(This is CNBC Pro’s live coverage of Wednesday’s analyst conference call and Wall Street chatter. Refresh every 20-30 minutes to see the latest posts.) Among the stocks analysts were talking about on Wednesday were the electric vehicle maker and the health insurance giant. Morgan Stanley raised its price target on Rivian to $17 from $13, while Jefferies raised UnitedHealth to buy from hold. Check out the latest conference call and chatter below. All times are ET. 7:35 a.m.: Wall Street pulls away from Five Below after CEO resignation and guidance cut Several Wall Street investors are keeping Five Below shares on the sidelines after the company cut its second-quarter guidance and announced the resignation of its CEO. “The unit growth, companion consistency, trade-down thesis has changed,” wrote Morgan Stanley’s Simeon Gutman. “The management change adds uncertainty to the investments needed to reinvigorate unit growth and sales. Estimates are down and risks remain to the downside.” Gutman changed his rating on the stock to equal weight and lowered his price target to $100 from $160 a share, suggesting the stock will move in a range from Tuesday’s close. The stock was down 15% before the close. Five Below’s shares have fallen 52% this year as the company grapples with slowing consumer spending and falling sales. Barclays analyst Seth Sigman said the CEO’s departure adds further uncertainty to an already difficult situation. “Overall, the concept still has a compelling unit growth story and many of the issues are solvable, but we lack perspective when looking at macro, political (tariffs) and company-specific changes over a 12-month outlook,” he said, changing his rating to equal weight and his $90 price target. Evercore ISI, Citi, Mizuho and Truist also downgraded the stock. – Samantha Sabin 7:23 a.m.: TD Cowen downgrades Charles Schwab following second-quarter results Charles Schwab’s near-term future appears full of uncertainty, according to TD Cowen. Analyst Bill Katz downgraded the financial services company’s shares to a hold rating. The analyst also lowered his price target to $71 from $88. But the new forecast suggests the stock could rise 5%. Charles Schwab shares have risen 2% this year, according to FactSet, and fell 10% on Tuesday after the company reported second-quarter net interest margins that fell short of expectations. The company also narrowly beat analysts’ expectations for adjusted earnings and revenue. Katz cited “ongoing mixed performance” as one of the reasons for the downgrade, as well as a possible shrinkage of Charles Schwab’s balance sheet and a lower outlook for future earnings. “Prior to this announcement, we believed management had already de-risked its earnings outlook following the roughly 10% drop in shares following the investor conference call, but combined with the July 16 update, the consensus is likely to be even lower,” he wrote. — Lisa Kailai Hung 7:21 a.m.: Wells Fargo Raises Price Targets for Morgan Stanley and Bank of America Wells Fargo analyst Mike Mayo raised his price targets for Morgan Stanley and Bank of America after second-quarter earnings beat expectations. Mayo rated Morgan Stanley shares an equal investment and raised his price target to $99 from $90, meaning the stock could fall 7% from Tuesday’s closing price. Morgan Stanley shares are up about 14% in 2024. “We raise our 2024 EPS estimate to $6.95 from $6.80, reflecting the current quarter’s upside and strong capital market trends,” Mayo wrote. “However, our 2025 and 2026 EPS estimates remain unchanged at $7.45 and $8.45, respectively, due to weaker WM fee growth, lower investment management, and slightly higher expenses, despite strong capital market revenue trends.” Meanwhile, Mayo noted that investment management is “sluggish” due to ongoing equity outflows. However, the analyst expects to see increased share buybacks in the second half of 2024. Meanwhile, Mayo rates Bank of America shares overweight. He raised his price target on the stock to $52 from $44, suggesting an 18% upside. “We believe Bank of America is best positioned among the big banks with respect to deposits (especially consumer), cost management, credit quality, and reputation,” the analyst wrote. “BAC is a technology leader among banks, which should help it further expand its lead toward its goal of a quarter of U.S. deposit share and demonstrate superior operating leverage. Overall, BAC is a Goliath when Goliaths are winning.” Mayo also raised his earnings forecast for 2024 by 5 cents and 10 cents each for 2025 and 2026. Bank of America shares are up 31% in 2025. — Lisa Kailai Hung 6:46 a.m.: Barclays sees tough times ahead of Tesla’s second-quarter earnings release. Investors shouldn’t expect Tesla’s recent strong performance to continue, according to Barclays. Analyst Dan Levy maintained his Equal Weight rating on the electric car maker ahead of the company’s second-quarter earnings release on Tuesday, July 23. He raised his price target to $225 from $180, but the increase suggests Tesla shares could fall 12%. “We believe TSLA’s clear lead in both the global EV shift and the emergence of software-defined vehicles, as well as the positive trajectory in sales numbers, positions it very well for the long term, but short-term headwinds have been overlooked in the recent rise in the stock price, leading us to remain on the sidelines,” the analyst wrote. More specifically, Levy noted that Tesla has shifted its investment thesis from growth through auto manufacturing to a focus on AV/AI businesses such as robotaxis. “While we appreciate the potentially disruptive opportunities these businesses bring, we believe this adds uncertainty to Tesla’s path forward and that the success of the stock price hinges on bets that are seemingly binary outcomes,” he added. Tesla shares have risen 3% this year, but are up 81% from their April lows. Levy believes Tesla’s next