Oppenheimer upgrades used-car seller Carvana to outperform as it sees nearly 40% upside ahead
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Yahoo
13 hours ago
- Yahoo
Goldman Warns: The Market's Missing a Major Risk
Wall Street is partying like tariffs don't matterbut Goldman Sachs' Peter Oppenheimer thinks that optimism might be premature. While investors pour back into US equities, betting on interest rate cuts and a smooth Trump second term, OppenheimerGoldman's chief global equity strategistwarns that markets could be overlooking serious downside risk. There's a degree of complacency, he told Bloomberg, noting that equity valuations are high and risk premia have come down. The tariff overhang might not spark a full-blown recession, but it could still hit stocks harder than markets are pricing in. In his view, now's a good time to get serious about diversification. Warning! GuruFocus has detected 4 Warning Sign with UNH. Oppenheimer made waves last year by calling out stretched US valuations just as AI mania was taking hold. While many strategists doubled down on domestic exposure, he turned the spotlight on long-ignored international markets. That contrarian bet is now paying off: MSCI's all-country ex-US index is up 17% this yeardouble the S&P 500's (SPY) 8.6% gain. Behind the call was a simple thesis: after a decade-plus of US dominance, the relative edge in profitability and returns was starting to fade. Add in geopolitical risk and shifting global growth dynamics, and the case for rebalancing away from the US became harder to ignore. With four decades in the game, Oppenheimer has seen how sentiment can shift fastbut the biggest returns come from spotting slow-moving structural shifts before they go mainstream. He believes today's generation of investorsraised on near-zero interest rates and instant feedback loopsmight be too focused on short-term noise. His advice? Be patient, stay diversified, and don't mistake a rebound for a risk-free rally. Even if the US avoids a tariff-induced recession, broader exposure could be the edge investors need in what's still a volatile and uncertain market. This article first appeared on GuruFocus. Sign in to access your portfolio
Business Insider
13 hours ago
- Business Insider
Wall Street is bullish on Meta's Q2 performance ahead of its earnings report: 'One of the best AI opportunity stocks'
It's Meta's time to shine. The Facebook parent is on deck to report earnings for the second quarter after the closing bell on Wednesday, and Wall Street analysts are feeling bullish on the tech giant's coming results. Analysts are expecting the company to report $44.7 billion in revenue for the last three-month period, compared to $42.3 billion in revenue for the first quarter. Earnings per share are expected to come in at $5.86, according to Bloomberg data. Wall Street has increasingly come to see Meta as a key AI play, with the company on track to roll out two major data centers and profit from AI-driven advertising on its platforms. Earlier in the year, the company also said it would spend up to $65 billion in capex as AI becomes a central growth strategy to the company. Here's what analysts are saying about the stock ahead of its next earnings report. Bank of America: "Top Online ad stock" Analysts at Bank of America said they expect Meta to beat consensus estimates for second-quarter earnings, pointing to positive checks they conducted on Meta's advertising business. Revenue could come in around $45.5 billion, they estimated, at the higher end of Meta's guidance for the quarter. In a note earlier this month, analysts called Meta a "Top Online ad stock" in 2025. That's because the company looks best-positioned to reap the benefits from AI-driven advertising, they wrote, which they believe could support a higher valuation for the stock. But Meta's AI spending could be an issue. "Expense risk on reports that Meta has ramped up AI hiring, and capex spend is the biggest concern into the print," analysts wrote last week, adding that they expected the company's total headcount to rise 2% for the quarter. Analysts reiterated their "Buy" rating on the stock. Earlier this month, they lifted their price target to $775 from $765, which implies 8% upside from the stock's current levels. Oppenheimer: Ads are a bullish factor Oppenheimer lifted its revenue outlook for Meta through the rest of 2025. Revenue could climb 4% in the second quarter, 9% in the third quarter, and 3% in the fourth quarter, analysts wrote in a note last month, citing the reduced risk of a tariff-induced recession as well as an improved outlook for the online ad market. Still, Oppenheimer said it saw a handful of key risks looming over the stock. Here are some of the potential headwinds they see: Meta could struggle to innovate its AI features. "Scout" and Maverick," the company's latest AI models for Llama 4, "have dramatically trailed peers," Oppenheimer said. Investors could sell Meta stock to divert proceeds to new tech IPOs. Meta's ads could become less effective if privacy restrictions make it difficult for the company to track user data The company faces competition from the likes of Google, Microsoft, Pinterest, Twitter, and TikTok. Oppenheimer reiterated its "Outperform" rating on the stock and lifted its price target to $775 a share, implying 8% upside from current levels. Needham: 'We expect META to over-deliver' Needham had a mixed view of Meta headed into its second-quarter earnings. On the one hand, the firm's analysts upgraded their rating for the stock from "Underperform" to "Hold," citing two positive catalysts: Rising revenue. "Based on our channel checks, we expect META to over-deliver on our prior rev and margin estimates for 2Q25 and FY 25," the analysts said, estimating that Meta would post 14% revenue growth and 6% earnings per share growth for the year. High productivity. Meta's business could be more productive than other mega-cap tech firms, with the company scoring the highest on free cash flow relative to labor costs in 2024. Still, analysts see a handful of risks ahead that held them back from rating the stock as a "buy." Risks include pressure on Meta's margins and free-cash flow, potentially higher-than-expected total labor costs due to stock-based compensation, and Meta's use of several strategies in its business, which "wastes capital and adds risks," analysts said. Citizens: Capex could climb past $90 billion next year Meta could lift its capital expenditures even higher as it ploughs more money into its AI and superintelligence projects, analysts at Citizens wrote in a note. "With Meta making material investments in its superintelligence team, including researchers and compute, we believe the company is going through a significant investment cycle and we expect 2026 CapEx to surprise the Street as Meta builds multiple 1GQ or greater data centers," they said, estimating capex could come in around $91 billion next year. Stocks typically don't benefit when a company is going through an investment cycle, analysts said. But the situation could be different for Meta, as AI can enhance the ad experience for users. "To that end, we believe more compute and access to better models can help sustain revenue growth and we moderately increase our growth estimates for Meta," analysts said. The firm reiterated its "Market Outperform" rating and $750 price target on the stock, implying 5% upside from current levels. CFRA Research: Hiring, ad spending, AI in focus Angelo Zino, an analyst at CFRA Research, wrote this month that investors will likely be most interested in three things heading into Meta's earnings call: The implications of the company's recent " AI hiring spree." The health of Meta's ad spending across its social media platforms. The company's monetization of AI and other growth initiatives. Still, Zino said he expects Meta to meet its expected revenue targets for the second and third quarters, largely due to increased stability in the digital ad market. Meta's ad impressions could see an increase of around 5%-6%, while the average price per ad could rise 9%-10% in both the second and third quarters, Zino said. CFRA reiterated its "Buy" rating on the stock and lifted its price target to $800 from $750, implying 12% upside from current levels.
