Street Calls of the Week

Market Insights: Key Wall Street Analyst Updates from the Past Week

Here are some significant developments and insights from Wall Street analysts over the past week.

Amazon.com

Recent Update: On Monday, Wells Fargo downgraded Amazon.com to Equal Weight with a target price of $183.

Summary: Wells Fargo anticipates short-term pressures on Amazon due to challenges related to Project Kuiper and Fulfillment by Amazon (FBA) fee issues. They believe Amazon’s margin expansion will face competition from Walmart, leading to a reduction in FBA fees by approximately $2 billion.

Details: Analysts at Wells Fargo highlighted that although Amazon has consistently seen positive revisions, several factors may exert downward pressure in the near term. These include investments in Project Kuiper, FBA fee challenges, and decreasing contributions from advertising. The downgrade arises from concerns about potential limitations on margin expansion in early 2025, prompting the bank to lower its operating income estimates for 2025, 2026, and 2027 considerably.

Despite these challenges, Wells Fargo views Amazon as having opportunities for margin expansion, albeit at a slower rate than previously anticipated, with Walmart’s competitive practices posing substantial threats.

Wells Fargo

Recent Update: On Tuesday, Wolfe Research upgraded Wells Fargo & Company to Outperform with a target price of $65.

Summary: Wolfe’s upgrade occurred amidst significant expected challenges, including a ~9% adjustment in earnings per share (EPS) for 2026. The anticipated lifting of the asset cap is expected to enhance EPS, which influenced the decision to upgrade.

Details: Wolfe Research highlighted that Wells Fargo shares have significantly underperformed compared to peers in recent months. The firm believes the current risks to consensus EPS and net interest income are now well understood, and the stock’s valuation is overly discounted. The expected removal of the asset cap is likely to offer a substantial EPS boost not currently reflected in the stock price.

Norwegian Cruise Lines

Recent Update: On Wednesday, Citi upgraded Norwegian Cruise Line Holdings Ltd to Buy with a target price of $30.

Summary: Citi commends Norwegian’s new strategy of balancing yield and cost, which they believe will help manage expenses effectively. They project a potential earnings growth rate of up to 30% if the yield/cost spread remains favorable.

Details: Analysts from Citi are optimistic about Norwegian’s strategic shift, projecting a 23% EPS compound annual growth rate (CAGR) over three years, with potential to reach 30% based on operational strategies that avoid excessive cost escalation. This change in strategy is anticipated to unlock pricing opportunities while maintaining a sound cost structure.

Nike

Recent Update: On Thursday, Truist upgraded Nike Inc to Buy with a target price of $97.

Summary: While maintaining a cautious outlook overall, Truist sees positive indicators as Nike’s expectations align more closely with reality. They note near-term improvements driven by marketing investments and better wholesale relationships.

Details: Truist acknowledges ongoing challenges in Nike’s turnaround process but expresses growing optimism as investor expectations adjust to the company’s position. Near-term strategies, including increased marketing efforts and high-profile endorsements, are expected to generate positive momentum and market confidence.

Ferrari

Recent Update: On Friday, JPMorgan upgraded Ferrari NV to Overweight with a target price of $525.

Summary: Ferrari’s upgrade reflects strong visibility into earnings growth and resilience in facing external challenges, including slower demand in China. The company’s disciplined growth approach under CEO Vigna is yielding record pricing and a solid backlog.

Details: Following discussions with management across several locations, JPMorgan expressed confidence in Ferrari’s unique drivers of earnings growth. The firm believes Ferrari can navigate industry challenges, such as electrification, and maintain profitability despite economic fluctuations. The company’s ability to adjust shipments to match regional demand further supports its profit margins and future growth potential.

These updates reflect the ongoing dynamics in the market as analysts adjust their perspectives on prominent companies amidst evolving economic conditions.