Wednesday’s analyst calls: Strong chipmaker play for 2024, Chinese e-commerce stock a top pick
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(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.) Wednesday’s analyst calls include top picks in the semiconductor and Chinese e-commerce sectors. Bernstein named Taiwan Semiconductor a “best idea” for 2024, raising its price target on the stock. Meanwhile Morgan Stanley called PPD Holdings a top play following a strong quarterly report. The bank also hiked its price target on shares. Check out the latest calls and chatter below. 5:42 a.m. ET: Piper Sandler moves to sidelines on Hershey, citing higher cocoa prices Elevated cocoa prices are souring the outlook for Hershey , according to Piper Sandler. Analyst Michael Lavery downgraded the stock to neutral from overweight and slashed his price target by $40 to $200. His new target reflects a belief that shares can climb 5.8% from Tuesday’s close. Those moves comes as confection companies grapple with what appears to be higher cocoa prices for some time, Lavery said. A shortage is tied to heavy rainfall in the Ivory Coast and cocoa swollen shoot virus disease in Ghana. “We don’t know how to best capture all of these elements, but we consider the magnitude of the cocoa cost increase, its likely stickiness, and elasticities to pose enough risk to our outlook to make us cautious,” Lavery said. “Even with HSY’s best in class pricing power, we worry that the consumer environment is too difficult for further significant pricing actions.” The company could see a $500-million hit to the cost of goods sold in 2025 due to the hiked prices, the analyst warned. That’s despite the fact that Hershey sources through multiple contracts, he added. Hershey has struggled this year, with shares down more than 18% in 2023. — Alex Harring 5:34 a.m. ET: Morgan Stanley hikes PDD price target, calls stock a top pick following earnings Morgan Stanley named Chinese e-commerce name PDD Holdings a top pick following its latest quarterly earnings report. Analyst Eddy Wang said the stock is the firm’s favorite of the Chinese e-commerce sector. Wang also raised his price target for U.S.-listed shares by $30 to $170, implying upside of 22.3% from Tuesday’s close. The discount retailer said revenue soared past the consensus forecast of analysts polled by LSEG in the third quarter. Wang was particularly excited about the performance of Temu, its global ecommerce business. “PDD’s strong 3Q23 results imply both sustainable market share expansion of its domestic e-Commerce business and strong growth momentum of … Temu,” Wang told clients. “These advantages will sustain into 4Q23 and 2024.” The results come amid a strong year for PDD’s U.S.-listed shares. They have already surged more than 70% since 2023 began. PDD YTD mountain PDD in 2023 — Alex Harring 5:34 a.m. ET: Bernstein calls Taiwan Semiconductor a ‘best idea’ for 2024, raises price target Bernstein analyst Mark Li named semiconductor giant Taiwan Semiconductor a “best idea” for the new year, calling the company a leader in the space and raising its price target on the stock. He also said the chipmaker will be able to withstand lower iPhone orders in the first quarter of 2024. “Though Apple indicated record iPhone sales in China in the September quarter, many third-party market researchers such as Counterpoint, Canalys, GfK, etc. all reported iPhone shipment in China is suffering a YoY drop,” Li wrote. “We attribute that to the share shift to Huawei who is benefiting from the homemade 7nm mobile SoC and patriotism.” “Despite the risk from iPhone, 1Q24 revenue will still grow YoY, reversing the YoY drop seen in all four quarters of 2023, thanks to the inventory restocking broadly seen in many applications, especially in Android smartphones,” the analyst said. “This also explains why the QoQ revenue change from 4Q23 to 1Q24 will be well within the seasonal range, as the drop from iPhone is balanced by the increase elsewhere.” The analyst also hiked his price target on U.S.-listed shares to $125 per share from $113. The new target implies upside of more than 27%. Shares are up more than 31% for the year. — Fred Imbert
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