(This is CNBC Pro’s live coverage of Friday’s analyst calls and Wall Street chatter. Please refresh every 20-30 minutes to view the latest posts.) Netflix and a popular beauty stock were featured among Friday’s biggest analyst calls. Canaccord Genuity downgraded Netflix after the streaming giant posted its first-quarter results. Ulta Beauty also got a downgrade from Jefferies. Check out the latest calls and chatter below. All times ET. 6:06 a.m.: Morgan Stanley upgrades Shopify, says shares can rally more than 20% Morgan Stanley is turning more bullish on Shopify . “Share gains upmarket by Shopify support confidence in the durability of growth against tempered consumer spending expectations,” wrote analyst Keith Weiss. “A disciplined view on headcount provides room for further operating leverage against more measured expectations, supporting our upgrade to Overweight.” Shares of the Canada-based e-commerce company jumped about 3% before the bell on the upgrade. The stock has tumbled 11% this year, but could rally 22% based on the firm’s adjusted $85 price target. SHOP YTD mountain SHOP year to date Underpinning the firm’s overweight rating is a bet that Shopify will expand its international traction and hold onto 20% growth even as consumer expectations moderate. Weiss also estimates that advertising can add 100 basis points to the company’s take rate by 2030, while a “largely flat headcount” should benefit 2024 operating margins. The take rate refers to the fees collected on a sale. “Despite questions around the durability of Shopify’s operating margin expansion following Q4 results, we believe investor expectations have over corrected and commentary pointing to modest headcount expansion in FY24 still leaves room for further realization of operating leverage and FCF growth in the business,” Weiss wrote. — Samantha Subin 5:53 a.m.: Canaccord Genuity downgrades Netflix, cites slower growth ahead Beware of slower growth ahead for Netflix , according to Canaccord Genuity. Analyst Maria Ripps downgraded the media giant to hold from buy after its first-quarter print, saying the company’s paid sharing initiative “meaningfully pulled forward member growth.” “Despite these mostly solid results and outlook, we see limited growth catalysts for the next few quarters and with the stock up ~90% over the last 12 months and up ~25% YTD, we think investors may be well served to look elsewhere for upside and are downgrading the stock to hold,” she wrote. Shares slumped nearly 6% before the bell even after Netflix topped first-quarter results and reported a 16% rise in total memberships in extended trading Thursday. NFLX 1D mountain NFLX falls Along with the results, Netflix also said it plans to stop reporting quarterly membership numbers and average revenue per member, which Ripps views as further contributing to this “uncertainty.” “We think this decision and the timing of when the company plans to sunset the disclosure indicates that member growth may become challenged in FY25, as paid sharing likely pulled forward member additions, although that benefit could still continue for another few quarters,” she said. Despite the news, some Wall Street majors retained their overweight rating on the stock. Although net additions will likely subside in 2025, Wells Fargo analyst Steven Cahall expects average revenue per user to accelerate as Netflix’s advertising program rolls out across the U.S. and Canada. Price hikes later this year in other countries and the continued build-out of Netflix’s advertising tier should also help offset some pressures on average revenue per user, added JPMorgan’s Doug Anmuth. Elsewhere, Morgan Stanley’s Benjamin Swinburne viewed the results and outlook as a sign that the company can support 25% to 30% EPS growth. “The business model transition put into place two years ago, when growth stalled, appears well on track,” he wrote. “Healthy double digit top-line growth looks sustainable beyond 2024.” – Samantha Subin 5:53 a.m.: Jefferies downgrades Ulta Beauty The competition against Ulta Beauty is heating up, and Jefferies thinks it could hurt the stock. Analyst Ashley Helgans downgraded the stock to hold from buy. She also slashed her price target to $438 from $585. The new forecast is just 3% above Thursday’s close. Shares slipped more than 1% in the premarket. “We have viewed Ulta as a share taker in current macro, but see constraints on ULTA’s prestige biz (50% sales) due to lack of newness and increasing pressure from Sephora which raises the potential for downward revisions in the [next 12 months],” Helgans wrote. The analyst added that, after meeting with management, she wouldn’t “be surprised to see ULTA be more promotional to hold market share, weighing on [gross margins] and delaying SG & A investments to maintain the current [operating margins] guide.” Ulta shares have struggled in 2024, losing 13.2%. ULTA YTD mountain ULTA year to date — Fred Imbert
