(This is CNBC Pro’s live coverage of Tuesday’s analyst calls and Wall Street chatter. Please refresh every 20-30 minutes to view the latest posts.) A media giant and a cybersecurity company were among the stocks being talked about by analysts on Tuesday. Bernstein lowered its rating on Warner Bros. Discovery on the back of a disappointing second-quarter report. Meanwhile, Mizuho raised its price target on Palo Alto Networks ahead of the company’s upcoming earnings release. Check out the latest calls and chatter below. All times ET. 6:29 a.m.: Morgan Stanley reiterates bullish rating on DraftKings despite performance outlook changes DraftKings kept its crown as a top pick by Morgan Stanley, even as the firm takes a hard look at the stock. Analyst Stephen Grambling reiterated his top pick designation and overweight rating on the online gambling stock. But Grambling shaved $4 off his price target to $47, though that still implies 57.5% upside from Monday’s close. Grambling said DraftKings’ EBITDA guidance for the second quarter and 2024 were both below what Morgan Stanley expected. The company performed off where the firm forecasted enough to warrant a serious analysis of user economics, Grambling said. As a result, he said estimates need to come down to account for higher revenue with a longer EBITDA ramp. His expectations for revenue and profitability headwinds in the near-term from new customer growth remain, but Grambling said he also foresees long-term upside. “While catalysts we focused on played out, the stock has stayed under pressure,” Grambling told clients in a Tuesday note. “We see the next leg higher being driven by future revisions & buyback execution.” Grambling’s call comes amid a tough year for DraftKings, with shares down more than 15%. That marks a turn after the stock soared more than 200% in 2023. DKNG YTD mountain DKNG in 2024 — Alex Harring 6:17 a.m.: Barclays takes neutral position on Dell following pullback and AI concerns Barclays is growing less concerned with the durability of artificial intelligence demand for Dell after a recent share price drop. Analyst Tim Long upgraded to technology stock to equal weight from underweight. Long kept his price target unchanged at $97, which reflects just 1.8% in upside over Monday’s closing price. The analyst pointed out that Dell shares have dropped around 34% since its earnings report in late May. By comparison, the S & P 500 has added about 1% over the same period, while the tech-heavy Nasdaq Composite has slipped by just close to 1%. Long actually described AI orders and revenues for Dell as “strong” but said to anticipate volatility ahead and to keep an eye on the company’s target customers. He added that the end market appears to be getting more competitive, while Dell hasn’t seen much of an ability to bring AI customers to other parts of the business. “We had been concerned about the durability of AI revenues/orders, the impact on margins, and the lack of pull-through of other products and services,” Long told clients in a Tuesday note. “We believe much of the share price contraction has been the market coming to terms with these structural issues surrounding the AI business.” Long said the underweight thesis just didn’t materialize and the trading multiple has moved closer to historical trends. Still, he highlighted continued challenges in the personal computer and tradition server and storage markets, while noting that the AI business alone can’t mitigate hurt from these areas. Dell climbed around 3% in Tuesday premarket trading. Despite its recent pullback, the stock is still up by about 24.5% in 2024. — Alex Harring 5:50 a.m.: UBS says shares of this water pure-play can jump almost 30% Investors may be overlooking growth opportunities in Xylem , according to UBS. Analyst Damian Karas initiated coverage of the water stock with a buy rating. Karas’ $165 price target suggests shares can rally 29.4% from Monday’s close. “We view XYL as the leading pure-play water company,” Karas wrote in a note to clients. It has “MSD+ growth profile that is less cyclical than peers and a ~100bps/year margin opportunity.” Karas noted the stock has only priced in a compound annual sales growth rate of 2.7% through 2028, which is around in line with the historical rate. But UBS expects that growth clip to be near 6%, meaning it could be far higher than traders are currently anticipating. The firm also said investors should be readying for a multi-decade growth cycle, as the business feels boosts from urbanization and government support for upgraded infrastructure. Meanwhile, the analyst also said the company is “operating from a position of strength” after its adjacent expansion through the $7.5 billion acquisition of Evoqua. Xylem shares have added 11.5% this year. XYL YTD mountain XYL year to date — Alex Harring 5:47 a.m.: Bernstein downgrades Warner Bros. Discovery, citing second-quarter earnings Bernstein moved to the sidelines on Warner Bros. Discovery after what the Wall Street firm deemed an “ugly” quarter. Analyst Laurent Yoon downgraded the media stock to market perform from outperform and shaved $2 off his price target to $8. Still, that new target implies 19.2% upside from Monday’s close. Yoon’s downgrade comes after the entertainment company missed quarterly expectations on adjusted EBITDA and revenue in its second-quarter earnings report published last week. Shares touched their lower point since the WarnerMedia-Discovery merger in 2022 in the wake of the release, the analyst noted. “It sounds bad and it is,” Yoon wrote to clients in a Tuesday note. “While there are some nuances, such as comps, the market reaction is reflective of the very little patience investors have for WBD given the ongoing deterioration.” Yoon specifically pointed to the fact that revenue fell by 6% and EBITDA by 16% in the quarter compared with the same period one year ago. Free cash flow tumbled by a whopping 43% when comparing the two time frames. Adding to uncertainty is the fact that the NBA chose other media companies to ink a rights deal with, ending a decades-long partnership with Warner Bros. Discovery’s Turner Sports. Warner Bros. Discovery is now suing the NBA. Warner Bros. Discovery shares shed 0.8% before the bell on Tuesday. The stock has tumbled around 41% in 2024. Disclosure: Comcast’s NBCUniversal, CNBC’s parent, was one company that got agreements for a package of NBA games. — Alex Harring 5:47 a.m.: Mizuho raises price target on Palo Alto Networks Investors should consider scooping up shares of Palo Alto Networks ahead of earnings. Analyst Gregg Moskowitz raised his price target on the cybersecurity stock to $380 from $350, maintaining his outperform rating. The new forecast implies upside of nearly 15%. “Our checks indicate an uptick in PANW demand for the first time in several quarters. More specifically, large deal activity has been stronger, customers have been consolidating more purchases with PANW, and demand has sounded healthier across both firewalls and subscriptions,” Moskowitz wrote in a note to clients. “In addition, we believe recent leadership changes are improving relations with some notable channel partners,” the analyst added. Palo Alto, which is due to report earnings Aug. 19, is up more than 12% for the year. Over the past month, however, shares are down more than 1%. PANW YTD mountain PANW year to date — Fred Imbert
