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Investing.com -- Here is your Pro Recap of the top takeaways from Wall Street analysts for the past week.
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Monday - US Markets Closed for George Washington’s Birthday
Bath & Body Works
What happened? On Tuesday, JPMorgan upgraded Bath & Body Works Inc. (NYSE:BBWI) to Overweight with a price target of $47.
*TLDR: BBWI foresees revenue growth, margin expansion. Cash flow boosts shareholder returns.
What’s the full story? JPMorgan highlights three key drivers behind its upgraded outlook for BBWI:
First, the bank models a revenue inflection to +3% growth in FY25, reversing a -2.5% decline over the past three years. Post-pandemic headwinds in candles and sanitizers, once a 300bps drag, are now immaterial. Low-single-digit square footage growth and innovation in core categories like home fragrance and body care are expected to drive growth, while adjacent segments like hair and men’s products could contribute ~100bps.
Second, the investment cycle is shifting, with operating margins set to expand by +10-15bps in FY25. Gross margin improvements and SG&A leverage, supported by stabilized marketing and technology costs, are key catalysts. JPMorgan sees BBWI’s margins bridging toward its long-term target of ~20%, driven by fixed-cost leverage and a multi-year growth trajectory. The bank notes BBWI’s margins rank among the top 5 in its coverage universe.
Finally, BBWI’s free cash flow generation of $825M+ over FY25/26 supports a visible low-teens total shareholder return profile. A balanced capital allocation strategy includes $625M in annual buybacks (driving ~5% EPS growth) and ~$200M in dividends (~2% yield). Debt leverage, held steady at 2.5x, could unlock an additional $480M in buybacks. Combined, JPMorgan projects 9% annual returns from capital allocation alone, fueling a robust 13-14% total shareholder return outlook.
NetApp
What happened? On Wednesday, BofA Securities upgraded NetApp Inc (NASDAQ:NTAP) to Neutral with a $128 price target.
*TLDR: Morgan Stanley (NYSE:MS) harbors favorable view on AI-driven growth and stable margins. Limited upside keeps the outlook cautious.
What’s the full story? Morgan Stanley analysts highlight several catalysts driving the revision: expanding total addressable market fueled by AI and public cloud demand; a rebound in macroeconomic conditions and all-flash-array market share gains; stable gross margins in the 71-72% range following robust F24 margin expansion; operating margin growth toward long-term targets above 30%; and strong free cash flow margins supporting capital returns and EPS outperformance. While these trends signal improving fundamentals, limited upside to consensus estimates keeps the rating at Neutral.
NTAP’s F24 free cash flow margin reached 24%, with a long-term target of 20% through FY27. The company has historically returned nearly 100% of free cash flow to shareholders. Morgan Stanley models EPS growth in line with consensus estimates—a 7% CAGR through FY27—though both the firm and Bank of America project F26 and F27 EPS below NTAP’s double-digit annual growth target.
While the outlook is steadier, the analysts remain cautious on substantial upward re-rating potential.
NXP Semiconductors
What happened? On Thursday, Citi upgraded NXP Semiconductors NV (NASDAQ:NXPI) to Buy with a $290 price target.
*TLDR: Analog recovery nears as Industrial market rebounds.
What’s the full story? The analog recovery is on the horizon, with ADI signaling a broad-based resurgence in the Industrial end market and guiding for normal seasonality amid rising bookings. While Citi anticipates continued weakness in the Automotive sector—which accounts for 58% of 4Q24 sales—the analysts expect the rebound in Industrial markets (17% of 4Q24 sales) to partially offset the drag, leading to only a modest cut to estimates. This shift underscores a pivotal inflection point in the analog cycle.
NXPI’s stock, buoyed by Infineon (OTC:IFNNY) and ADI’s upbeat earnings commentary, has surged in recent weeks, reflecting early signs of recovery. The analysts project NXPI’s multiple to expand by 30-40% during this upturn, nearing the lower end of its historical 30-100% range. With consensus estimates down 30% from their peak and now only 9% above Citi’s forecasts, the worst appears to be over.
Citi upgrades NXPI to Buy, raising the price target to $290 (27x C26 EPS) from $210 (20x C26 EPS), driven by multiple expansion and the analog replenishment cycle. The analysts see significant upside as the recovery gains momentum.
Akamai Technologies
What happened? On Friday, Piper downgraded Akamai Technologies Inc (NASDAQ:AKAM) to Neutral with a $100 price target.
*TLDR: Piper downgrades Akamai citing weak 2025 outlook and murky growth prospects.
What’s the full story? Piper downgrades Akamai to Neutral after Q4 results reveal a 2025 outlook that falls short of even cautious expectations, compounded by a newly introduced 3-5-year framework. While the brokerage acknowledges progress in Enterprise IaaS, go-to-market adjustments, and stabilized operations excluding TikTok, significant challenges loom. Low growth, including in core Security, declining margins, higher capex needs, and uncertainties around revenue substitution create a murky path forward. Fast-growing segments like ZTNA, IaaS, and API remain marginal as the core business decelerates, prompting Piper to advise investors to wait for clarity before re-engaging.
The brokerage also questions the optimism of the 3-5-year framework, raising concerns it echoes unmet targets from prior analyst days. With estimates revised downward, Piper cuts its price target to $100, reflecting tempered expectations. Until Akamai navigates these complexities and delivers more consistent results, Piper remains on the sidelines.
