Intel and Robinhood Upgrades; Investing.com’s SunPower Downgrade

Investing.com — Here’s a pro summary of the key takeaways from Wall Street analysts last week: Intel, Robinhood (NASDAQ:) and Boston Beer (NYSE:) Upgrade; Downgrade of SunPower (NASDAQ:).

InvestingPro subscribers always get the first information on rating changes that move the markets.

MasterCard

What happen? On Monday, Piper Sandler initiated an Overweight report on Mastercard with a $531 price target.

What’s the full story? Pfeiffer expects Mastercard (NYSE:) to achieve 11.0% revenue growth this fiscal year, with even stronger performance expected in fiscal 2025, when the company is expected to grow 12.7%. This growth is primarily driven by the payment networks segment. The Payment Networks segment is expected to grow revenue by 9.5% this year and surge 13.5% in FY25, accounting for approximately 62% of Mastercard’s total revenue. At the same time, value-added services and solutions are expected to grow by 13.7% in FY24 and 11.5% in FY25, accounting for approximately 38% of total revenue.

The brokerage highlights the significant potential of consumer payments as a pivotal growth catalyst for Mastercard. The company’s current transaction volume reaches $9 trillion annually, with a total addressable market (TAM) exceeding $250 trillion across multiple revenue channels, including domestic and cross-border transactions, processing, and value-added services.

Piper also said Mastercard will continue to innovate and innovate traditional cash transactions to provide new services and technologies.

At Piper, overweight means “expected to outperform the median of the group of stocks covered by analysts.”

How did stocks react? MasterCard opened the regular session at $456.44 and closed at $457.76. This is a 0.10% increase from the previous day’s regular closing.

boston beer company

What happen? On Tuesday, Jefferies upgraded Boston Beer to Buy with a $360 price target.

What’s the full story? Jefferies reports a positive outlook for Flavored Malt Beverages (FMB) and Ready-to-Drink (RTD) products, predicting growth of 4-5% at the expense of Seltzers and domestic beers. Hard Tea emerged as the dominant category in this segment, with major brands receiving 43% of honorable mentions. The leader is Twisted Tea, which accounts for 19% of mentions and currently surpasses Truly in market size. These changes represent a significant trend change in the Segment Addressable Market (SAM).

The brokerage notes that while the malt-based seltzer industry is on a downward trend, with Truly experiencing continued market share losses, Boston Beer’s cider and beer portfolio is also facing a prolonged decline. However, Twisted Tea’s strong performance in the flavored malt beverage segment is helping to mitigate this decline. Nonetheless, overall volume declines across the sparkling water, beer and cider categories are delaying the recovery in gross margin (GM) ratios.

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? Boston Beer opened the regular session at $288.32 and closed at $284.78. This is a 0.34% increase from the previous day’s regular close.

Sun Power

What happen? On Wednesday, Wolfe Research downgraded SunPower to Underperform with a $2 price target.

What’s the full story? I deeply agreed with this argument because the company was, as expected, part of an irrational meme stock gamble. The stock traded as high as the $5 handle on Tuesday. The company has no way of issuing products at such high and unstable price levels. Additionally, GLJ Research’s Gordon Johnson had a great article posted to Investing.com premium users at the time of distribution Tuesday at noon. Click the link here. This was a simple, confident call at good times, like catching the last of a good set when surfing.

Wolfe Research highlighted SunPower as an outstanding example of the recent meme stock phenomenon within the cleantech sector. Despite the lack of positive fundamental updates, SPWR’s stock price has surged about 100% year to date due to a significant short squeeze. This market move was triggered by high short interest in the company, which amounts to around 95% of the stock, which has attracted the attention of retail investors, with 65% of the float traded on Tuesday alone. Adding to the volatility, SPWR announced a delay in its 1Q24 10-Q filing due to ongoing issues with internal controls and historical financial misstatements.

Brokerage firms remain optimistic about the home solar market, driven by incentives such as inflation reduction laws and increased utility rates. Wolfe Research appreciates certain aspects of SPWR’s business strategy that provide clearer financial information and reduce exposure to interest rate fluctuations compared to peers. However, the lack of a contracted revenue or cash flow base is making it difficult for home sales to slow, especially after 2023. SPWR has overcome bankruptcy risks from past breaches of its debt covenants, but may need additional capital in 2024. CEOs further contribute to the uncertainty surrounding the company’s strategic direction.

Wolfe’s Underperform means “Security is expected to underperform analysts’ industry coverage over the next 12 months.”

How did stocks react? SunPower opened the regular session at $3.44 and closed at $3.11, down 29.16% from the previous day’s regular close.

intel

What happen? On Thursday, Wolfe Research upgraded Intel (NASDAQ:) to Peer Perform. The company does not issue price targets for Peer Perform stocks.

What’s the full story? Wolfe Research maintains a cautious stance on Intel despite the company’s stock price falling 38% year-to-date. This has underperformed the Semiconductor Index (SOX) by about 60% YTD and by 40% since the brokerage’s July inception. Recent foundry events and earnings reports have strengthened Wolfe Research’s argument in line with the current low market sentiment for INTC. The brokerage’s main concern is that server CPU sales growth will not be sufficient to cover the significant capital expenditures and depreciation associated with INTC’s ambitious 5N4Y manufacturing strategy. This view is corroborated by INTC’s own forecasts, which say the manufacturing division is not expected to break even until 27 and that profitability will depend on expansion of the foundry business by the end of the decade.

Challenges aside, Wolfe’s team expects INTC’s gross margin to gradually improve in CY25 as start-up costs decline and the company begins to internalize more of its production processes. However, these improvements are expected to be minimal. Now that these factors have factored into investor expectations, Wolfe Research has taken a more neutral stance on Peer Perform.

Wolfe’s Peer Perform means “Security is expected to perform roughly in line with the analyst’s industry coverage area over the next 12 months.”

How did stocks react? Intel opened the regular session at $31.61 and closed at $32.04. This is a 2.46% increase from the previous day’s regular closing.

robinhood market

What happen? On Friday, BofA doubled Robinhood’s upgrade to Buy with a $24 price target.

What’s the full story? BofA Securities expects to: (1) increase retail participation and accelerate organic growth; (2) positive operating leverage after large cost reductions; (3) Attractive valuation based on EBITDA/EPS growth. Interactive Brokers (NASDAQ:) remains the research team’s top broker, Buy, while Virtu Financial (NASDAQ:) remains a stealthy approach to retail participation through payments for order flow.

The research team is leaving the recently revised EPS unchanged and switching to a pure EBITDA valuation method (15x vs. 7x + excess cash), increasing PO from $14 to $24. After significant improvements in operating efficiencies, organic growth, and product offerings, it now carries a 15x EBITDA multiple, which is near the low end of the range in which IBKR/Charles Schwab (15-20x) trades. BofA Securities’ 2025 adjusted EBITDA forecast is more than 40% higher than consensus.

Regulators may take action against HOOD’s cryptocurrency practices in 2H24. Because Robinhood has been conservative in its cryptocurrency offerings, BofA Securities was less interested in the potential outcome.

At BofA, a buy means “buy the stock with an expectation of a total return of at least 10% and it is the most attractive stock in the coverage cluster.”

How did stocks react? Robinhood opened the regular session at $18.94 and closed at $20.08. This is a 12.18% increase from the previous day’s regular closing.