Microsoft Corp (MSFT): Margin Challenges Amid Azure Concerns
UBS downgrades Microsoft’s price target to \$510 from \$525 while maintaining a “Buy” rating. The removal of the 2H Azure guidance reflects another round of disappointment in its cloud business. Despite a margin raise, it is unlikely to fully offset the challenges Microsoft faces with Azure. Investors are advised to consider this as a single factor in their decision-making process.
Amazon.com (AMZN): Declining E-Commerce Capital Intensity
Amazon’s price target is raised to \$275 from \$264 with a “Buy” rating. UBS foresees a period of lower e-commerce capital intensity for Amazon, estimating that additional fulfillment center capacity may not be needed until 2026. This strategic shift could improve margins and operating efficiency in the long term.
Meta Platforms (META): AI-Driven Growth Potential
Meta’s price target is upgraded to \$786 from \$736 while maintaining a “Buy” rating. UBS highlights prospects for faster ad revenue growth and benefits from generative AI (genAI), which remain underpriced in current models. Product catalysts are expected to boost Meta’s shares throughout 2025 and beyond.
International Business Machines Corp. (IBM): A Slow Start to 2025
IBM is rated “Sell” with a price target of \$160. UBS expresses concern over IBM’s mixed Q4 performance and soft Q1 outlook, which requires a steep ramp and contributions from HashiCorp to meet the 2025 outlook. This inclusion of HashiCorp in the guidance was unexpected and adds further complexity to IBM’s trajectory.
Capital One Financial (COF): Long Live the Consumer
UBS reiterates a “Buy” rating for Capital One, with a price target raised to \$240 from \$235. COF remains the top pick across the card and large-cap bank universe. Positive trends in credit quality and declining delinquency rates are expected to drive net charge-offs improvement in 2025. However, concerns linger around post-close deal economics and reinvestment strategies.
O’Reilly Automotive, Inc. (ORLY): A Blustery Tailwind
O’Reilly maintains its “Buy” rating at a price target of \$1400. UBS anticipates steady growth in 2025 following a challenging 2024. The company is well-positioned to gain market share from competitors and leverage investments in its infrastructure. Favorable weather and a reduction in deferred maintenance are expected to drive demand in the auto aftermarket sector.
Neurocrine Biosciences Inc. (NBIX): Promising Pipeline Diversification
UBS raises Neurocrine’s price target to \$176 from \$162 with a “Buy” rating. The report highlights strong growth potential for Crenessity, a multi-billion peak sales drug. Physician surveys support its promising outlook, helping Neurocrine diversify its pipeline after previous setbacks in other programs.
Tesla, Inc. (TSLA): Mixed Outlook with Lowered Bar for 2025
Tesla is rated “Sell” with a price target of \$259, up from \$226. Despite lowered expectations for 2025, UBS notes that the stock is pricing in more fear than warranted by fundamentals. Key factors include concerns over Revlimid loss of exclusivity (LOE) and Austedo IRA impacts on operating margins.
Hess Corporation (HES): Guyana Rebound Boosts CFPS
Hess retains its “Buy” rating with a price target of \$185. UBS highlights a strong Q4 2024 performance driven by a rebound in Guyana, which propelled cash flow per share (CFPS) beyond expectations. This positions Hess for long-term growth in its oil and gas operations.
CenterPoint Energy Inc. (CNP): Rate Case Settlement
CenterPoint Energy is rated “Buy” with a price target of \$37. UBS notes a positive development with the filing of a settlement in the CEHE rate case, which strengthens the company’s long-term regulatory framework and stability.
Raymond James Financial Inc. (RJF): Resilient NII Drives Strong Performance
Raymond James receives a “Buy” rating with a raised price target of \$200 from \$185. UBS highlights the company’s resilience in net interest income (NII) and advisory services as key drivers for its earnings beat and solid 2025 outlook.
Stryker Corp (SYK): Top-Tier Growth Outlook
Stryker’s price target is upgraded to \$405 from \$370, retaining a “Neutral” rating. UBS acknowledges the company’s strong growth outlook but remains cautious due to valuation concerns.
Meta Platforms (META): Continued Momentum
Meta’s Q4 2024 results underscore its strong positioning in AI-driven ad revenue growth. UBS reiterates its “Buy” rating with a price target of \$736, citing continued product catalysts to drive value in 2025.
Extreme Networks Inc. (EXTR): Mixed Growth Prospects
Extreme Networks retains a “Neutral” rating with a price target of \$16.5. UBS points to strong bookings momentum but notes lagging growth in services, impacting second-half gross margins.
Brookfield Renewable (BEP): Strengthening Renewable Capacity
Brookfield Renewable is rated “Buy” with a price target of \$31. UBS cites favorable long-term growth opportunities in renewable energy, supported by strong capacity expansion and project execution.
