Nike, Broadcom, Ring Central: Trending tickers
Citi upgraded Nike (NKE) from "Neutral" to "Buy" and lifted its price target, citing margin recovery, innovation ahead of the 2024 Olympics and its China position. The move comes ahead of Nike's fiscal second quarter 2024 results, which will be released on Thursday, December 21 after the market close.
Broadcom (AVGO) shares rose after Citi resumed coverage with a "Buy" rating. Broadcom's VMware deal and core strengths, plus AI opportunity, underpin Citi's bullish view. Broadcom has gained more than 80% year-to-date.
RingCentral (RNG) CEO Tarek Robbiati resigned effective December 8th. Founder Vlad Shmunis returns as CEO, replacing Robbiati who assumed the role in late August after serving as CFO of Hewlett Packard Enterprise.
Yahoo Finance's Julie Hyman and Josh Lipton break down the details of today's trending tickers.
For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.
Video Transcript
JOSH LIPTON: All right. Let's take a look at some trending tickers here as well. I'm going to start with Nike shares, running into the green after-- there you go-- after Citi upgraded the stock from neutral to buy, raises target ahead of the company's quarterly results. So go to buy. Target goes to 135. And basically telling clients this note, Julie, listen, topline challenges remain. But what they do like they see gross margin recovery starting in Q2 2024, new innovation coming, they say, next year ahead of the Olympics and what they describe as a solid position in China. Bottom line, they note one of a kind brand with visible margin recovery creates, in their opinion, favorable risk reward.
JULIE HYMAN: Yeah. And you know, it's interesting, too, because Nike has sort of lost a little bit of its mojo. It was such a solid performer for so long. This has not been a great year for Nike. And the way that I took this note from Citi and Paul Lejuez over there is that what we have seen Nike doing is basically pricing its shoes to sell and sacrificing gross margin as a result.
And what he says is now we're going to see that switch. And that even if they see sales a little weaker, and he does say that they are going to see sales a little weaker, that that gross margin is more than going to make up for it. So kind of a flip in the Nike strategy here that they're no longer going to be sacrificing sales-- that they are going to be sacrificing sales but making up for it with the gross margin. So we'll see if that actually comes to fruition.
At the same time, we also have a call out from Citi on Broadcom with a buy rating. Shares of the chip maker are rising in today's trading session as a result of that. And interesting here, we heard from Broadcom last week with its earnings. But the analyst over at Citi says that there's strength in the company's core business. They like the VMware acquisition as well, which recently closed.
And what's interesting on a broader level, too, is that Broadcom has been on a tear recently.
JOSH LIPTON: Huge.
JULIE HYMAN: You know, so that--
JOSH LIPTON: Huge at this move, yeah.
JULIE HYMAN: So that's been kind of the theme that you and I have been watching.
JOSH LIPTON: Yeah. I mean, if you've been in Broadcom this year, you're sitting pretty. I mean, the stock just hit a record high. It's up now more than 80% in 2023. And most analysts are fans of this stock. I mean, they-- listen, they like the C-suite. They like Hock Tan, the CEO. They like this management team.
You'll see as you go through the notes, they really like the strategy under Hock Tan, the business model. Remember, they've been pivoting to higher margin software. And they see this company benefiting from exposure to AI within its networking business. So that is another tailwind that has certainly been working for the bulls this year.
JULIE HYMAN: Yeah. And just want to point out, I've called up the semiconductors real quick on the YFi interactive, because what's been interesting as of late, and this is a trend that the Wall Street Journal pointed out today, one of these things is not like the other. And it's the thing that was doing amazingly well. I'm talking about Nvidia, of course. The stock is down 1.9% today, but that's been happening more recently that we have seen some of the other chip makers start to catch up with that Nvidia monster move this year.
Just today, not only do you have Broadcom, which still confusingly its ticker is AVGO because of Avago, but ASML, AMD is higher. Intel up 4% on the day. If you look at that versus the year-to-date performance, it is quite a different picture. Nvidia, the clear leader, although everything else is up as well. It's just Nvidia has been up more thus far this year.
JOSH LIPTON: It has been-- and part of that story has been the AI play. And it continues-- it continues to work for them. Finally, let's end on RingCentral, because there are some big changes their. CEO Tarek Robbiati is resigning from the company effective December 8. This coming just a few short months after taking the helm. RingCentral's founder Vlad Shmunis to return to his full-time role as chief executive officer.
You know, Julie, investors don't like surprises. And this was one, right? This was a big one. When your CEO abruptly exits, that caught them off guard. And as we know, his appointment has only been in effect since late August actually. So now we have Vlad founder and executive chairman returning as CEO. A company, we should note, did reiterate Q4 and annual guidance. But this took some folks by surprise.
JULIE HYMAN: yeah, Most definitely. And also Tarek Robbiati was CFO at HPE. So then he came and joined RingCentral from another large company and now exiting here, not seeing a lot of explanations what's happening here. But definitely, analysts seeing this as abrupt and as a surprise to your point here. Piper Sandler saying that-- pointing out that recently the CFO canceled a conference last week because of illness. And so really, investors are trying to understand what's going on here, that they're looking for some kind of strategic change for the company.
JOSH LIPTON: Yeah, I think a lot more questions here for sure.
JULIE HYMAN: Yeah, most definitely.