earnings call will force investors to weigh the company’s still-challenging fundamentals against its recent strong performance, especially given that AV/AI hopes may fade soon. — Lisa Kay-Lai Hung 6:30 a.m.: UBS recommends buying Sweetgreen UBS sees good prospects for Sweetgreen. UBS has a buy recommendation on the fast-casual salad chain Sweetgreen’s shares and set a $31 price target, which implies an upside of about 16% for the stock. UBS analyst Dennis Geiger wrote that the stock has “room for significant unit growth” and that Sweetgreen has the potential to generate revenue growth of more than 15%. “We expect its strategic plan across kitchen automation, loyalty and menu innovation to support SSS. [same-store sales] “We expect EBITDA margin expansion (>200 bps/year) over the next few years, while key menu attributes will be core competitive advantages,” he added. More specifically, Geiger cited Sweetgreen’s automated Infinite Kitchens as a catalyst, writing that the average Infinite Kitchen location maintains 28% margins versus the system average of 18%. “IK is transformational for the brand, with potential for at least 60 bps of margin improvement per year, with upside potential from the expansion of IK locations in AUV urban areas,” he detailed. Geiger also sees opportunities for Sweetgreen to introduce new menu ideas, including additional proteins, such as the launch of steaks and additional beverages. He also noted the company’s focus on throughput and enhanced loyalty program as promising. Sweetgreen’s stock is up 137% this year. SG YTD Mountain SG YTD — Lisa Kailai Han 6:01 am: TD Cowen Downgrades American Airlines to Hold Ahead of Earnings Report Investors should remain cautious on American Airlines for now, according to TD Cowen. Analyst Thomas Fitzgerald downgraded the airline’s shares to a hold recommendation from a buy recommendation ahead of American Airlines’ next quarterly earnings report, due before the close of trading on July 25. The analyst also lowered his price target on the stock to $10 from $16 and lowered his second-quarter adjusted earnings forecast to the low end of the guidance issued in late May. American Airlines shares have fallen 19% in 2024. Fitzgerald’s latest price forecast suggests the stock could fall another 11%. AAL YTD Mountain AAL YTD The analyst noted that American Airlines’ recent aggressive discounting could lead to downside risks to earnings forecasts later this year. “Our research shows that the airline has engaged in aggressive discounting this summer as fuel prices have fallen. American’s network has increased its exposure to the currently most oversupplied markets, reducing its ability to offset the rising cost environment,” he wrote. To address these challenges, the airline will need to make a significant shift in strategy and invest in multiyear capital expenditure funding. Fitzgerald noted that the company also needs to sign new contracts for its flight attendants and hire a new chief commercial officer. “These factors will likely reduce free cash flow generation and shareholder return opportunities over the medium term,” he said. Meanwhile, he added, American will need to “invest heavily” to close the gap with rivals Delta and United. — Lisa Kailai Hung 5:44 a.m.: Jefferies upgrades UnitedHealth to Buy on ‘Excellent 25-Year Buildout’ UnitedHealth’s near-term buildout is bright, according to Jefferies. The bank upgraded the health insurance stock to Buy from Hold.Analyst David Windley also raised his price target to $647 from $481. This latest forecast suggests an 18% upside for UnitedHealth shares. UnitedHealth shares have risen 4% this year and were up 6.5% on Tuesday after the company reported better-than-expected second-quarter profits and sales. UNH YTD UNH YTD The analyst praised UnitedHealth’s efforts to beat earnings expectations by tightly controlling costs, which he said could lead to a “strong 2025 picture.” Windley also wrote that UnitedHealth’s relative multiple could improve if total sales growth accelerates. Moreover, external factors are also working in the company’s favor. “The primary reason for the hold position is the increasing number of political, regulatory or self-inflicted concerns,” Windley said. “Over the past couple of months, a number of concerns have been resolved or moved in UNH’s favor, particularly the U.S. presidential election (the most important by far), competitors expressing conservative MA bidding stances, the Amedisys deal moving forward (key to fixed-price growth), the Chevron diff ruling, and UNH reportedly ceasing its pursuit of Steward’s physician network (which looked bad).” The analyst added that UnitedHealth seems best positioned to capture the full economic opportunity from the growth of its Medicare Advantage plans. — Lisa Kailai Han 5:44 a.m.: Morgan Stanley Raises Rivian Stock Target The new partnership has reinvigorated Rivian’s stock, but Morgan Stanley believes the upside from here is limited. Analyst Adam Jonas raised his price target on the stock to $17 from $13. But the new forecast suggests a 5.2% decline from Tuesday’s closing price. The change came after Volkswagen announced on June 25 that it would invest up to $5 billion in the EV maker, sending shares soaring. Rivian has risen 50% since then. “VW’s cash reduces near-term volatility in the stock, but our view remains that Rivian has a better future as a Tier 1 supplier/SDV ‘technology partner’ than a sole EV manufacturer,” wrote Jonas, who maintained an overweight rating on the stock. “For Rivian to justify being an OW in the portfolio at this price, the company needs to show continued evidence of capital discipline, improved earnings visibility and a credible path to $1B-$2B growth.” [free cash flow] “Before the decade is out,” he added. — Fred Imbert
All the market-moving chatter on Wall Street on Wednesday
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