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(This is CNBC Pro’s live coverage of Tuesday’s analyst calls and Wall Street chatter. Please refresh every 20-30 minutes to view the latest posts.) A fast food giant was in focus among analysts Tuesday along with a key delivery company. BTIG lowered its rating on McDonald’s to neutral from buy following the company’s latest quarterly results. On a more positive note, UPS upgraded United Parcel Service to buy, calling for more than 25% upside over the next 12 months. Check out the latest calls and chatter below. All times ET. 5:58 a.m.: Sell Chegg as AI pressures margins, Piper Sandler says The most recent quarterly report was the last straw for Piper Sandler when it comes to Chegg . Analyst Arvind Ramnani downgraded the educational technology stock to underweight from neutral, while shedding 50 cents off his price target to $8.50. Ramnani’s new price target implies shares can slide 8.6% from Monday’s close. Chegg tumbled more than 7% before the bell Tuesday, the morning after the company offered light guidance for current-quarter revenue. That pulled attention away from a better-than-expected performance on the line in the fourth three-month period of 2023. “Chegg delivered modest upside on muted 4Q expectations, wrapping up a year with sustained revenue headwinds,” Ramnani said, also calling the report “lackluster.” Ramnani highlighted declining revenues from subscription services, limited visibility and competitive pressures from artificial intelligence as reasons for concern. Specifically, he said the company’s margins are under pressure given a need to improve its offerings related to AI. But he did applaud management’s spending discipline, noting it has been able to relieve some revenue margin pressure. Chegg shares have dropped more than 18% already in 2024. That builds on 2023’s retreat of around 55%. CHGG 1Y mountain Chegg in past year — Alex Harring 5:41 a.m.: Citi upgrades Palantir as earnings show signs of improvement Citi took back some of its negative sentiment on Palantir following the software provider’s latest earnings report. Analyst Tyler Radke upgraded his rating to neutral from sell and doubled his price target to $20. Radke’s new price target implies shares can climb 19.6% from Monday’s close. Palantir surged more than 18% in premarket trading on Tuesday, a day after the company said demand for artificial intelligence helped revenue exceed Wall Street revenue expectations for the fourth quarter. Meanwhile, earnings per share in the quarter and the full-year outlook came around in line with analyst forecasts. While revenue was just around 1% above the expectation, Radke said leading growth indicators like total billings and commercial were “exceptionally strong.” On top of that, he called the continued profitability strength and the “inflection” point there impressive. Even when accounting for the after-hours pop, Radke said the stock still trades at a “palpable” valuation. Elsewhere, he sees potential as free cash flow improves. “We are upgrading shares … after a stronger-than-expected Q4 and outlook that suggests some breakthrough momentum in the Commercial business,” Radke told clients. “Impressively, this is paired with significantly better free cash flow/profitability.” Tuesday’s premarket rally marked a turn for the stock, which has dropped more than 2% in 2024. That follows a strong year, as Palantir ended 2023 higher by more than 167%. — Alex Harring 5:29 a.m.: BTIG moves to sidelines on McDonald’s after earnings BTIG has a different taste in its mouth about McDonald’s following earnings. Analyst Peter Saleh downgraded the fast food chain’s stock to neutral from buy after the Monday morning financial release. He has no price target on the stock. Revenue came in lower than analysts expected in the fourth quarter, while earnings per share topped forecasts. Saleh pointed to management commentary around a pullback in the low-income consumer; a challenging landscape in Islamic countries amid the Israel-Hamas war; and expectations for slowed earnings growth as reasons for caution. “Sales trends have normalized, operating conditions have become more uncertain, and earnings upside seems more limited,” Saleh told clients Monday. “While we continue to believe that McDonald’s will take market share, accelerate development and expand operating margins, we believe sales and earnings growth are returning to more normalized levels following their multi-year boom.” With the challenges and the outlook for earnings growth at percent in the mid-single digits, Saleh said the forward multiple should likely contract modestly. That also bolsters the view for a neutral position on shares, the analyst said. McDonald’s slipped 0.7% before the bell Tuesday, building on Monday’s slide of 3.7%. Shares have fallen more than 3% in 2024. — Alex Harring 5:29 a.m.: UPS gets upgrade to buy from UBS Cost savings going forward could lead to big gains down the road for UPS , according to UBS. The bank upgraded the delivery giant to buy from neutral and hiked its price target to $175 from $160. The new forecast implies upside of 25.8% over the next 12 months. “We expect management to deliver a strong cost reduction program to support margin expansion and attractive EPS growth despite facing a backdrop of muted revenue growth,” analyst Thomas Wadewitz wrote. “On their 4Q23 earnings call, UPS unveiled a plan to reduce management headcount by 12,000, or about 14%, generating $1 bn of cost savings in 2024. This is a large step of cost reduction, but we believe there could be much more at their analyst meeting,” Wadewitz added, referring to an event se to take place next month. UPS shares are down more than 11% year to date. Last week, the company posted mixed fourth-quarter results, with earnings beating estimates while revenue fell short. UPS YTD mountain UPS year to date — Fred Imbert
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