Investing.com -- Here is your Pro Recap of the top takeaways from Wall Street analysts for the past week.
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Robinhood
What happened? On Monday, Citi upgraded Robinhood Markets Inc (NASDAQ:HOOD) to Neutral with a $18 price target.
*TLDR: HOOD selloff on Friday unwarranted. Citi positive on management performance.
What’s the full story? Citi reported that Robinhood finished down 12% on Friday due to the potential impact of lower rates. However, the research team noted that the fundamental story has been improving recently, with healthy growth in deposits, margin balances, and options/equities trading. Following the stock’s pullback, Citi views current valuations as presenting a more balanced risk/reward level.
The company is set to report its second-quarter earnings on Wednesday, August 7th, where the research team expects to receive positive updates on growth initiatives, including the UK expansion and the Gold card. Citi anticipates an overall positive update on the fundamental outlook for Robinhood
Neutral at Citi means “For stocks rated Neutral (2), if an analyst believes that there are insufficient valuation drivers and/or investment catalysts to derive a positive or negative investment view.”
CrowdStrike Holdings
What happened? On Tuesday, Piper Sandler upgraded CrowdStrike Holdings Inc (NASDAQ:CRWD) to Overweight with a $290 price target.
*TLDR: Ramifications from outage to be short-lived with negligible costs.
What’s the full story? Piper’s recent downgrade of CrowdStrike in early July did not anticipate the global outage and its subsequent fallout. However, the research team has now upgraded the cybersecurity leader, aiming to evaluate its long-term strategic value. Historically, outages and breaches have had modest impacts on cyber business fundamentals, but the scale of the CRWD-caused outage is unprecedented. Despite the near-term focus on litigations, settlements, congressional testimony, and potential numbers cuts ahead of and during the second-quarter earnings, the analysts believe the ramifications of the event will likely be short-lived and at negligible cost.
With shares down sharply for the month, Piper believes investors should opportunistically build positions at current levels. The research team maintains that the long-term strategic value of CrowdStrike remains intact, and the current situation presents a favorable risk/reward opportunity for investors.
Overweight at Piper Sandler means “Anticipated to outperform relative to the median of the group of stocks covered by the analyst.”
Arm Holdings
What happened? On Wednesday, Bernstein SocGen upgraded Arm Holdings ADR (NASDAQ:ARM) to Market-Perform with a $100 price target.
*TLDR: Bernstein believes ARM has improved gains in cloud computing. Royalties likely to boost earnings in 2026.
What’s the full story? Bernstein SocGen has reviewed its valuation argument for Arm Holdings, prompted by a ~40% decline in the company’s share price over the past four weeks. The brokerage has growing confidence that the penetration of Arm’s v9 architecture will underpin 40% of royalties by the end of FY25, primarily from mobile applications. Additionally, they have more conviction in Arm’s market share gains in cloud computing. Despite ongoing weaknesses in networking and industrial IoT, Bernstein SocGen believes that the royalty growth related to mobile and cloud computing can lead to an adjusted diluted EPS of 2.2 in FY26.
The brokerage maintains its FY26 target P/E at 45x and has set a new target price of USD 100. This revised outlook reflects Bernstein SocGen’s belief in the long-term strategic value of Arm Holdings, supported by the anticipated growth in mobile and cloud computing royalties.
Market Perform at Bernstein SocGen means “Market-Perform: Stock will perform in line with the market index to within +/-15 pp .”
Klaviyo
What happened? On Thursday, Keybanc upgraded Klaviyo Inc (NYSE:KVYO) to Overweight with a $33 price target.
*TLDR: EMEA region strengthen during the quarter. Growth in a tough environment has been evident
What’s the full story? Baird began with a neutral stance on Klaviyo at its March launch, tempered by expectations of limited upside due to a challenging cycle for front office software. However, Klaviyo has defied industry trends, reporting a 35% revenue growth in Q2 2024 as multiple growth drivers converge. The research team is particularly optimistic about Klaviyo’s success in securing a record number of net-new $50K customers and its international expansion, which is growing nearly 40%. Notably, the EMEA region, typically a weak spot for software companies, saw a 45% growth due to product enhancements like language localization and increased SMS integration.
In terms of valuation, Klaviyo’s impressive growth is being recognized with a relatively low multiple. Despite operating in a tough software environment, the company has maintained mid-30s% growth through the first half of the year, a rare achievement. Klaviyo’s next twelve months (NTM) growth rate is in the 97th percentile of Baird’s software database, yet it closed at a 6.7x NTM multiple, placing it in the 68th percentile for valuation multiples. This highlights the company’s strong performance and potential for future growth.
Overweight at Keybanc means “We expect the stock to outperform the analyst's coverage sector over the coming 6-12 months.”
Five9 Inc
What happened? On Friday, Baird downgraded Five9 Inc (NASDAQ:FIVN) to Neutral with a $40 price target.
*TLDR: Company competition increasing. Increases competitive threats to linger over shares for the foreseeable future
What’s the full story? Baird reported that Five9 delivered solid Q2 results yesterday afternoon, though the company provided weaker initial Q3 guidance and lowered its full-year guidance. The research team noted that Five9 cited weaker bookings trends and an uncertain macro environment as reasons for the revised outlook. Despite mixed results from recent channel survey work, Baird had still expected solid overall performance.
While the downside could be somewhat limited by valuation, the research team expects reduced visibility and ongoing competitive threats to be significant overhangs for Five9. These factors are likely to impact the company’s performance in the near term, creating challenges for investors.
Neutral at Baird means “Expected to perform in line with the broader U.S. equity market over the next 12 months. “