Estee Lauder downgraded by Deutsche Bank on China struggles, management risks
Deutsche Bank has downgraded Estee Lauder from buy to hold due to near-term risks. The cosmetics giant is currently trading around the firm’s $146 price target. The stock could drop by about 0.2% based on its previous close at $146.25. In premarket trading, the stock dropped 1.3%.
While the analyst, Steve Powers, sees long-term upside for Estee Lauder, he also notes the near-term downside risks. If the China inventory and brand recovery is delayed and the US market sees a slowdown, the stock could face downside risk. Furthermore, questions about management succession and possible M&A actions also present risks at this point.
Estee Lauder’s stock price has been under pressure in 2023, resulting in the erasure of tens of billions of market value and creating a divide between the founding family and the board.
Goldman initiates Rollins as a buy, citing organic revenue growth
Goldman Sachs has initiated coverage of pest control services provider Rollins with a buy rating and a $49 price target. The analyst, George Tong, believes Rollins has attractive upside potential and that its shares could gain around 12% over the next year. The stock has already gained about 6.7% over the past month.
Tong highlights Rollins’ strong route density, unique multi-brand strategy, and attractive business model characteristics as factors contributing to its organic revenue growth. Rollins has an expanded brand portfolio and has been focusing on door-to-door sales and shifts in post-Covid consumer behaviors.
Amazon, Meta are among RBC’s top global ideas for 2024
RBC analyst Brad Erickson has named Amazon and Meta among the firm’s top picks for 2024. Erickson assigned an outperform rating and a $180 price target to Amazon, indicating an 18.5% upside potential. He believes Amazon’s unmatched scale, advantage in verticalized e-commerce, and industry-leading cloud business give it many future opportunities.
For Meta, Erickson sees a potential 13% gain from its $400 price target. He notes that Meta has the largest user base and the deepest amount of data on that user base. Once Meta passes through its currently elevated investment cycle around AI, it can achieve 15% to 20% earnings growth. Erickson adds that Meta is trading at a discount to the broader internet group.
Barclays downgrades Apple, says stock could lose more than 15%
Barclays analyst Tim Long has downgraded Apple from equal weight to underweight, citing weakness in iPhone volumes, as well as in Macs, iPads, and wearable devices. Long’s $160 price target suggests that the stock could lose around 17% from its latest close. In premarket trading, Apple’s stock dipped 1.2%.
Long believes that iPhone 15 has been lackluster and expects the same for IP16. He also expects other hardware categories to remain weak and services to not grow more than 10%. Long states that ongoing weak results coupled with multiple expansion are not sustainable, and next year could be risky for Apple’s services business.
Stifel names Nvidia a ‘best idea’ for 2024
Stifel has named Nvidia as a “best idea” for the new year, building on the chipmaker’s artificial intelligence momentum from 2023. The analysts believe that Nvidia is well-positioned in markets that have an overall TAM of more than $100 billion by the end of 2025.
While Stifel views Nvidia’s exposure to gaming, automotive, and professional visualization favorably, they believe the shift from general-purpose compute to accelerated compute represents the company’s most significant revenue and profitability growth opportunity in the coming years. Nvidia was the best-performing S&P 500 stock in 2023, with a surge of 238.9%. Stifel’s price target of $665 implies a 34.3% upside going forward.
Analyst comment
Estee Lauder: Negative news. Downgraded by Deutsche Bank due to China struggles and management risks. Near-term downside risk if China recovery is delayed and US market slows. Shares could decline 0.2%.
Rollins: Positive news. Goldman Sachs initiates as a buy with 12% upside potential. Strong route density and multi-brand strategy driving market share gains. Organic revenue growth has seen a structural increase.
Amazon, Meta: Positive news. RBC names both as top picks for 2024. Amazon’s unmatched scale and advantage in e-commerce and cloud business present future opportunities. Meta’s largest user base and data on AI can drive earnings growth.
Apple: Negative news. Barclays downgrades due to weakness in iPhone volumes and other hardware categories. Stock could lose 15%. Weak results and risks for services business.
Nvidia: Positive news. Stifel names as a ‘best idea’ for 2024. Well positioned in markets with a TAM of over $100 billion. Shift to accelerated compute is the biggest growth opportunity. Price target implies 34.3% upside.
