Here is your Pro Recap of the biggest analyst cuts you may have missed since yesterday: initiation at Intel, downgrades at Carvana, Joby Aviation, and J.B. Hunt Transport Services.
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Intel initiated with Underperform rating at Wolfe
Wolfe Research initiated coverage on Intel (NASDAQ:INTC) with an Underperform rating and a price target of $27.00, as reported in real time on InvestingPro. Shares were recently down some 1.5% to $33.96 in premarket trading.
Wolfe says its previous Underperform rating on the company - in 2021/2022 - was based on its belief that Intel's recovery would be lengthy and costly, making it unlikely to benefit the stock. The firm maintains this same fundamental view.
We believe that optimism about a recovery is again rising, which presents a risk that our Underperform call is early. Nonetheless, with the prospect of an industry wide recovery for CY24, and INTC having little chance of generating any cash flow during that recovery, we think that sets up underperformance for the stock.
Carvana downgraded to Underperform following Q2 beat
RBC Capital downgraded Carvana (NYSE:CVNA) to Underperform from Sector Perform while raising its price target to $30.00 from $9.00 following the company’s reported better-than-expected Q2 results, which caused the stock to jump more than 40% yesterday.
RBC Capital acknowledged that Carvana's strong Q2 results, debt restructuring, and newfound access to equity capital have alleviated liquidity risks, which is seen as a significant positive for the stock. However, considering the fundamental aspects, the firm decided to cut the rating to Underperform.
The firm believes that the market may have already overly appreciated the potential for long-term margin improvements, and a faster return to growth (which could potentially stall margins) might be necessary to cover debt costs. Additionally, the firm expects significant dilution and an expanding debt burden following the restructuring.
Raising ests/target given better near-term performance & lower liquidity risks but would expect the stock & more measured fundamentals to converge over time if and when near-term volatility abates.
2 more downgrades
Joby Aviation (NYSE:JOBY) shares dropped more than 15% yesterday after JPMorgan downgraded the company to Underweight from Neutral with a price target of $6.00 (from $5.00).
The company has seen a significant increase in its share price year-to-date. This can be attributed to investor optimism regarding the progress made toward achieving commercial operations. However, JPMorgan holds the belief that this rapid price movement is excessive, considering that the commercial opportunity for Joby Aviation is still at least five years away.
CFRA downgraded J.B. Hunt Transport Services (NASDAQ:JBHT) from Hold to Sell with a price target of $167.00 after the company’s Q2 earnings announcement that missed Street estimates as lower customer rates and volume weighed on performance.
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