Microsoft Can Double Its EPS by 2029 Based on Position in Cloud, Gen AI, Morgan Stanley Says

/ / Technology /

Microsoft’s (MSFT) “strong secular positioning” in tech, cloud and generative artificial intelligence should help the company double its earnings per share to $24 by fiscal 2029, Morgan Stanley said in a note Thursday. Given the company’s leading position, the business should be able to achieve a compound annual growth rate of 14% in revenue and 16% in earnings per share over the next five-year period, the firm said. Growth in the company’s earnings and revenue will be driven by its cloud business, while its first mover advantage in generative AI should further compound the gains. Morgan Stanley estimates the company’s revenue from its largest three generative AI initiatives could jump from around $5 billion in 2024 to almost $67 billion in 2029, and as much as $120 billion in a bullish scenario. The firm raised its price target to $520 from $465 on the company’s stock and maintained its overweight […]

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CFRA Maintains Strong Buy Opinion On Shares Of Marvell Technology, Inc.

/ / Technology /

CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows: MRVL hosted its Accelerated Infrastructure for the AI Era event where it highlighted an objective to double its market share by 2028 (10% in 2023), led by share gain in the custom compute and switching markets, which we think has the potential to grow MRVL’s revenue by at least 3x-4x in five years. MRVL estimates that its TAM will rise at a 29% CAGR through CY 28 to $75B (estimated $21B in 2023), with accelerated custom compute at a 45%+ CAGR and switching at 15%+. On the connectivity side, AI workloads are demanding a doubling of interconnect speed every two years, or half the time to pre-ChatGPT (2x every four years). On the compute side, we see design wins from existing/new hyperscale customers and greater momentum for

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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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Microsoft’s Growth Soars With AI Innovations, Projected to Lead in Public Cloud by 2032: Analyst

/ / Technology /

Morgan Stanley analyst Keith Weiss maintained Microsoft Corp (NASDAQ:MSFT) with an Overweight and raised the price target from $465 to $520. Weiss highlighted that as investors hone in on the Generative AI cycle and look to identify assets able to monetize and compound the benefits of these innovations, he extended his discrete Microsoft forecast to 5-years, highlighting the durable EPS story enabled by their strong secular positioning. Weiss expected Microsoft’s leadership position for multiple secular growth trends to translate into a 14% revenue CAGR and 16% EPS CAGR through fiscal 2029. Weiss noted that Microsoft’s improving positioning for Public Cloud drives an increasing share of the overall IT wallet, as evidenced by Microsoft Commercial revenues gaining 3.5% points of share within IDC’s overall software market estimates over the past five years. The analyst noted that more robust positioning for Enterprise PaaS workloads should enable Azure to take the market share lead in Public

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Apple Eyes Higher Profitability, Premium Mix and In-House Technologies Drive Margin Boost: Analyst

/ / Technology /

BofA analyst Wamsi Mohan maintained a Buy rating on Apple Inc (NASDAQ:AAPL) with a price target of $225. Mohan noted that historically, Apple investors have tended to look at existing products and the profitability associated with those products and services to measure the company’s future performance. He went back to 2018 to see where the 2023 consensus gross margins were in 2018. The Street was modeling fiscal 2023 gross margins for Apple at 39%, but Apple printed 44% gross margins, significantly exceeding (500bps) original expectations. Mohan noted that the Street continues to underestimate Apple’s long-term gross margin potential across both products and Services yet again. He emphasized about 180bps of Product gross margin upside and about 150bps of Services margin upside over the next few years. He noted that Apple’s gross margins are headed significantly higher, driven by an increased mix of services within the overall portfolio, which should account for about 60bps

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ServiceNow Likely to Benefit From Customer Market Growth, Oppenheimer Says

/ / Technology /

ServiceNow (NOW) has a large growth opportunity in the customer market, Oppenheimer said in a note Thursday following a recent interview with a “large” ServiceNow partner. “Customer workflows are time-consuming and manual, requiring updating records, exchanging spreadsheets, and other processes,” Oppenheimer said. “In our view, the opportunity is ripe for ServiceNow to disrupt this market by leveraging AI and its integration architecture to help organizations maintain records and service needs in real-time.” The ServiceNow partner experienced robust business activity and pipeline momentum in Q1, according to the firm. “ServiceNow remains well positioned to leverage its position as a leading enterprise integration engine and impresses us with its technology-vision and execution,” Oppenheimer said. Oppenheimer maintained ServiceNow’s outperform rating and $825 price target.

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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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