Street Calls of the Week

Pro Recap: Key Insights from Wall Street Analysts

Here’s a summary of the significant takeaways from Wall Street analysts over the past week.

Southern Company

What happened? On Monday, Mizuho downgraded Southern Company to Neutral with a price target of $90.

Key Points: Mizuho sees limited catalysts for further outperformance, despite the company’s 21% price-to-earnings (P/E) premium. It expects a 5-7% growth rate in earnings per share (EPS) supported by strong load growth and a robust capital plan, maintaining a healthy balance sheet through 2026.

Full Story: Mizuho had previously upgraded Southern Company in April 2023, anticipating a potential re-rating ahead of the completion of Vogtle Unit 4. However, with current trading levels significantly above the industry average, they now see fewer drivers for growth. Nonetheless, they believe that persistent demand from data centers and reshoring of manufacturing will bolster EPS growth and sustain the capital plan.

Shopify

What happened? On Tuesday, Redburn-Atlantic upgraded Shopify to Buy with a price target of $99.

Key Points: The firm’s optimism stems from Shopify’s innovation, social media integrations, and the Shop Pay feature, predicting a 29% revenue CAGR and a 40% EBIT margin by 2026.

Full Story: Redburn-Atlantic emphasizes Shopify’s strong competitive advantages in the e-commerce space, highlighted by its user-friendly platform and ecosystem. As a result, they anticipate significant growth in enterprise merchant engagements by 2025, projecting revenue growth significantly above consensus estimates.

ResMed

What happened? On Wednesday, Wolfe Research downgraded ResMed to Underperform with a price target of $180.

Key Points: The downgrade is linked to potential disruption from a new sleep apnea indication for Lilly’s GLP-1 medication, suggesting a 10% upside but substantial 30%-40% downside risks.

Full Story: Wolfe’s target reflects their expectations for moderate growth due to market disruptions anticipated in 2025 and 2026. Their analysis indicates that ResMed’s growth prospects align more closely with slower-growing peers, estimating a decrease in CPAP prescription volumes.

DoorDash

What happened? On Thursday, BTIG upgraded DoorDash to Buy, setting a price target of $155.

Key Points: The upgrade is based on DoorDash’s near-term strength and anticipated long-term growth drivers, with expectations of positive EBIT and net income in the second half of the year.

Full Story: BTIG noted strong execution and positive market dynamics within the rideshare-delivery sector, positioning DoorDash for ongoing growth. The firm suggests that it’s a compelling investment relative to more saturated sectors.

Reddit

What happened? On Friday, B. Riley initiated coverage on Reddit with a Buy rating and a price target of $75.

Key Points: B. Riley attributes Reddit’s growth potential to its unique platform and early monetization strategies, offering an attractive risk/reward scenario.

Full Story: With a robust user base and a diverse community structure, Reddit is seen as poised for significant advertising and data licensing growth. B. Riley views this potential for expansion as a strong investment opportunity, given its favorable valuation metrics.

This summary captures the latest insights and recommendations from analysts regarding several key companies, reflecting their market potential and inherent risks.