Wednesday’s analyst calls: UPS is a buy, Reddit set to jump more than 25%
(This is CNBC Pro’s live coverage of Wednesday’s analyst calls and Wall Street chatter. Please refresh every 20-30 minutes to view the latest posts.) A delivery giant and a social media company were among the stocks being talked about by analysts on Wednesday. Citi initiated UPS with a buy rating, citing an attractive valuation. Meanwhile, Jefferies began coverage of Reddit with a buy rating and a price target of $90. Check out the latest calls and chatter below. All times ET. 5:55 a.m.: Wells Fargo hikes Roblox price target as earnings report looms Wells Fargo sees more room for Roblox to run as the video game company’s earnings report approaches. Analyst Ken Gawrelski lifted his price target by $8 to $54, which now suggests 33.3% upside from Tuesday’s close. He also has an overweight rating on the stock. For earnings, Gawrelski said total bookings growth for the third quarter should increase by 6 points to 27.5% year over year, which is above the consensus forecast on Wall Street. That’s driven by strong engagement and favorable foreign exchange shifts, he said. “The market continues to question the durability of engagement strength,” Gawrelski wrote to clients in a Tuesday note. “We believe another reported strong quarter and healthy guidance will be constructive to investor confidence.” Additionally, Gawrelski pointed to Roblox’s growing list of monetization tools as a “crucial” driver of developer engagement. Roblox is expected to report earnings Oct. 31, according to FactSet. It comes during a rough patch: Shares have dropped more than 11% this year, eating into 2023’s rally of more than 60%. RBLX YTD mountain RBLX in 2024 — Alex Harring 5:50 a.m.: Citi says UPS is a buy Buy the dip on UPS shares, according to Citi. Analyst Ariel Rosa initiated the delivery giant with a buy rating and a price target of $162. That implies upside of 23%. UPS has struggled in 2024, losing 16.7%. UPS YTD mountain UPS year to date However, Rosa said the stock is now “attractively priced given that it is trading at the lower end of its historical forward P/E average.” “Despite share loss to Amazon Logistics and Walmart Fulfillment Services and mix headwinds from direct-from-China mega e-tailers Temu and Shein, UPS is positioned to benefit from the end of the freight recession and start of the next upcycle, driving more profitable volumes,” the analyst said. — Fred Imbert 5:50 a.m.: Jefferies opens coverage on Reddit with Street-high price target Reddit’s advertising and data licensing opportunities brought Jefferies to the bull camp. Analyst John Colantuoni initiated coverage of the social media platform at a buy rating. Colantuoni set a $90 price target, which implies shares can rise 27.2% from Tuesday’s close. That $90 price target appears to be the highest on Wall Street, according to LSEG. Colantuoni said $65 of it is tied to the advertising business, while the remaining $25 comes from data licensing. The analyst said EBITDA should more than double over the next two years to around $450 million, coming in above consensus. That will be driven by high growth in users and a closing monetization gap when compared to peers. Colantuoni also pointed to the potential for more high-margin licensing deals. Those will come, he said, as Reddit’s database of content gains value due to generative artificial intelligence. Shares rose more than 1% before the bell on Wednesday, The stock debuted on the market in March through an initial public offering priced at $34 per share. — Alex Harring
