Investing.com — Here is your Pro Recap of the top takeaways from Wall Street analysts for the past week.
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Amazon.com
What happened? On Monday, Wells Fargo downgraded Amazon.com (NASDAQ:AMZN) to Equalweight with a $183 price target.
*TLDR: WFC sees NT pressures on AMZN from Project Kuiper and FBA fee issues. AMZN’s margin expansion faces competition from Walmart (NYSE:WMT), reducing FBA fees by $2 billion.
What’s the full story? Wells Fargo analysts note that while Amazon has been a consistent positive revision story, several factors are likely to pressure revisions in the near term. These include investments in Project Kuiper, anticipated FBA fee pressures, and moderating advertising operating income contributions. The bank’s downgrade comes on the heels of potential caps on margin expansion in the first half of 2025. Consequently, Wells Fargo has reduced its operating income estimates for 2025, 2026, and 2027 by $5.4 billion, $4.5 billion, and $5.5 billion, respectively.
Despite these headwinds, Wells Fargo maintains that Amazon remains a margin expansion story, albeit at a more moderate pace than the market expects. The analysts also highlight the growing competition from Walmart, whose expanding fulfillment capabilities and competitive pricing are likely to impact Amazon’s merchant services more than consumer wallet share. This competition is expected to result in an estimated $2 billion annual reduction in FBA fees.
Equalweight at Wells Fargo means “Total return on stock expected to be -10% to +10% over the next 12 months. “
Wells Fargo
What happened? On Tuesday, Wolfe Research upgraded Wells Fargo & Company (NYSE:WFC) to Outperform with a $65 price target.
*TLDR: Wolfe upgraded WFC amid a challenging ~9% EPS reset for 2026. Asset cap removal expected to boost EPS, supporting the upgrade decision.
What’s the full story? Wolfe upgraded Wells Fargo amid the challenging ~9% EPS reset for 2026 and the complexities of AML and regulatory risks. The decision comes after noting that WFC shares have significantly lagged behind peers by approximately 2000 basis points since April. The analysts believe that the risks to consensus EPS and Net Interest Income (NII) are now better understood, and the current valuation remains overly discounted, even with deeper cuts.
Furthermore, Wolfe highlights that the removal of the asset cap is expected to provide a high-single-digit EPS boost, which is not yet reflected in the stock’s multiple. This potential tailwind, combined with the improved understanding of risks, supports the analysts’ decision to upgrade WFC.
Outperform at Wolfe means “The security is projected to outperform analyst’s industry coverage universe over the next 12 months.”
Norwegian Cruise Lines
What happened? On Wednesday, Citi upgraded Norwegian Cruise Line Holdings Ltd (NYSE:NCLH) to Buy with a $30 price target.
*TLDR: Citi sees NCLH’s new strategy balancing yield and cost, mitigating runaway expenses. Potential 30% EPS CAGR if NCLH maintains a 2.5% yield/cost spread.
What’s the full story? Citi analysts express confidence in Norwegian Cruise Line Holdings’ new strategy, which aims to balance yield and cost, mitigating the risk of runaway expenses. They estimate a 23% three-year EPS CAGR, potentially reaching 30% if NCLH maintains its targeted 2.5% yield/cost spread. This shift from a “quality at all costs” approach to a more balanced strategy is expected to unlock significant pricing opportunities without escalating costs.
The firm’s conservative long-term estimates suggest substantial earnings upside, even if NCLH falls short of its yield/cost target. Citi’s projections indicate that maintaining the 2.5% spread could lead to a three-year EPS CAGR closer to 30%, highlighting the potential for meaningful earnings growth and multiple expansion compared to current market expectations.
Buy at Citi means “Buy (1) ETR of 15% or more or 25% or more for High risk stocks.”
Nike
What happened? On Thursday, Truist upgraded Nike Inc (NYSE:NKE) to Buy with a $97 price target.
*TLDR: Truist remains cautious on Nike but sees growing optimism as expectations align with reality. Near-term wins include marketing investments, better wholesale relationships, and promoting Caitlin Clark.
What’s the full story? Truist has maintained a cautious stance on Nike since the Fall of 2023. While the brokerage still views the turnaround process as long and uncertain, there is growing optimism about Nike’s shares as investor expectations now seem to accurately reflect the company’s current reality. With a team of seasoned company veterans back at the helm, Truist believes Nike is moving in the right direction.
Although a fundamental recovery remains a long-term prospect, Truist sees potential for some near-term wins. These include increased investment in marketing, improved wholesale relationships, and the promotion of ambassador Caitlin Clark. The brokerage believes these efforts by the new team should be enough to demonstrate to investors that better times are ahead for Nike.
Buy at Truist means “the stock’s total return is expected to outperform the S&P 500 or relevant benchmark over the next 12-18 months (unless otherwise indicated).”
Ferrari
What happened? On Friday, JPMorgan upgraded Ferrari NV (NYSE:RACE) to Overweight with a $525 price target.
*TLDR: RACE upgraded on high visibility earnings growth and resilience to China’s slowdown. RACE’s disciplined growth strategy under CEO Vigna results in record pricing, backlog, and future earnings visibility
What’s the full story? JPMorgan has upgraded Ferrari shares following a series of investor meetings with CEO Benedetto Vigna and Manager of Investor Relations Aldo Benetti across several major cities in Asia and Australia. The analysts highlighted key investment positives, including unique drivers of high visibility earnings growth, which are expected to be increasingly valued by investors amidst growing macroeconomic, industry, and geopolitical uncertainties. The analysts gained greater confidence in Ferrari’s ability to navigate key debate areas such as electrification and emerged assured that Ferrari will remain resilient against the current slowdown in China, which is affecting other high-end automakers and European luxury goods brands.
JPMorgan emphasized Ferrari’s disciplined growth strategy, rooted in the philosophy of delivering one car less than the market demands, as famously stated by founder Enzo Ferrari. Under CEO Vigna’s leadership, this strategy has resulted in record pricing and backlog, providing excellent visibility into future earnings growth. Ferrari’s ability to reallocate shipments from markets with softer demand, like China, to regions with stronger demand ensures no negative impact on total company profits and even higher margins. Additionally, Ferrari’s upcoming battery electric vehicle promises an exceptional driving experience, and the potential debut of its latest Supercar could provide a significant earnings boost.
Overweight at JPMorgan means “over the duration of the price target indicated in this report, we expect this stock will outperform the average total return of the stocks in the Research Analyst’s, or the Research Analyst’s team’s, coverage universe.”
