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Here’s a roundup of 8 price target changes we made in Club stocks after earnings

Published

5 months ago

October 29, 2022

This earnings season has been a tough one for our big technology stocks — and as a result, we’ve lowered several of our price targets based on the companies’ latest quarterly reports, forward guidance and commentary. The current rising interest rate environment and the strong U.S. dollar — another 75-basis-point rate hike by the Federal Reserve is expected next week — are also headwinds for some of our more economically sensitive stocks. We made PT cuts on some of those names, as well. However, a price target — whether it’s ours or from the myriad of Wall Street firms that we report on every day — is just one piece of the puzzle for investors to consider when evaluating a stock. Here’s a rundown of the price target changes we recently made in Jim Cramer’s Charitable Trust, the portfolio we use for the CNBC Investing Club. Apple (AAPL): Despite a solid quarter , strong growth trends, and our positive long-term view on the stock, we trimmed our price target to $175 per share from $195. The reduction is less about Apple shares themselves and more to do with shrinking valuations across the entire tech sector. In our earnings analysis Thursday evening, we reiterated our 1 rating . Apple’s stock rose nearly 8% on Friday, to around $156 a share. Amazon (AMZN): Shares dropped more than 8% on Friday on the back of a weak third quarter, to around $101.88 a share. But we’re sticking with the stock , with Jim Cramer saying that much of the negativity is built in. He added that the Amazon Web Services (AWS) cloud unit is making so much money that an investor essentially gets the rest of the company for free on a valuation basis. However, we cut our price target to $140 per share from $160, acknowledging headwinds due to rising interest rates and lower earnings estimates. Meta Platforms (META): Given stubbornness when it comes to spending, we had no choice but to downgrade shares to a 2 rating . We also cut our price target to $150 per share from $235 following Wednesday’s announcement of a brutal third quarter and subsequent 25% stock plunge. Shares were up slightly Friday, at around $99 a share, but that’s little consolation. Ford (F): We lowered our price target on the automaker to $16 per share from $18, reflecting a slide in profit estimates and a contraction in stock multiples amid higher interest rates. We liked the earnings beat Ford reported for the third quarter and its solid free cash flow. That’s why we continue to own the stock, even as we maintain our 2 rating . Management’s decision to move its profit target to the low end of its range was prudent in this environment. Alphabet (GOOGL): Shares lost 9% on Wednesday, the day after reporting poor third-quarter results. We lowered our price target for the Google parent to $130 per share from $160. However, in our earnings analysis Tuesday evening we advised investors to sit tight and wait for the dust to settle before making any decisions about the stock. Shares dropped another 2% on Thursday, before finally getting a bounce Friday, climbing 3.75% in afternoon trading, to $95.67 a share. Microsoft (MSFT): Despite our longer-term positive view, we reduced our price target to $300 per share from $375. We said Tuesday evening that Microsoft’s fiscal second-quarter guidance will likely lead to downward earnings and price target revisions from analysts on Wall Street. That certainly did happen. The stock lost 7% on Wednesday and nearly 2% on Thursday. It then regained more than 3% Friday, trading around $234.4 a share. Danaher (DHR): The underlying business remains incredibly healthy and management is best-in-class, which was on display when the life sciences company reported third-quarter results last week . However, considering that customers are reducing inventory and that could pressure new orders in the near term, we trimmed our price target to $320 from $330, while reaffirming our 1 rating. Procter & Gamble (PG): Increased currency headwinds and prolonged margin pressure resulting from higher input costs led us to take our price target down to $160 per share from $165 after P & G reported fiscal first-quarter results last week. We maintain our 1 rating on the stock for its pricing power and its economic downturn-resistant nature. People don’t tend to stop spending on daily necessities and we think those headwinds will flip to tailwinds a few quarters from now. (Jim Cramer’s Charitable Trust is long AAPL, AMZN, META, F, GOOGL, MSFT, DHR and PG. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

The logo of Meta Platforms is seen in Davos, Switzerland, May 22, 2022.

Arnd Wiegmann | Reuters

Source: CNBC

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