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Roku's 'clear' path to profits; Chewy's 'overdone' selloff: 5 big analyst picks.

Davit Kirakosyan |

© Reuters

Roku upped to Neutral

Roku (NASDAQ:ROKU) popped 3% after MoffettNathanson upgraded the stock to Neutral from Sell, maintaining its existing $55.00 price target.

The analysts said the unchanged price target was based on their "imputed EBITDA valuation approach," but that the upgrade from Sell reflects "our increased confidence in the profitability outlook. In right sizing the expense base, the path to profitability is clearer even at slower rates of revenue growth."

The analysts added, "Further, we struggle to find meaningful downside at current levels."

Shares were recently trading at $58.06.

Chewy’s selloff overdone, says Morgan Stanley

Chewy (NYSE:CHWY) shares gained more than 3% recently after Morgan Stanley upgraded the company to Overweight from Equalweight with a price target of $28.00 (from $31.00), as reported in real time on InvestingPro.

Morgan Stanley views the recent investor reaction to worries about US market saturation - which have prompted an over-50% drop since mid-July - as "overdone." The company's customer base is showing a marginal dip of about 1% from 2021 levels, and the market is concerned that the pet food name may face challenges in further expanding that base.

The analysts believe that the macro backdrop has played a much larger part than appreciated and wrote, “According to our analysis, CHWY is still gaining market share on both a revenue and customer basis,” they wrote.

Shares were lately changing hands at $19.24.

XPO Logistics earns an upgrade at Jefferies

Jefferies upgraded XPO (NYSE:XPO) to Buy from Hold and raised its price target to $95.00 from $81.00 following the company’s strong Q3 beat, which led to more than a 15% jump in the stock price on Monday.

The analysts emphasized their increased confidence in the long-term margin opportunity at XPO, writing:

“Two major events over the last six months have changed our view on XPO's margin execution: (1) the company’s appointment of COO Dave Bates, long-time ODFL SVP of Ops (best-in-class operator) and (2) the bankruptcy of #3 player YELL and subsequent volume dispersion. The strategy is clear: invest to improve service which drives pricing and margin."

Shares were dipping a little over 1% in recent trading to $76.43.

Two more upgrades: Arista Networks and SoFi Tech

Morgan Stanley upgraded Arista Networks (NYSE:ANET) to Overweight from Equalweight and raised its price target to $220.00 from $185.00 after Arista's impressive Q3 earnings and guidance. Shares were recently up more than 12% to $197.12.

The analyst said that, while Arista's current market valuation is not cheap, they believe the company is best positioned within their coverage universe to capitalize on upcoming AI networking investments. Because of this, they say, the analysts are willing to assign a premium to the stock.

SoFi Technologies (NASDAQ:SOFI) shares were climbing 8% to $7.50 recently after Morgan Stanley upgraded the company to Equalweight from Underweight, with a price target of $7.00, after Monday's better-than-expected Q3 results and guidance raise.


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