Snap, Pinterest shares gain on Jefferies upgrade: 4 big analyst picks
Investing.com — Here is your Pro Recap of the biggest analyst picks you may have missed since yesterday: upgrades at Snap, Pinterest, Hewlett Packard Enterprise, and an Outperform initiation at Ecolab.
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Snap shares gain on Jefferies upgrade
Snap (NYSE:SNAP) shares rose more than 2% pre-market today after Jefferies upgraded the company to Buy from Hold and raised its price target to $16.00 from $12.00.
According to the analysts, the most challenging times for the company seem to be over, and they see a pathway back to a mid-teens revenue CAGR over the next 3-5 years. The underperformance of Snap in the past, according to Jefferies, was largely due to the rebuild of their direct response (DR) advertising platform. This revamp led to a drop in revenue in the first two quarters of the year. However, recent developments suggest that the DR platform is starting to show positive trends.
The analysts also pointed out other potential revenue sources for Snap, such as a more in-depth integration with Amazon ads, potential collaborations with other retailers, the growing impact of Snapchat+, and the expansion of their brand advertising products. The analysts believe that Snap is well positioned to achieve a 15% revenue growth in fiscal 2024, marking a significant increase from around 0% in 2023.
Pinterest earns an upgrade, shares rise
Pinterest (NYSE:PINS) shares gained nearly 3% pre-market today after Jefferies upgraded the company to Buy from Hold and raised its price target to $41.00 from $32.00, as reported in real-time on InvestingPro.
The analysts cited several reasons for the upgrade, including expected EBITDA growth outperforming market predictions, confidence in advertising pricing tailwinds, and more durable than expected user growth and engagement gains.
Jefferies views the Q4 revenue guidance of 11-13% growth as conservative and expects a beat.
"We also view Q1'24 rev ests as achievable, as they assume relatively typical Q1 seasonality despite the Amazon partnership being an incremental contributor early next year. We now have more confidence in PINS's ability to deliver sustainable mid-to-high teens rev growth with potential upside to 20%+ growth over the next 3-5 years."
Two more picks
Hewlett Packard Enterprise (NYSE:HPE) shares surged more than 4% pre-market today after Morgan Stanley upgraded the company to Equalweight from Underweight with a price target of $16.00.
The company reported its Q4 results, beating the consensus estimates, which led to more than a 6% gain in its stock price yesterday.
Raymond James initiated coverage on Ecolab (NYSE:ECL) with an Outperform rating and a price target of $210.00.
The analysts highlighted that the common perception of water technology usually involves the traditional concept of "pipes and pumps," which typically represent a one-time purchase. However, Ecolab's approach is different. As a major player in water treatment chemicals, the company primarily generates its revenue through recurring sales. The analysts pointed out the company's strong revenue predictability, particularly from its sales to the food service, hotel, hospital, and pharmaceutical industries.
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