Citi ups Verizon and AT&T to Buy
Citi analysts see an improved investment outlook for large-cap telecoms, and specifically upgraded both Verizon (NYSE:VZ) and AT&T to Buy, with $40 and $17 price targets, respectively.
“We see a few factors that point towards a stabilizing wireless competitive landscape,” say the analysts, adding, “AT&T and Verizon have recently introduced another round of targeted back book pricing increases. Also, longer device holding periods are reducing upgrade costs & stabilizing churn.”
The analysts say that the stocks’ current valuations “may be discounting more than full-remediation cost scenarios for lead, while anticipated updates could help to level and possibly narrow the perceived risk,” referring to recent controversy borne of a Wall Street Journal report that the companies are using contaminating lead-covered cables, which could lead to high remediation costs.
Verizon shares were gaining 1.4% to $34.02 in recent premarket trading. AT&T was adding 1.6% to $14.43.
3M earns an upgrade following $5.5 billion settlement reports
Wolfe Research upgraded 3M (NYSE:MMM) to Peerperform from Underperform.
Shares surged more than 5% yesterday following media reports that the industrial conglomerate has agreed to pay over $5.5B to resolve hundreds of thousands of lawsuits alleging that its earplugs sold to the U.S. military were defective.
According to the reports, sources close to the matter say that the negotiations are ongoing and a final amount has yet to be decided. The potential settlement was first reported by Bloomberg News.
Wolfe views the settlement amount “as good as could have been expected.”
The remaining challenges are that there is still a highly uncertain event path, and we view the upcoming Healthcare spin as a catalyst for a dividend cut. Nevertheless, the stock finally screens as roughly fair value vs. our revised $76-140 bear/bull spread.
Oracle gains on UBS upgrade
Oracle (NYSE:ORCL) shares rose more than 2% pre-market today after UBS upgraded the company to Buy from Neutral and raised its price target to $140.00 from $120.00.
According to the bank, Oracle’s shares have surged by 42% year-to-date, and they acknowledge that many investors already see Oracle as a winner in AI. However, UBS believes there’s still significant room for Oracle’s AI story to unfold. It pointed out several factors supporting this perspective. “a) we may be just one quarter into AI start-ups ramping their use of OCI, and we don’t think that Cohere has kicked-off its ramp yet; b) we are sitting in front of what could be a constructive CloudWorld event and Investor day” mentioned UBS.
Furthermore, the firm noted the P/E multiple of 20x doesn’t look full on its estimates, as well as only a minority (around 40%) of sell-side analysts even rate Oracle shares a Buy.
Mister Car Wash jumps 6% following Piper Sandler upgrade
Mister Car Wash (NYSE:MCW) shares rose more than 6% yesterday after Piper Sandler upgraded the company to Overweight from Neutral and raised its price target to $12.00 from $9.00.
This rating change is based on the anticipation of a significant upside to estimates over the next two years. Piper Sandler expects the company’s rollout of Titanium 360 to contribute to around a 5% increase in comparable sales for both 2024 and 2025.
The reduction in competitive openings in 2024 is also expected to ease pressure on Retail sales industry-wide. Positive industry feedback about Mister Car Wash further supports its potential for long-term growth.
