Investing.com – Here’s your Pro Recap of the top takeaways from Wall Street analysts over the past week.
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South Co .
What happened? On Monday, Mizuho downgraded The Southern Company (NYSE: ) to Neutral with a $90 price target.
*TLDR: Mizuho sees limited catalyst for higher performance despite a 21% P/E premium. Strong load growth and strong capital plans should support EPS growth rates of 5-7% SO and maintain a strong balance sheet through 2026.
What is the full story? Mizuho downgraded Southern Company to Neutral, after previously upgrading it in April 2023 when shares traded at a 4% P/E premium to the group. The company initially asserted that the stock could be revalued to a double premium as Vogtle Unit 4 was completed. However, with shares currently trading at a 21% P/E premium to the electric utility group, Mizuho sees few catalysts for outperformance.
Despite moving to the sidelines in SO, Mizuho believes that strong growth in the SO service area, driven by demand for data centers and manufacturing reshoring, should make the company’s 5-7% EPS growth rate more sustainable. The company also believes that management can maintain a strong capital plan, a strong balance sheet with 17% FFO/Debt, and minimum equity needs of $350 million annually through 2026.
Neutral in Mizuho means “The total return of the stock is expected to perform in line with the unweighted, expected total return of industry analysts covering the Universe over the next 12 months. “
Shopify
What happened? On Tuesday, Redburn-Atlantic upgraded Shopify (NYSE:) to Buy with a $99 price target
*TLDR: Redburn-Atlantic highlighted Shopify’s innovation, social media integration, and Shop Pay as key growth factors. The company predicts 29% revenue CAGR and 40% EBIT margin by 2026.
What is the full story? Redburn-Atlantic highlights Shopify’s industry-leading innovation, social media integration, user-friendly platform, and unique Shop Pay button functionality as key factors positioning it to leverage structural growth. Its extensive ecosystem and enterprise platform capabilities have made Shopify the e-commerce provider of choice for merchants of all sizes, with significant enterprise merchant wins anticipated by 2025.
Redburn-Atlantic upgraded its recommendation on Shopify to Buy, citing the company’s multi-faceted moat characterized by scale, high switching costs, and an impenetrable three-sided network. The company forecasts net profit CAGR of 29% from 2023-26 and EBIT margin of 40% in 2026, resulting in a forecast of 24% above 2026 EBIT consensus. The price target is set at $99, based on above consensus earnings and multiples in line with friends in the internet, fintech, and software sectors.
Buying in Redburn-Atlantic means “Redburn Atlantic argues that the stock price will rise at least 15% within a year. For high beta stocks, the level of hurdle may be higher. “
Resmed
What happened? On Wednesday, Wolfe Research dropped ResMed Inc (NYSE: ) to Underperform with a price target of $180.
*TLDR: Wolfe gave RMD an Underperform rating with a $180 target, citing disruption risks from Lilly’s GLP-1 drug. Analysts see 10% upside and 30%-40% downside risk, projecting mid-single digit growth.
What is the full story? Wolfe analysts rate RMD stock as Underperform with a target price of $180, applying a 20x P/E multiple to NTM EPS of approximately $9. This lower range shows the risk of disruption anticipated for the RMD business in 2025-2026 due to Lilly’s potential Open indication of obstructive sleep apnea for its GLP-1 drug tirzepatide. Wolfe’s total addressable market analysis suggests a long-term impact of 15%-25% on the CPAP opportunity, resulting in sustainable growth rates more likely to be in the mid single digits than high single digits.
Analysts present two sets of comparisons: HSD med tech farmers with 25x-27.5x P/E and MSD med tech farmers with 15x-20x P/E. They believe RMD’s growth expectations are more in line with the upper end of MSD’s range. The physician survey had a 6% negative impact on CPAP prescription volume, creating a potential shift from HSD growth to MSD. Wolfe sees 10% upside potential with 30%-40% downside risk over the next 12-24 months.
Underperform at Wolfe means “The security is expected to underperform the world of analyst industry coverage over the next 12 months.”
DoorDash
What happened? On Thursday, BTIG upgraded DoorDash Inc (NASDAQ: ) to Buy with a $155 price target.
*TLDR: BTIG raised its forecast for DASH due to its near-term strength and long-term growth drivers. Positive EBIT and net income expected in 2H; the rideshare-delivery sector shows secular growth.
What is the full story? BTIG has been closely monitoring DoorDash due to its positive category bias, strong execution, and upward pressure on estimates. The analyst highlighted three main reasons for raising the forecast: short-term strength and underappreciated long-term drivers, important milestones with positive EBIT and expected net income in the second half, and the rideshare delivery sector is a rare secular area. growth in the Internet facing consumers.
The analyst emphasized the desire to increase exposure to DASH relative to more mature categories like eTravel, online dating, and real estate services. BTIG sees significant potential in the continued growth and milestones of DASH, positioning it as a compelling investment opportunity.
Buy on BTIG means “A safe that is expected to have a total positive return of 15% or more within 12 months after the recommendation. The BUY rating can be maintained as long as it is considered appropriate, even if there are price fluctuations that will cause the target to fall outside of the 15% return. “
What happened? On Friday, B. Riley initiated coverage on Reddit (NYSE: ) at Buy with a price target of $75.
*TLDR: B. Riley looks at Reddit’s unique platform and early monetization phase driving growth. Attractive risk/reward profile at 31x 2025 EBITDA, with significant leverage potential.
What is the full story? B. Riley highlighted Reddit’s unique value proposition for users, advertisers, and content licensees through its platform, which supports tens of millions of users in more than 100,000 communities. This creates a vast and extensive repository of curated content. The broker believes Reddit is in the early stages of monetizing its platform through advertising and data licensing, positioning it for healthy top-line growth and margin gains in the coming years.
At approximately 31x 2025 estimated EBITDA, B. Riley finds an attractive risk/reward profile, given the above industry growth prospects and significant impact over the next few years. The broker sees Reddit’s potential for expansion and continued profitability as an attractive investment opportunity
Buy at B. Riley means “We generally expect” Buy “rated stocks to have an above-average risk-adjusted total return over the next 12 months. We recommend that investors buy securities at their current value.
