Recent analyst actions include Broadcom (AVGO) and Groupon (GRPN) receiving upgrades, with AVGO benefiting from strong AI backlog figures and a compelling growth-adjusted valuation, and GRPN seeing improved fundamentals suggesting an inflection point. Conversely, Eli Lilly (LLY) faced a downgrade due to an overstretched valuation and intense competition in the weight-loss drug market, while Nvidia (NVDA) was moved to Hold as analysts forecast long-term growth moderating due to market maturation and cyclical hardware demand.
Upgrades
-
Broadcom (AVGO): Upgrade Hold to Buy by Envision Research. The upgrade follows a stock price pullback and strong Q4 earnings, highlighting positive catalysts like a $73 billion AI-related backlog and the addition of a significant fifth XPU customer, making the stock’s growth-adjusted multiples compelling.
“AVGO’s current valuation profile, either in terms of absolute P/E or growth-adjusted ratios, is also quite reasonable, or even attractive, when compared to close peers.”
-
Groupon (GRPN): Upgrade Sell to Hold by Given Mahlangu. Recent improvements in key fundamentals, including stabilized revenue and positive operating margins, suggest the company may finally be succeeding in improving merchant economics, despite lingering concerns about the underlying business model.
“Groupon is definitely an interesting company to write about. I believe the firm currently has a flawed business model, but recent fundamental improvements tell me the company might be working on improving merchant economics, which could be a substantial change if this goal gets achieved.”
Downgrades
-
Eli Lilly and Company (LLY): Downgrade Hold to Sell by Louis Gerard. The stock’s valuation is deemed overstretched and priced to perfection, creating significant downside risk, particularly as competition intensifies and aggressive pricing strategies emerge in the high-margin weight-loss drug market.
“The company’s valuation is for me the biggest risk right now, even if the company’s P/E has decreased from its highs over the past couple of years. LLY has a P/E Non-GAAP of 48.99, which is the highest among its peers, while its FCF yield is among the lowest at 0.9%.”
-
NVIDIA (NVDA): Downgrade to Hold by Li Eason. The analyst believes Nvidia’s current valuation already reflects its dominance, and future growth will be limited as AI model development hits diminishing returns, causing GPU demand to become cyclical like previous hardware markets.
“At some point, ROI will collapse, and slightly better outputs will not justify the exponential increase in compute. That is, when AI training costs tens of billions of dollars, while additional revenue from the model is only in the billions. … Even though I agree Nvidia’s dominance will continue for the foreseeable future, past lessons from hardware companies like Intel prove this does not equate to growing return on investment.”