Lululemon (NASDAQ:LULU) has received an upgrade despite its 50% year-to-date decline, with international growth offering a potential bright spot amid U.S. weakness. Similarly, Palantir (NASDAQ:PLTR) has been upgraded based on its leadership strength and growth trajectory, despite trading at premium multiples.
On the downgrade side, Google parent Alphabet (NASDAQ:GOOGL) faces caution after a recent antitrust ruling relief rally, while Chinese real estate platform KE Holdings (NYSE:BEKE) has been downgraded due to deteriorating housing market fundamentals and fading recovery momentum.
Upgrades
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Lululemon athletica inc. (NASDAQ:LULU): Upgrade to Buy by Gary Alexander. Following a ~15% post-earnings drop and ~50% year-to-date decline, international sales acceleration in China and other markets provides a path to growth despite U.S. weakness.
“International sales, especially in China, are accelerating and now comprise over a quarter of revenue, offsetting U.S. weakness and providing a path for future LULU growth… Lululemon maintains rich gross margins in the high 50s and holds hefty cash reserves, giving flexibility for buybacks or growth initiatives… Despite recent missteps and macro headwinds, I see more upside in this cheap rebound play (at just ~13x ex-cash P/E) than in expensive large-cap tech stocks at peak valuations.”
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Palantir Technologies Inc. (NASDAQ:PLTR): Upgrade to Strong Buy by Oliver Rodzianko. Despite its premium valuation, the company’s visionary leadership and significant commercial revenue growth justify long-term investor confidence.
“Palantir acts more like a military intelligence division, and the market pays not only for the results of this lean, agile operating model, but also for the narrative of its direction under Karp operationally and Thiel meta-operationally… With a company as strong as this with recurring 30–40% top and bottom line annual growth rates on consensus moving forward, you don’t need to overthink it. This is a world-class company that is set for enduring alpha as fundamentals continue to compound aggressively upwards.”
Downgrades
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Alphabet Inc. (NASDAQ:GOOGL): Downgrade to Hold by Tech Stock Pros. Despite a favorable antitrust ruling allowing Google to keep Chrome, the stock’s 9% relief rally has priced in the positive news.
“The upside is that the worst-case scenario is off the table… In a blog post, the company stated the following: ‘Now the Court has imposed limits on how we distribute Google services, and will require us to share Search data with rivals…We have concerns about how these requirements will impact our users and their privacy, and we’re reviewing the decision closely.’”
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KE Holdings Inc. (NYSE:BEKE): Downgrade to Hold by May Investing Ideas. Weakening core business fundamentals, margin pressure, and slowing transaction volumes indicate limited near-term upside for the Chinese real estate platform.
“The core brokerage business has historically been BEKE’s most profitable business line. The fact that it is now contributing less despite volume growth suggests a structural decline in unit economics. At the same time, operating costs are moving higher… With weakening unit economics, slowing transaction volumes, and valuation already at historical averages, I see little scope for upside until there are clear signs of a property market bottom.”