MediaAlpha and Constellation Energy Secure Upgrades: Weekly Wall Street Updates

MediaAlpha's Upward Surge: BMO Capital Boosts Rating and Foresees Growth

In a noteworthy move on Monday, BMO Capital upgraded MediaAlpha (NYSE:MAX) to Outperform, setting a target price of $28. The catalyst behind this upgrade is BMO Capital's optimistic outlook on MediaAlpha's Transaction Value (TV)-related revenue growth from 2024 to 2025. Particularly, the forecast anticipates a surge fueled by increased advertising-for-growth spending by auto insurers, with a spotlight on Progressive, outperforming sell-side expectations in '24.

BMO Capital's valuation multiple of approximately 25.6x on 2025 estimated adjusted EBITDA surpasses MAX's historical average. This divergence is based on their projection of substantial upward revenue revisions spanning '24 and '25. While acknowledging the cyclical nature of auto insurance profits, BMO Capital foresees the potential for MediaAlpha's valuation multiple to revert to the mean in subsequent years as the initial advertising wave naturally decelerates.

Stock Reaction: MediaAlpha witnessed a 7.54% gain, trading from $20.02 to $21.53 on the day of the upgrade.

Roku Faces Setback: Wells Fargo Downgrades Due to Walmart's Shift

On Tuesday, Wells Fargo downgraded Roku (NASDAQ:ROKU) to Underweight, establishing a price target of $51. The downgrade is rooted in Wells Fargo's belief that Walmart, accounting for a significant portion of Roku's device sales and net additions, is set to acquire Vizio. This acquisition introduces the SmartCast operating system (O/S), potentially pressuring Roku's net additions by 2025-26. Additionally, Walmart is expected to transition its Connected TV (CTV) from Roku O/S to SmartCast, prompting a necessary repositioning for Roku.

Wells Fargo highlights the collaboration between Roku and Walmart on shoppable ads, with Walmart likely shifting Walmart Connect towards the SmartCast installed base. The competitive landscape shift leaves Roku facing challenges, and Wells Fargo emphasizes the need for an improved narrative for investors to justify a substantial long-term premium.

Stock Reaction: Roku experienced a 0.81% decline, opening at $62.82 and closing at $63.83.

Constellation Energy's Growth Strategy: Keybanc Upgrades to Overweight

Wednesday saw Keybanc upgrading Constellation Energy (NASDAQ:CEG) to Overweight, setting a target price of $190. This upgrade follows CEG’s 4Q23 results and discussions, with Keybanc highlighting Constellation Energy's crystallized growth strategy. Keybanc sees the company's reliance on existing nuclear Production Tax Credits and long-term U.S. power market trends as sustainable post-elections.

Constellation Energy aims for at least a 10% earnings growth rate through 2028, positioning itself as a premium infrastructure company in Keybanc’s coverage. The analysts' updated estimates reflect the newly quantified earnings upside, and the $190 price target reflects Constellation Energy's premium status among peers.

Stock Reaction: Constellation Energy closed at $170.76, marking a 9.8% gain from the previous session.

Bitdeer Technologies Enters the Fray: Roth Capital Initiates Buy Rating

Thursday witnessed Roth Capital initiating Bitdeer Technologies Group (NASDAQ:BTDR) at Buy, establishing a $14 price target. Despite the call not going as expected for Roth, the initiation is based on Bitdeer trading at a significant discount, approximately 61%, compared to industry counterparts. This undervaluation is attributed to the novelty of Bitdeer's narrative and an excess of dividend shares held by Bitmain investors.

Roth anticipates a substantial appreciation in Bitdeer's valuation multiples as the company shifts focus from hosted to self-mining operations and activates new mining sites. The $14 price target is derived from an estimated $37.5 million per calendar year 2025 EH/s.

Stock Reaction: Bitdeer experienced a 9.8% drop, closing at $6.61.

Ashland's Redemption: Wolfe Initiates Outperform Rating

Closing the week on a positive note, Wolfe initiated Ashland (NYSE:ASH) at Outperform on Friday, setting a $108 price target. Wolfe analysts suggest that the market's frustration with Ashland's destocking issues is easing, positioning the company to outperform peers soon. Ashland's achievements in the pharmaceutical sector, combined with new product developments and continued innovation, are expected to drive its outperformance.

Ashland's focus on top-line growth through leveraging flagship products, Klucel and Benecel, and nearing the completion of a multi-year restructuring effort, contributes to Wolfe's positive outlook.

Stock Reaction: Ashland closed at $95.42, marking a 2.52% gain.

In summary, the week saw dynamic shifts in stock ratings, reflecting the ever-changing landscape of the market. Investors should stay vigilant and consider these updates in their decision-making processes.

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