Selected stock price target news of the day - July 19, 2023

By Matthew Otto

Carvana Reports an Improvement in Quarterly Profit and Debt Restructuring

The second quarter proved to be a milestone for Carvana, with adjusted EBITDA reaching $155 million and profit per unit at $6,520. The company reported revenue of $2.97 billion for the quarter, surpassing expectations of $2.6 billion. Carvana also disclosed an agreement with bondholders to reduce its outstanding debt by over $1.2 billion, which led to a change in its earnings date.

The debt restructuring deal is expected to eliminate a portion of Carvana’s unsecured note maturities and reduce its required cash interest expense by $430 million annually for the next two years.

Mixed Analyst Recommendations for Carvana

JP Morgan analyst Rajat Gupta downgrades from Neutral to Underweight and set a price target of $10. The analyst expressed a view that Carvana’s valuation has exceeded what can be justified by recent improvements in the company’s business.
JMP Securities analyst Nicholas Jones maintains an Outperform rating and raises the price target from $25 to $50.
Piper Sandler analyst Alexander Potter reiterates an Overweight rating and raises the price target from $21 to $29.

Analyst Michael Baker (D.A. DAVIDSON) currently has the highest performing score on CVNA with 6/7 (85.71%) price target fulfillment ratio. His price targets carry an average of

$8.96 (1.14%) potential upside. Carvana stock price reaches these price targets on average within 20 days.

Charles Schwab Reports Better-Than-Expected Q2 Profit

Charles Schwab reported second-quarter profit that was lower than expected but still better than anticipated. Despite a decline in interest revenue, Schwab saw a boost in asset management fees, which helped offset the impact. Schwab relies on clients’ uninvested cash for its interest-earning businesses, but some clients have been moving their cash to alternatives that offer better returns in the current high-interest rate environment.

To counter the outflows of cash, Schwab has turned to supplementary funding sources, including borrowing from the Federal Home Loan Bank, which has resulted in more expensive funding. As a result, net interest revenue for the company declined by 10% to $2.29 billion in the second quarter. The company expects the realignment activity to improve before the end of 2023. Schwab saw a 12% increase in asset management and administration fees, reaching $1.17 billion, driven by inflows into the company’s funds.

Charles Schwab’s second-quarter profit, excluding one-time costs, fell by 25% to $1.49 billion, or 75 cents per share. However, this surpassed analysts’ expectations of 71 cents per share. The earnings report comes during a week when investors are closely monitoring the results of banks and financial institutions, looking for any lingering effects from the banking crisis earlier this year.

Analysts Raise Price Targets for Charles Schwab Amid Positive Outlook

Citigroup analyst Christopher Allen maintains a Buy rating and raises the price target from $65 to $75.
JMP Securities analyst Devin Ryan reiterates Outperform rating and raises the price target from $73 to $77.
Barclays analyst Benjamin Budish stands on an Equal-Weight rating and raises the price target from $62 to $70.
Raymond James analyst Patrick O’Shaughnessy remains on Outperform rating and raises the price target from $64 to $77.

Analyst Steven Chubak (WOLFE) currently has the highest performing score on SCHW with 10/11 (90.91%) price target fulfillment ratio. His price targets carry an average of $3.64 (8.65%) potential upside. Charles Schwab stock price reaches these price targets on average within 160 days

Microsoft Stock Reaches All-Time High as Pricing Strategy for AI Software Is Announced

Microsoft announced the pricing strategy for its Microsoft 365 Copilot software, which adds generative artificial intelligence capabilities to its flagship software suite. The software will be offered to business customers at a rate of $30 per user per month.

Bernstein analyst Mark Moerdler noted that the pricing for 365 Copilot exceeded his expectations and represented a price increase ranging from 53% to 240%, depending on the version of Microsoft 365 being used. The focus on Microsoft 365 instead of Office 365 suggests a strategic move to drive new subscriptions and shift users to the higher-priced Microsoft 365.

Microsoft also unveiled Bing Chat Enterprise, a standalone chatbot app for business customers priced at $5 per user per month. Analysts, such as Wedbush’s Dan Ives and Citi’s Tyler Radke, viewed the pricing announcement positively, with Ives believing it could boost Microsoft’s annual cloud revenue by 20% by 2025. Radke, although the general availability is expected to be months away, considered the news to be incrementally positive.

Analysts Raise Price Targets and Maintain Positive Ratings for Microsoft

Wells Fargo analyst Michael Turrin maintains an Overweight rating and raises his price target from $380 to $400.
Barclays analyst Raimo Lenschow remains an Overweight rating and raises his price target from $336 to $425.
Piper Sandler analyst Brent Bracelin reiterates an Overweight rating and a $400 price target.
Wedbush analyst Daniel Ives maintains an Outperform rating and a $375 price target.
Keybanc analyst Michael Turits reiterates an Overweight rating and raises his price target from $340 to $400.

Analyst Mark Murphy (JPMORGAN) currently has the highest performing score on MSFT with 25/25 (100%) price target fulfillment ratio. His price targets carry an average of $18.45 (12.49%) potential upside. Microsoft stock price reaches these price targets on average within 119 days