Yahoo
19 hours ago
- Yahoo
According to Analysts, This Tech Stock Has the ‘Longest Runway.' Should You Buy It Here?
Spotify (SPOT) stock gained close to 2% on Thursday, July 24 after Oppenheimer upgraded the streaming giant to 'Outperform' with an $800 price target, arguing the company has 'the longest runway' among large-cap internet stocks despite trading 12% below all-time highs. The firm forecasts that Spotify stock will add approximately 75 million net new users annually from 2026 to 2030, yet still reach only 17% of the global adult population by the end of the decade, significantly lower penetration than peers like Meta (META) and YouTube, suggesting that substantial growth potential remains untapped. More News from Barchart Tesla Just Signed a Chip Supply Deal with Samsung. What Does That Mean for TSLA Stock? Dear Microsoft Stock Fans, Mark Your Calendars for Aug. 1 Is Lucid Motors Stock a Buy, Sell, or Hold for July 2025? Our exclusive Barchart Brief newsletter is your FREE midday guide to what's moving stocks, sectors, and investor sentiment - delivered right when you need the info most. Subscribe today! Oppenheimer identifies several catalysts driving the bullish outlook. The company's under-monetized free tier presents a massive opportunity, with analysts projecting €10 billion in potential advertising revenue by 2030 if Spotify closes the gap with traditional radio and podcast advertising rates. Alternatively, introducing a modest €1 monthly fee for the lowest tier could generate up to €12 billion in revenue. Recent App Store changes are expected to improve paid user conversion on iOS, while the upcoming 'Superfan' tier launch and successful price increases, supported by low churn rates, are expected to provide additional revenue drivers. The firm expects gross margins to expand from approximately 31% currently to 37% by 2030, driven by the profitability of podcasts and effective cost control measures. The $800 price target reflects 20 times Oppenheimer's 2030 earnings estimate, factoring in €20 billion in projected share buybacks while maintaining €17 billion in cash reserves, underscoring confidence in Spotify's long-term financial trajectory. Spotify Continues to Grow at a Steady Pace Spotify reported its second-highest first quarter for premium subscriber additions ever, reaching 268 million net subscribers, surpassing expectations and marking the strongest Q1 performance since 2020. The music streaming giant's monthly active users grew to 678 million, while total revenue climbed 15% year-over-year to €4.2 billion on a constant currency basis. CEO Daniel Ek expressed optimism about the business fundamentals despite broader macro uncertainty, noting that engagement remains high and retention is strong. Spotify's freemium model provides flexibility for users during uncertain times. This tier contributed to the robust subscriber growth, which was driven primarily by emerging markets, particularly Latin America and the Asia Pacific. Premium revenue increased 16% year-over-year, driven by continued subscriber growth and higher average revenue per user resulting from recent price increases. The advertising business exceeded expectations, achieving 5% growth, thanks to automated features that attracted over 10,000 advertisers, representing a 21% year-over-year increase. Spotify's gross margin expanded to 31.6%, surpassing guidance and improving 400 basis points year-over-year. Operating income reached €509 million, while free cash flow hit €534 million for the quarter. The company ended with €8 billion in cash and short-term investments. Looking ahead, management forecasts 689 million MAUs and 273 million subscribers for Q2, with €4.3 billion in total revenue. Is SPOT Stock Undervalued Right Now? Analysts tracking SPOT stock estimate revenue to increase from $16.28 billion in 2024 to $33 billion in 2029. In this period, adjusted earnings are forecast to expand from $5.71 per share to $21.23 per share. Compared to the previous year, free cash flow is projected to increase from $2.37 billion to $7.58 billion. If SPOT stock is priced at 35 times forward FCF, it should trade at a market capitalization of $265 billion, indicating upside potential of 86% over the next three years. Out of the 32 analysts covering SPOT stock, 20 recommend 'Strong Buy,' two recommend 'Moderate Buy,' eight recommend 'Hold,' one recommends 'Moderate Sell,' and one recommends 'Strong Sell.' The average target price for SPOT stock is $741, roughly 5.6% above the current price. On the date of publication, Aditya Raghunath did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
