Consumer Discretionary

Netflix Likely to See Higher Q1 Revenue as Paid Sharing Benefits Continue, Oppenheimer Says

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Netflix (NFLX) is likely to report higher Q1 revenue April 18 as long-tail benefits of paid sharing become increasingly evident, Oppenheimer said in a note Thursday. Analysts, including Jason Helfstein, said that Netflix has captured about 20% of the 100 million disclosed opportunity for paid sharing, and could have a 60% capture rate by 2026, mainly due to “increasing content advantage and content/advertising spend pull-back by competitor streaming platforms.” They expect Netflix’s 2024 ad revenue to be $5.1 billion. The average revenue per member for 2024 is expected to rise 4% year-over-year, reflecting the recent basic and premium price increases in the US, the UK, and France, with potential upside from subscribers paying for extra members or other geographic price increases. “We believe Netflix’s dominance will continue, given its clear advantage in producing high-engagement content and monetizing that content more effectively than peers,” the analysts said. Oppenheimer kept its outperform […]

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Spotify’s Q1 Outlook: Analyst Anticipates Surge in Subscriber Base and Revenue Per User

/ / Consumer Discretionary /

Keybanc analyst Justin Patterson maintained Spotify Technology SA (NYSE:SPOT) with an Overweight rating and raised the price target from $300 to $350. Spotify will report its first-quarter fiscal 2024 results before the market opens on April 23. Patterson refined his estimates and framed vital factors to watch. The analyst now expects 2024 revenue of €15.4 billion and 2025 revenue of €18.0 billion, which reflects slightly higher ARPU growth. His 2024 operating profit decreases by 20% due to social charges, while 2025 increases by 2% due to higher revenue. Finally, Patterson introduced 2026 revenue of €20.6 billion and an operating profit of €2.2 billion, which assumes 14% revenue growth, 29.9% gross margin, and 10.5% operating margin. Due to the higher revenue and profitability forecasts, Patterson raised his price target, implying 3.4x 2025E EV/S and 34.7x 2025E EV/FCF. For reference, the analyst noted that Netflix Inc (NASDAQ:NFLX) saw its EV/S multiple expand by ~50% over five years

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Tesla CEO Musk Ought to Provide ‘Clear Roadmap’ With Model 2 at Center of Strategic Vision, Wedbush Securities Says

/ / Consumer Discretionary /

Tesla’s (TSLA) future is a “bit murky now” that requires Chief Executive Elon Musk to give a “clear roadmap” to the Street with Model 2 as the main component of that “strategic vision,” a research note from Wedbush Securities said following the electric vehicle manufacturer’s plans to unveil its Robotaxi on Aug. 8. Model 2 is a critical element in Tesla’s growth story as a sub $30,000 price point will help drive mass demand globally, Wedbush analysts, including Daniel Ives, said in the note late Thursday. About 60% of the company’s growth in the next few years will come from Model 2, which was set to hit the roads by late 2025 or early 2026. “If robotaxis is viewed as the ‘magic model’ to replace Model 2 we would view this as a debacle negative for the Tesla story,” Ives said in the note. “It would be a risky gamble

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CFRA Reiterates Buy Opinion On Shares Of Amazon.com, Inc.

/ / Consumer Discretionary /

CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows: We lift our 12-month target from $198 to $221, calculated using an EV/EBITDA multiple of 17x (was 16x) against our 2024 adj-EBITDA of $141.8B (up from $137.0B) vs. the 12x-30x historical range. We lift our 2024 adj-EPS estimate to $6.85 from $6.45 and 2025’s to $8.53 from $7.18. Our upwardly revised estimates reflect margin expansion opportunities in 2024, driven by continued retail efficiencies (e.g., supply chain regionalization benefits), AWS growth reacceleration (e.g., GenAI investments), and robust advertising growth (e.g., Prime Video ads introduced in January). We see GAAP operating margins rising from 6.4% in 2023 to 9.4% in 2024, above the current 8.5% consensus, with free cash flow likely exceeding $70B (up from $37B in 2023). Risks include a slower consumer spending environment and lumpy AWS growth,

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Delta Air Lines On Line To Gain Demand Growth, Says BofA Analyst

/ / Consumer Discretionary /

BofA Securities analyst Andrew G. Didora reiterated a Buy rating on the shares of Delta Air Lines Inc (NYSE:DAL) and raised the price target from $53 to $55. Yesterday, Delta reported a first-quarter 2024 operating revenue growth of 8% year-over-year to $13.748 billion, and the adjusted EPS was $0.45, above the consensus of $0.36. Both the unit revenue and unit cost outlooks were about 100 basis points better than the analyst modeled, which drove the EPS upside. The analyst thinks there were more pros than cons in DAL’s outlook, giving the confidence to raise 2024E EPS to $6.81 from $6.57. DAL’s demand commentary was better than feared, as transatlantic and premium products remain robust, each a revenue tailwind offsetting pressure from Latin America, noted the analyst. The analyst estimates 2Q24 capacity growth of +6.9%, the high end of DAL’s +6%-7% range, and unit revenue growth of -90 basis points, in line with DAL’s

