell designation on an investment list is determined by the total return potential of the stock under coverage.”

How did stocks react? Maxeon Solar Technologies opened the regular session at $1.76 and closed at $1.75, down 5.41% from the previous day’s regular close.

Medifast

What happen? On Wednesday, DA Davidson downgraded Medifast (NYSE:) to Underperform with a $17.50 price target.

What’s the full story? This downgrade follows a meeting with Medifast, which led to a change in revenue forecasts. A sequential leveling is now expected in the first quarter of 2025 rather than the fourth quarter of 2024. As a result, projected sales for 2025 are down 5% compared to the same period last year. Expected earnings per share (EPS) for the year are down 29%.

Medifast’s GLP-1 product advertising campaign, originally scheduled for June, has been postponed to July. The impact of these ads on customer acquisition won’t be revealed until November. DA Davidson has hinted at further declines, with its shares down 64% since the start of the year. Medifast’s current marketing expenses (5-6% of sales) are significantly lower than those of its weight loss and telemedicine competitors (25-50% of sales), raising concerns about its competitive position.

DA Davidson’s underperformance means it is “expected to lose more than 15% of its value on a risk-adjusted basis over the next 12-18 months.”

How did stocks react? Medifast opened the regular session at $20.43 and closed at $22.02, down 8.30% from the previous day’s regular close.

lululemon

What happen? HSBC was upgraded on Thursday. Lululemon Athletica Buy Inc (NASDAQ:) with a $425 target price.

What’s the full story? HSBC analysts report that while Lululemon has experienced a notable share price surge, it has faced challenges after hitting an all-time high in January 2024. Doubts about the resilience of North American growth raised concerns and the company’s March guidance missed consensus expectations. “Beat and Raise” pattern. As a result, the stock is down 40% year-to-date, in contrast to the more stable sporting goods sector.

Comparative sales in the “Americas” remained flat in the first quarter, but some of the pain was self-inflicted due to stock shortages in a variety of colors and sizes, especially for women’s products. However, global comparable sales increased 7%, driven by strong performance in mainland China and other international markets. While the Americas still account for 73% of the group’s sales, the surge in overseas sales points to a potential scenario where overseas sales could reach half of the group’s business.

Despite limited earnings revisions, the recent multiple compression has analysts viewing the stock as overly punished.

How did stocks react? Lululemon opened the regular session at $337.23 and closed at $323.03. This is a 4.91% increase from the previous day’s regular closing price.

College of Pharmacy

What happen? Jefferies was upgraded on Friday. Colesium Pharmaceuticals Buy Inc (NASDAQ:) with a $44 target price.

What’s the full story? Jefferies expressed a more optimistic view on COLL, which now stands at just 4x EBITDA following the CEO’s departure. The company believes that the risk/reward ratio is tilted upward. This optimistic view is driven by several factors. First, Jefferies notes that second quarter trends are strong and the EBITDA consensus is likely too low. Second, the company believes the upside surrounding its base case (LOE) is underestimated.

Jefferies also highlights the significant cash generation expected by 2028, predicting that net cash will exceed market capitalization in F28. As a result of these factors, the company upgraded COLL to Buy with a target price of $44. This target is based on equal weighting of the 5xC25 Adjusted EBITDA and DCF analyses. Despite recent leadership changes, Jefferies sees potential for future growth and profitability in COLL.

At Jefferies, a buy “refers to a security expected to deliver a total return (price appreciation plus yield) of more than 15% within 12 months.”

How did stocks react? Collegium Pharma opened the regular session at $32.62 and closed at $33.19. This is a 5.84% increase from the previous day’s regular closing.