(This is CNBC Pro’s live coverage of Thursday’s analyst calls and Wall Street chatter. Please refresh every 20-30 minutes to view the latest posts.) A retailer and a beauty company were among the stocks being talked about by analysts on Thursday. Baird upgraded elf Beauty to outperform, calling for nearly 35% upside. Meanwhile, Morgan Stanley raised its rating on Gap to overweight. Check out the latest calls and chatter below. All times ET. 6:01 a.m.: Redburn Atlantic downgrades Palo Alto Networks on expected AI slowdown Palo Alto Networks could see a growth slowdown as its artificial intelligence-boost appears to be just a short-term reaction rather than a sustainable boost, according to Redburn Atlantic. Analyst Nina Marques downgraded Palo Alto to neutral and kept her $325 price target, which implies that shares of the cybersecurity services provider could slide 2.1% from Wednesday’s close. Marques cut her revenue forecast for Palo Alto to reflect her view that generative AI will not result in another “investment super-cycle,” given early indicators of a spending slowdown and deflationary impacts from generative AI and higher competition that will put pressure on future growth in cybersecurity companies. She noted that Palo Alto, which is up 12.5% year to date, continued to soar even as growth in cybersecurity-tied AI winners slowed. “Near-term expectations have been reset after the announcement of Palo Alto’s ‘platformisation’ strategy,” Marques said. This strategy has helped the company land several deals this year to shift customers to their cybersecurity platform. “However, consensus expects a sharp reacceleration in dollar growth from FY26 onwards, which we view as unlikely,” the analyst added. “We view Palo Alto more defensive as it is skewed to a stickier customer base and a wider moat.” — Pia Singh 5:45 a.m.: Morgan Stanley’s names Gap among its most preferred retail picks Gap’s earnings momentum is not going away soon, according to Morgan Stanley. Analyst Alex Straton upgraded Gap to overweight from equal weight and said the stock appears among the most favorable opportunities in his firm’s retail coverage. His $29 price target implies 26.4% potential upside for the stock, which has added 9.8% this year. GPS YTD mountain GPS in 2024 “GPS is one of few Retailers where we see a long runway for positive rate of change under new mgmt,” Straton said in a note. According to Straton, Gap’s business continues to offer “among the greatest fundamental recapture opportunities” on both a topline growth and profitability basis. The stock is also trading at an attractive entry point and has an attractive valuation, he said. Straton added that he sees room for a temporary valuation re-rating to a high-teens level, where the retailer is delivering earnings per share beats and raises in the short term. Gap has already been outperforming quarterly EPS estimates for the past 5 consecutive quarters, he said. — Pia Singh 5:45 a.m.: Baird upgrades elf Beauty There’s a big buying opportunity in elf shares, according to Baird. Analyst Mark Altschwager upgraded the beauty stock to outperform from neutral. He also raised his price target to $230 from $210, implying upside of 34.7% from Wednesday’s close. “With healthy brand momentum (including positive FQ1 checks), ongoing distribution expansion, and significant international whitespace, ELF appears poised to sustain market share gains and premium earnings growth even in a choppier consumer backdrop,” Altschwager wrote. Shares are up more than 18% year to date. However, they are down 19% this week. ELF 5D mountain ELF 5-day chart “Incremental China tariffs in a potential Trump administration represent a manageable risk, in our view, given demonstrated pricing power and still-attractive price positioning vs. peers,” Altschwager said. — Fred Imbert
