(This is CNBC Pro’s live coverage of Tuesday’s analyst calls and Wall Street conversations. Please refresh every 20-30 minutes to see the latest posts.) A media giant and a cybersecurity company were among the stocks analysts were talking about Tuesday. Bernstein cut its rating on Warner Bros. Discovery on the back of a disappointing second-quarter report. Meanwhile, Mizuho raised its price target on Palo Alto Networks ahead of the company’s upcoming earnings release. Watch the latest earnings calls and conversations below. All times ET. 6:45 a.m.: Buy shares of struggling Hormel Foods, says Citi has stepped back from the sidelines on Hormel Foods, citing a handful of reasons to be optimistic about the struggling stock. Analyst Thomas Palmer raised his rating on the parent company of Planters and Skippy to “buy” from “neutral” and raised his price target by $4 to $37. That adjusted target suggests an 18.4% gain from Monday’s closing price. Palmer said the stock has upside potential for earnings per share in the third quarter and full year, as well as for fiscal 2025 and 2026, due to improvements in underlying retail sales, mitigated cost pressures and the potential for rising turkey prices as production declines. However, the analyst said sentiment toward the stock appears negative, stressing he has the only buy rating on the sell side of Wall Street. Palmer noted that consensus estimates already assumed Hormel’s $250 million operating profit improvement plan in fiscal 2026 would not materialize. There are also nuances in investors’ views on valuation, according to Palmer. “The shares are trading at a premium to most grocery stocks,” he said. “However, they also trade at a wider discount to their historical P/E and EV/EBITDA multiples than comparable food companies.” Hormel shares rose 1.8% in premarket trading Tuesday. The stock has lost more than 2.5% in 2024, bucking the broader market’s advance. — Alex Harring 6:29 a.m.: Morgan Stanley reiterates bullish rating on DraftKings despite change in performance outlook DraftKings has retained its crown as Morgan Stanley’s top pick even as the firm takes a close look at the stock. Analyst Stephen Grambling reiterated his top pick rating and overweight rating on the online gambling stock. But Grambling reduced his price target by $4 to $47, though that still implies 57.5% upside from Monday’s close. Grambling said DraftKings’ EBITDA guidance for the second quarter and 2024 was below Morgan Stanley’s expectations in each case. The company’s performance fell short of the firm’s forecasts, which warrants serious analysis of user economics, Grambling said. As such, estimates would need to be lowered to account for higher revenue with a longer EBITDA increase. His expectations for revenue and profitability issues in the near term due to new customer growth remain, but Grambling said he also sees long-term upside. “While the catalysts we have been focused on have played out, the stock has remained under pressure,” Grambling told clients in a note Tuesday. “We expect the next upside to be driven by future revisions and the execution of buybacks.” Grambling’s forecast comes amid a difficult year for DraftKings, with shares falling more than 15%. This marks a reversal after the stock rose more than 200% in 2023. DKNG YTD Mountain DKNG in 2024 – Alex Harring 6:17 am: Barclays Takes Neutral on Dell After Share Price Drop, AI Concerns Barclays is less concerned about the durability of artificial intelligence demand for Dell after a recent share price drop. Analyst Tim Long upgraded the weighting on technology stocks to equal weight from underweight. Long maintained his price target at $97, representing just 1.8% upside from Monday’s close. The analyst pointed out that Dell shares have fallen about 34% since reporting earnings in late May. For comparison, the S&P 500 has gained about 1% over the same period, while the tech-heavy Nasdaq Composite has declined just under 1%. Long actually called AI orders and revenues for Dell “strong,” but said to expect volatility and keep an eye on the company’s target customers. He added that the end market appears to be getting more competitive while Dell sees little ability to bring AI customers into other business areas. “We have been concerned about the sustainability of AI revenues/orders, the impact on margins and the lack of traction from other products and services,” Long told clients in a note Tuesday. “We believe the share price decline is in large part due to the market coming to terms with these structural issues related to the AI business.” Long said the underweight thesis simply hasn’t played out and the trading multiple has moved closer to historical trends. Still, he emphasized ongoing challenges in the personal computer and traditional server and storage markets, noting that the AI business alone cannot mitigate the damage from those areas. Dell rose about 3% in premarket trading Tuesday. Despite the recent decline, the stock is still up about 24.5% in 2024. – Alex Harring 5:50 a.m.: UBS says shares of this pure-play water company can rise nearly 30% UBS says investors may be overlooking growth opportunities at Xylem. Analyst Damian Karas initiated coverage of the water stock with a buy rating. Karas’ $165 price target suggests shares can rise 29.4% from Monday’s close. “We view XYL as the leading pure-play water company,” Karas wrote in a note to clients. It has an “MSD+ growth profile that is less cyclical than peers and a margin opportunity of ~100 basis points/year.” Karas noted that the stock has only priced in a 2.7% compound annual revenue growth rate through 2028, which is roughly in line with the historical rate. But UBS expects that growth rate to be around 6%, meaning it could be far higher than traders currently expect. The firm also said investors should prepare for a multi-decade growth cycle as the company gets a boost from urbanization and government support for improved infrastructure. Meanwhile, the analyst also said the company is “operating from a position of strength” following its expansion through the $7.5 billion acquisition of Evoqua. Xylem shares have gained 11.5% this year. XYL YTD-Berg XYL YTD – Alex Harring 5:47 a.m.: Bernstein downgrades Warner Bros. Discovery, citing second-quarter earnings Bernstein has pulled back on Warner Bros. Discovery after the Wall Street firm called an “ugly” quarter. Analyst Laurent Yoon downgraded the media stock to “market perform” from “outperform” and cut his price target by $2 to $8. Still, that new target represents 19.2% upside from Monday’s closing price. Yoon’s downgrade comes after the entertainment company missed quarterly adjusted EBITDA and revenue expectations in its second-quarter earnings report released last week. Shares hit their lowest level since WarnerMedia and Discovery merged in 2022 on the release, the analyst noted. “It sounds dire, and it is,” Yoon wrote in a note to clients on Tuesday. “While there are some nuances, such as comparables, the market reaction reflects very little investor patience for WBD in the face of continued deterioration.” Yoon specifically pointed out that revenue fell 6% and EBITDA fell 16% in the quarter compared to the same period last year. Free cash flow plunged a whopping 43% compared to the two periods. Adding to the uncertainty is that the NBA has chosen other media companies for a rights deal, ending a decades-long partnership with Warner Bros. Discovery’s Turner Sports. Warner Bros. Discovery is now suing the NBA. Warner Bros. Discovery shares lost 0.8% in premarket trading Tuesday. The stock is down about 41% in 2024. Disclosure: Comcast’s NBCUniversal, CNBC’s parent company, was one of the companies that struck deals for a package of NBA games. – Alex Harring 5:47 a.m.: Mizuho raises price target for Palo Alto Networks Investors should consider buying shares of Palo Alto Networks ahead of the earnings release. Analyst Gregg Moskowitz raised his price target on the cybersecurity stock to $380 from $350 and maintained his Outperform rating. The new forecast implies upside potential of nearly 15%. “Our checks show an increase in PANW demand for the first time in several quarters. More specifically, activity in large deals was stronger, customers consolidated more purchases with PANW, and demand felt healthier across both firewalls and subscriptions,” Moskowitz wrote in a note to clients. “In addition, we believe recent leadership changes are improving relationships with some notable channel partners,” the analyst added. Palo Alto, which is scheduled to report earnings on Aug. 19, is up more than 12% for the year. However, shares have fallen more than 1% in the past month. PANW YTD Mountain PANW Year to Date – Fred Imbert
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