UBS Upgrades S&P 500 Targets; Goldman Sachs on AMZN, Downgrades ETSY, MBLY, ENPH Insights

UBS Increases S&P 500 Target for 2024 & 2025

UBS has raised its target for the S&P 500 to 5,850 for 2024 (up from 5,600) and to 6,400 for 2025 (up from 6,000). They expect earnings per share (EPS) of $240 for 2024 and $257 for 2025, which is lower than what Wall Street predicts. UBS believes that as the Federal Reserve reduces interest rates, stock valuations will increase.

The index has risen 22.85% in 2024 and recently reached a record closing high of 5,859.85 points. Analysts, led by Jonathan Golub, believe that rate cuts will reduce interest expenses and default risks, which will help improve earnings per share (EPS) and company valuations.

They also noted that financial conditions are becoming less stressful and more liquid, which is good for valuations. UBS predicts that the Federal Reserve will lower rates by 250 basis points by 2026, and a significant drop in interest rates could boost profit margins by 20 basis points.

Goldman Sachs on Amazon ($AMZN) – Buy Rating with $230 Price Target

Goldman Sachs maintains a Buy rating on Amazon and has set a price target of $230. They anticipate three main trends in Amazon’s Q3 2024 earnings: stable online shopping demand, a strong advertising market, and continued growth in Amazon Web Services (AWS). They plan to analyze factors like investments in Project Kuiper, losses in Devices and Services, retail margins, and store economics. They think that Amazon’s investments in lower prices and more product choices are smart long-term moves and will lead to growth and improved profits.

Goldman Sachs Downgrades Etsy ($ETSY) to Sell with $45 Price Target

Goldman Sachs has downgraded Etsy to a Sell rating, reducing the price target from $70 to $45. They believe that Etsy is facing ongoing declines in gross merchandise sales (GMS), and it’s unclear when they will return to positive growth. They think Etsy will continue to lose market share in the eCommerce space and that earnings estimates might go down if GMS declines persist. High margin expectations for the upcoming quarters could further pressure the stock.

RBC Capital Downgrades Mobileye ($MBLY) to Sector Perform with $11 Price Target

RBC Capital has downgraded Mobileye to Sector Perform and lowered the price target from $24 to $11. They are concerned about uncertainties regarding wins with major automotive manufacturers in the near future and potential negative news related to their Chinese customers. However, they believe that as consumer acceptance of higher-level automated driving features increases, there may be new opportunities for Mobileye.

RBC Capital Downgrades Enphase ($ENPH) to Sector Perform with $100 Price Target

RBC Capital has downgraded Enphase to Sector Perform, lowering the price target from $125 to $100. They believe that competition and changing market dynamics will slow growth next year, which isn’t reflected in current forecasts. They estimate that Enphase will earn about $1.825 billion in revenue for 2025, which is about 8% less than what analysts expect.

Morgan Stanley on Celsius ($CELH) – Equal Weight with $50 Price Target

Morgan Stanley has given Celsius an Equal Weight rating, expecting no significant changes until sales trends improve. They see potential for market share growth but also face risks from weak category growth and increased competition. Recent sales growth for Celsius has been low, with market share dropping slightly. They have adjusted their estimates based on inventory changes and overall market performance.

Piper Sandler on Celsius ($CELH) – Overweight with $47 Price Target

Piper Sandler maintains an Overweight rating for Celsius and keeps the price target at $47. They have updated their estimates to reflect possible changes in inventory levels. Discussions with distributors suggest that optimal inventory levels should be lower than previously thought. Despite lowering their sales estimate for 2024 slightly, they still expect strong sales momentum, particularly among teens.

Morgan Stanley analyst, Lee Simpson, discussed the challenges facing ASML. They highlighted that the company’s financial outlook for 2025 is worse than expected, with a weaker order book and slower spending in certain areas. Intel seems to be a key factor in the lower demand for ASML’s EUV technology due to slower production timelines and delays in factory upgrades. Although spending on memory chips like HBM and DDR5 continues, it’s less focused on ASML’s EUV technology and can’t make up for the drop in demand for logic chips.

ASML’s guidance for Q4 is between €8.8-9.2 billion, which includes revenue from two new High NA EUV tools, likely sold to Intel. However, ASML lowered its forecast for 2025 revenue to €30-35 billion (down from €30-40 billion) and reduced its expected profit margins due to fewer shipments of EUV tools next year. TSMC, another major customer, seems to be negotiating lower prices, impacting ASML’s profit margins.

The company’s order book is also weaker, with only €2.65 billion in orders, including €1.4 billion for EUV tools and €1.2 billion for older DUV technology. There are concerns about a possible slowdown in China, which might see its share of ASML’s sales drop to 20% in 2024, compared to 49% in the first half of this year. Sales from ASML’s Installed Base Management (IBM) services were also below expectations, suggesting that chip production isn’t bouncing back as quickly as hoped.