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(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.) A beauty stock and an insurance name were in focus among early analyst calls. Goldman Sachs lowered its rating on Estée Lauder to neutral, and its new price target calls for a slight decline going forward. On a more positive note, Jefferies raised its rating on insurance company Root, noting it expects more than 24% upside from current levels. Check out the latest calls and chatter below. All times ET. 6:08 a.m.: Piper Sandler downgrades New York Community Bancorp, acknowledge mistake in not doing so earlier New York Community Bancorp’s latest announcement was the last straw for Piper Sandler. The investment bank downgraded shares of the regional lender to neutral from overweight, citing Thursday’s startling announcements that the bank would be replacing its chief executive officer. “Most worrisome, the company announced that it identified a material weakness in its internal controls related to internal loan review. The assessment is not yet complete (which presumably could lead to more issues/costs/etc). As a result, the company does not expect to be able to file its 10-K on time,” analyst Mark Fitzgibbon wrote. Shares of New York Community Bancorp sold off 29% in Thursday’s extended hours session, adding to its 53% decline this year. The analyst slashed his price target for the bank to $5 from $8, implying that shares could still add 4%. NYCB 1D mountain NYCB drops In the note, Fitzgibbon acknowledged that his previous call about the name had been wrong — and overly optimistic. “We fully acknowledge that our call has been wrong on this name,” he wrote. “When the company announced that it was taking several meaningful strategic actions, including building liquidity, cutting the dividend and boosting reserves, we hesitated to downgrade the stock. At the time, we reasoned that it was too late to downgrade since the stock was already down meaningfully. Moreover, we were hopeful that NYCB would get back on track. If this occurred, the share price looked remarkably inexpensive.” Besides the near-term uncertainty around a new management team taking the reins at New York Community Bancorp, Fitzgibbon also underscored his lack of conviction in the company’s short-term earnings estimates. “Hence, it is very tough to value,” he wrote. “None of that gives us comfort in recommending to investors that they should buy the stock.” — Lisa Kailai Han 5:51 a.m.: Morgan Stanley downgrades Flywire to equal weight Morgan Stanley thinks it’s time to take “some chips off the table” when it comes to Flywire . The bank downgraded shares of the global payments platform to an equal-weight rating from overweight. Analyst James Faucette thinks the company’s current valuation better balances its risk-reward level, thus justifying the downgrade, although he likes the business in the long term. Shares of Flywheel have gained almost 23% this year. FLYW YTD mountain FLYW in 2024 Faucette accompanied his downgrade by lifting his price target to $30 from $27. This new objective corresponds to a nearly 6% upside. “FLYW can continue to gain share rapidly in the attractive Education vertical given robust NRRs, competitive product advantages, and a long penetration runway ahead. Expansion into new verticals such as Healthcare, Travel, & B2B is likely to be supportive to ongoing revenue growth,” the analyst wrote. On the other hand, Faucette cautioned that he was monitoring several facets of the company, including potential headwinds in Canada, rising competition and a potential squeeze from the U.S. government on student visas and immigration policies. — Lisa Kailai Han 5:46 a.m.: Goldman Sachs downgrades Estée Lauder, cites near-term headwinds Investors should ease positions on Estée Lauder until further notice, according to Goldman Sachs. The bank downgraded shares of the cosmetics company to neutral from buy, setting a 12-month price target of $145. This would imply that Estée Lauder stock could slide 2.4% from their Thursday closing price. “Assume at Neutral until uncertainty around travel retail recovery clears and cost savings initiatives begin to bear fruit,” the bank said. One major headwind for the company remains overseas sales pressures, especially in Asia. Estée Lauder’s path to recovery is extremely dependent on China since the Chinese market has traditionally been a key growth driver. “We expect rising income levels as well as premium beauty taking a greater share of income for Chinese consumers to drive durable growth ahead,” the bank wrote. “That said, we acknowledge that broader macro challenges in the region may pressure the consumer for longer, and as such Chinese consumers may take longer to catch-up to other developed Asian markets. Within China, the global duty-free market in Hainan is a “compelling long-term opportunity,” the bank said. But on the other hand, growth challenges in developed markets have proved “stickier” than expected for Estée Lauder. “While channel mix is relatively better placed now relative to pre-Covid, EL’s share trends are yet to show signs of meaningful recovery, and as such will likely require incremental brand re-investments going forward,” the bank stated. However, Goldman emphasized that in the long-term, Estée Lauder’s extreme cost cutting measures should drive its margin expansion higher. Shares of Estée Lauder have edged slighter higher this year. EL YTD mountain EL in 2024 — Lisa Kailai Han 5:46 a.m.: Jefferies upgrades Root Expect Root’s recent surge to continue, according to Jefferies. Analyst Yaron Kinar upgraded the insurance company to buy from neutral. He also lifted his price target on the stock to $40 from $30, implying upside of 24.6% from Thursday’s close. Shares were up more than 9% in the premarket. Over the past month, the stock has ripped 291% higher after the company reported much better-than-expected fourth quarter results. ROOT 1M mountain ROOT in past month “The company has generated industry-leading loss ratios for two consecutive quarters in Personal Auto, showing material YoY improvement and essentially achieving its 65% target. The much improved loss ratio suggests that incremental customer additions are profitable,” Kinar said. “Having achieved its loss ratio target, particularly while incumbents are still focused on improving loss ratios and retrenching, present ROOT with a material growth opportunity met with increased company appetite for growth and increased ambient shopping by customers who are still seeing material increases in their premiums.” — Fred Imbert
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