A professional roundup of key findings from Wall Street analysts over the past week, including a rare Nvidia (NASDAQ:) stock price cut.
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Intercontinental Exchange (NYSE:)
what happened? Goldman Sachs raised Intercontinental Exchange (NYSE:ICE) to a “buy” rating and set a $167 price target on Monday.
What are the details? Goldman upgraded ICE to Buy from Neutral and set a 12-month price target of $167, implying an upside of 22%. After sub-10% EPS growth over the past three years, Goldman sees ICE’s EPS growth rising to the low teens beyond 2025. This is supported by the following factors:
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Structural tailwinds and ICE’s global leadership in the energy market, which represents approximately 30% of revenues, are driving revenue growth of over 25% through 2024, with 8%-10% growth beyond 2024.
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It’s a sign of accelerating growth in its fixed income data and analytics division, which accounts for about 22% of revenue. The firm’s ASV has recovered and inflows into fixed income funds have rebounded year to date.
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Mortgage technology, which accounts for about 16% of revenue, is in a cyclical trough. Origination activity is stable and ICE’s organic efforts are taking shape, leading to high single-digit to low double-digit revenue growth in 2025 and 2026.
The research team expects high incremental margins from ICE’s fastest-growing Exchange revenue to support operating margin expansion of approximately 100 basis points per year, which, combined with high free cash flow conversion, is expected to accelerate the pace of deleveraging and increase share repurchases by the end of 2024.
Goldman believes these trends are undervalued, with the company’s EPS remaining mid-single digits above consensus (Visible Alpha Consensus Data) of $6.14/$6.90/$7.88 per share. As ICE’s sales growth accelerates and the company reduces its leverage ratio, Goldman sees room for its next-12-month P/E ratio to rise to over 22.5x from the current 21x, implying an EV/EBITDA multiple of 16.5x, which is in line with historical levels.
At Goldman, “buy” means that “whether it is assigned to buy or sell on the investment list depends on the stock’s total return potential relative to its overall coverage.”
How did the stock price react? Intercontinental Exchange opened regular trading at $138.47 and closed at $136.93, up 0.19% from the previous day’s regular close.
Pure Storage (NYSE:
what happened? On Tuesday, UBS set a $47 price target on Pure Storage (NYSE: PSTG) and downgraded the company’s price rating to “sell.”
What are the details? UBS downgraded Pure Storage shares to Sell from Neutral, citing an unfavorable risk/reward scenario. UBS analysts expect PSTG to grow at about 8% over the next five years, down from 16% growth over the past five years. They expect PSTG’s market share in the all-flash sector to plateau at about 15%. Additionally, UBS’s FY26 and FY27 revenue forecasts are 6% and 10% below consensus, respectively.
Analysts observed that PSTG’s market share in the all-flash storage market has fallen by about 80 basis points to 14.5% over the past 12 months as competitors such as NetApp’s (NASDAQ:NTAP) C-Series have gained popularity among enterprise customers.
Despite a 1% decline in earnings estimates for both FY25 and FY26, PSTG shares have risen about 83% year-to-date, outperforming the 15% rise in the S&P 500. This indicates that the share price appreciation has been entirely driven by the expansion of the multiple to lofty levels of around 6x EV/Earnings.
UBS also notes that PSTG’s valuation is overly influenced by optimism that AI infrastructure investments will drive growth, but the analyst believes AI-related storage spending will likely grow more slowly than the market expects and be focused on inference, a slower-growing market segment compared to training.
Additionally, private vendors such as Weka, VAST Data and Hammerspace are gaining market share, as evidenced by Meta (NASDAQ:META (NASDAQ:)) partnering with Hammerspace to develop and implement a parallel network file system on GenAI clusters. This trend further supports UBS’ decision to downgrade Pure shares to sell.
At UBS, a “sell” means “specified factors or events are expected to cause the stock price to decline within three months of the rating being assigned. The FSR is more than 6% below the MRA.”
How did the stock price react? Pure Storage began regular trading at $61.21 and closed at $62.74, down 4.20% from the previous day’s regular trading close.
Charter Communications (Nasdaq:)
what happened? On Wednesday (when US markets were trading during reduced hours), Citi downgraded Charter Communications (NASDAQ:CHTR) to “sell” and set a target price of $255.
Can you tell me more about it? Citi analysts have expressed concern about Charter’s financial outlook, citing heightened risks to both revenue forecasts and market valuation. The analysts noted a tougher than previously expected organic broadband environment, which could negatively impact subscriber and revenue growth over the coming year. Given these headwinds, the analysts believe the consensus forecast for Charter’s 2025 EBITDA may be too optimistic.
In response to these concerns, the bank revised its target price downward to reflect a narrower fair value-to-EBITDA multiple to 6.0x. The adjustment is based on Citi’s own forecasts, which project a lower-than-market consensus EBITDA number for 2025. However, Citi analysts acknowledge that free cash flow could recover in the future if Charter survives its current phase of ramped capital investment.
Looking ahead, Citi sees Charter’s second and third quarter results as a potential drag. Citi expects these earnings reports to highlight the challenges facing Charter, particularly broadband pricing and subscriber numbers. The recent depreciation of All-Channel Programming (ACP) has been highlighted as a contributing factor to these headwinds, with analysts expressing skepticism about a near-term recovery in this regard.
Selling at Citi is as follows: “Investment grade is defined as: buy when ETR is above 15% or above 25% for high risk stocks, sell when ETR is negative.”
How did the stock price react? Charter Communications began regular trading at $299.19 and closed at $301.25, up 1.72% from the previous day’s regular trading close.
Thursday – US markets closed
NVIDIA
what happened? On Friday, New Street Research downgraded Nvidia (NASDAQ:NVDA) to neutral with a $135 price target.
What are the details? According to New Street analysis, consensus forecasts call for GPU revenue to grow 35% by 2025, roughly in line with previous forecasts leading to revenue growth.
However, the brokerage sees limited potential for further upside based on insights from the industry’s value chain. As a result, New Street downgraded the stock to Neutral, highlighting that significant additional gains would depend on a bullish scenario in which outlook improves significantly beyond 2025, a development the brokerage currently considers uncertain.
Going forward, consensus forecasts expect revenue growth to slow to the mid-teens, but this trend could be put at risk by a moderation in hyperscale capital spending and potential market share gains by ASICs and AMD (NASDAQ:). In an unchanged outlook scenario, New Street expects the stock to see little further upside and may even face the risk of a valuation adjustment.
The stock currently trades at 40 times next-12-month earnings per share, but fell to as low as 20 times during slowing growth in 2019 before recovering to 35 times recently.
New Street values Nvidia at 35 times earnings, reminiscent of valuation levels in late 2019 and early 2020. The company’s base case forecasts EPS of $4.1 by 2027, with the target price reaching $143 by 2026, leading to New Street’s one-year price target of $135.
Despite these metrics, brokerages acknowledge the enduring quality of Nvidia’s fundamentals and have indicated they would be prepared to recommend the company’s shares as a buy again, especially during periods of extended market downturn.
How did the stock price react? NVIDIA began regular trading at $127.41 and closed at $125.83, down 1.91% from the previous day’s regular trading close.