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Nike Poised to Meet Estimates on ‘Bold’ Management Moves, BofA Securities Says in Upgrade

/ / Consumer Discretionary /

Nike’s (NKE) annual earnings estimates “finally look achievable” on management’s “bold steps to transform” following a stock slump, BofA Securities said Thursday in a report. Calling Nike’s valuation “compelling,” BofA upgraded the stock to buy from neutral and raised the price objective to $113 from $110. The EPS consensus of $3.99 in fiscal 2025 and $4.49 in fiscal 2026 EPS appear achievable as the company’s management takes steps to transform the business and benefits from marketing around the Paris Olympics this year. “Management has acknowledged a need for big changes, and continued shakeup in the team and processes from the recently announced cost savings plan could also spur faster sales stabilization,” BofA said. Shares of Nike rose 3.4% in recent trading Thursday.

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Delta Air Lines’ Better Q1 Metrics Drive Q2 EPS Guidance Beat, BofA Says

/ / Consumer Discretionary /

Delta Air Lines’ (DAL) slightly better metrics in Q1 have driven better-than-expected Q2 earnings-per-share guidance, BofA Securities said in an emailed note to clients Thursday. Delta on Wednesday reported higher Q1 adjusted EPS and revenue that beat analysts’ estimates and initiated Q2 EPS guidance of $2.20 to $2.50, exceeding BofA’s estimate of $2.12. The company’s outlook prompted BofA to raise its 2024 EPS estimate to $6.81 from $6.57, according to the note. The company’s “better unit costs [for Q2] are encouraging and reflect solid operations and an increasing focus on efficiency,” BofA said. The investment firm raised the airline’s price objective to $55 from $53 and reiterated its buy rating.

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The Bar Is Finally Low Enough for Nike, Analyst Says. These Big Events Could Help the Stock This Year

/ / Consumer Discretionary /

By Bill Peters ‘Nike has historically benefited from the newness and marketing around the Olympics, and we see this year as no different,’ BofA analysts say Over the past two years, Nike Inc. has dealt with slowing demand and a lack of new sneakers and other gear to revive it. But for analysts at BofA, acknowledging the problem has been part of the solution. And as Wall Street tempers its profit expectations, they say the bar for the athletic-gear maker might finally be low enough to actually clear. BofA analysts Lorraine Hutchinson and Christopher Nardone upgraded shares of Nike (NKE) to buy from neutral on Thursday. While they said a bigger turnaround could still take time, efforts to lure back customers by shaking up its product assortment, along with a potential boost from events like the Summer Olympics, would benefit the company. The analysts also nudged their price target higher,

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Nike Stock Jumps On Upgrade To Buy As Analyst Says It’s ‘Time To Just Do It’

/ / Consumer Discretionary /

Nike Inc (NYSE:NKE) shares are trading higher Thursday following an upgrade from BofA Securities. What Happened: BofA analyst Lorraine Hutchinson upgraded Nike from Neutral to Buy on Thursday and raised the price target from $110 to $113, noting that “it’s time to just do it.” Full-year earnings estimates for Nike have fallen 35% over the last two years. When paired with the fact that the stock is trading at 10-year lows on a price-to-earnings basis, BofA believes it’s time to buy. “We are upgrading Nike to Buy (from Neutral) as estimates finally look achievable, Nike is taking bold steps to transform, and the stock sits at a 10-year trough relative P/E,” the analyst said in a new note to clients. Hutchinson sees mid single-digit revenue growth ahead with margin expansion. Based on this outlook, the valuation looks “compelling,” she said. Nike also has catalysts ahead including the company’s first investor day in seven years

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Tesla and Nvidia Could Be a Match Made in AI Heaven — Barrons.com

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Whether Tesla is just a car company or something more could mean trillions of dollars in stock market value for both the EV maker and Nvidia. “Tesla remains fiercely debated as it faces earnings pressure…and the business model crosses the chasm from autos towards [artificial intelligence] and robotics,” wrote Morgan Stanley analyst Adam Jonas in a Thursday report. Pressure is an understatement. Tesla is expected to earn about $2.70 a share in 2024, while two years ago, the consensus call was $6.40 a share. More electric-vehicle competition, higher interest rates, and an aging product lineup have made selling Teslas much harder. That is why analysts focused primarily on the car business are bearish on Tesla stock. “It’s hard for a car company to not be a car company,” wrote Bernstein analyst Toni Sacconaghi in a recent report, calling the auto industry hypercompetitive and noting that AI breakthroughs can eat away

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