6 analyst cuts weekly: Meta & Rivian downgraded to Neutral | Pro Recap

By Davit Kirakosyan

Investing.com -- Here is your Pro Recap of the biggest analyst cuts you may have missed since last week.

Meta downgraded to Neutral on the stock’s significant run-up

New Street Research downgraded Meta Platforms (NASDAQ:META) to Neutral from Buy with a price target of $220.00. Shares fell more than 1% today.

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The downgrade was due to the stock’s significant run-up, trading approximately 84% higher year-to-date. According to the firm, The Year of Efficiency re-rating is likely finished, and while cost cuts could help estimates, they're unlikely to impact the multiple significantly.

Additionally, the firm is concerned about high costs related to AI and Metaverse investments and their potential impact on margins in the mid-to-long term. To become more bullish on Meta, the firm wants to see increased adoption of Advantage+ and other ad tech tools, as well as reduced competition from TikTok.

The company will report its Q1/23 earnings results on April 26. Consensus estimates stand at $2.02 for EPS and $27.62 billion for revenues.

Rivian Automotive downgraded to Neutral as current strategy is 'costly'

Piper Sandler downgraded Rivian Automotive (NASDAQ:RIVN) to Neutral from Overweight on Friday and cut its price target to $15.00 from $63.00, as it believes the company’s strategy is too costly.

“We still like Rivian's strategy, which uses vertical integration to capture lucrative after-sales revenue (e.g. software, service, and charging). Tesla (NASDAQ:TSLA) is the only other company with so much ambition, and arguably, Tesla's superiority stems from its ability to unilaterally control all aspects of design, production, sales, and service,” said the firm, noting that the problem is that this strategy is costly.

According to the firm, in order for Rivian to justify its cost structure, the company must spread its investment over millions of units (just like Tesla does), and in order to finance such aggressive expansion, it will need capital. Specifically, the firm believes over $4 billion will be needed to fund growth beyond 2025.

Upstart started with Underweight at JPMorgan, shares down 9% last week

JPMorgan initiated coverage on Upstart Holdings (NASDAQ:UPST) with an Underweight rating and a price target of $11.00, given funding headwinds, its growing on-balance sheet credit exposure, and uncertain near-term origination and profit outlook.

While the firm likes the longer-term potential of Upstart's AI Lending platform, it noted that the business is proving to be extremely cyclical and sensitive to the whims of its funding partners.

Shares closed nearly 9% lower last week.

3 more downgrades

Citi downgraded Vale (NYSE:VALE) to Neutral from Buy and cut its price target to $16.00 from $20.00 with iron ore about to enter a period of seasonal weakness driven by the China steel mill stocking cycle.

Longer-term, Citi remains positive based on Vale’s strong asset quality and the potential to improve operating performance.

JPMorgan downgraded Wolfspeed (NYSE:WOLF) to Neutral from Overweight and cut its price target to $65.00 from $100.00, given the higher likelihood of negative catalysts in the near term, including challenging improvement in yields on taller boules and throughput from the Durham facility, respectively, and at the same time a more modest ramp in MVF through 2024 even though early revenue still remains on track likely for Q4/23.

Teradyne (NASDAQ:TER) shares closed more than 2% lower today after JPMorgan downgraded the company to Underweight from Neutral and cut its price target to $81.00 from $90.00, noting increasing risks around elevated expectations of a rebound in revenue and earnings starting with the back half of 2023 and in 2024.

The company will report its Q1/23 earnings results on April 25.