5 big analyst picks: Jack Daniel's maker upgraded 2 notches at Morgan Stanley
Here is your Pro Recap of the biggest analyst picks you may have missed since yesterday: a buy initiation at Madison Square Garden Entertainment , and upgrades at Cognizant, VTEX, and Shift4 Payments.
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Brown-Forman BFb shares double upgraded at Morgan Stanley
On Wednesday Morgan Stanley upped Jack Daniel's maker Brown Forman (NYSE:BFb) by two notches - to Overweight from Underweight - with a new BFb price target of $75, up $9 from the prior one.
The analysts said it was previously concerned about the spirits company's "limited prior visibility around gross margin recovery," as well as macro concerns about US spirits growth and BFb shares' "full valuation."
But, they wrote, "With gross margins now turning from a headwind to a tailwind, and concerns over industry growth likely to dissipate, we expect the stock to appreciate" as investors refocus on the company's "robust" long-term expected revenue growth of 5% to 7% and high-single-digits growth profile for its partnership with spirits glass maker O-I.
And with an improving macro picture for spirits prices, Morgan Stanley added, "We now have significantly greater visibility around GM recovery over the next 12-24 months." It also called BFb's relative valuation "compelling" even as its "absolute valuation is rarely cheap."
Madison Square Garden Entertainment started with a Buy rating at BofA
On Tuesday after the bell, BofA Securities initiated coverage on Madison Square Garden Entertainment Corp (NYSE:MSGE) with a Buy rating and a price target of $41.00, as reported in real time on InvestingPro. Shares gained more than 5% yesterday.
Following its separation from Sphere, BofA considers MSGE, which possesses renowned venues like Madison Square Garden and The Chicago Theatre, as an attractive opportunity to invest in a growth-oriented company.
Benefiting from its strong market position as the top-grossing venue of its scale globally, MSGE stands to gain from the surge in live music and entertainment events. The bank projects mid-single-digit revenue growth and low-double-digit growth in adjusted operating income from fiscal 2023 to 2027, driven by robust trends in live entertainment.
Cognizant upgraded to Neutral at JPMorgan
JPMorgan upgraded Cognizant Technology Solutions (NASDAQ:CTSH) to Neutral from Underweight and raised its price target to $77.00 from $72.00, noting that the expectations bar seems low enough against progress on the CEO's priorities.
"Recent large deal momentum coupled with a reasonably conservative outlook established at BOY, creates a better risk/reward profile than our prior thesis considered," mentioned JPMorgan. According to the firm, the new CEO's efforts across three key areas – large deals, employee satisfaction, and operational discipline – appear to be advancing positively.
The firm emphasized that if these execution trends continue, they could help narrow the growth and valuation gaps when compared to peers. Despite the upgrade, JPMorgan maintained a cautious stance on the company's mid-term profit margins.
Two more upgrades
VTEX (NYSE:VTEX) shares gained more than 6% pre-market today after UBS upgraded the company to Buy from Neutral and raised its price target to $7.50 from $4.70.
"We think VTEX is in a good position to maintain a fast-paced revenue expansion, while expanding margins in the coming quarters. The number of new contract signings is rising while the sales cycle is stabilizing, which accelerates client monetization."
Raymond James upgraded Shift4 Payments (NYSE:FOUR) to Outperform from Market Perform with a price target of $74.00.
According to Raymond James, a big chunk of the company’s new successes since 2022 are coming from areas that aren't as dependent on the overall economy. This is making the company's overall mix and profits better. Furthermore, when Finaro closes, probably in late Q3 or early Q4, it's likely to give the company's stock a boost, setting things up for the next round of growth.
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