Spirit Airlines, Marvell Technology, Celsius: Top Stocks

January 19, 2024 at 4:43 PM

Spirit Airlines (SAVE) shares moved higher Friday after the airline operator raised its fourth-quarter guidance. This comes on the heels of a federal judge blocking its potential merger with JetBlue (JBLU).

Citigroup named Marvell Technology (MRVL) its top specialty semiconductor pick over previous number one Nvidia (NVDA), citing Marvell's revenue growth and AI potential.

Celsius Holdings (CELH) shares fell after Bank of America downgraded the stock to "Neutral" from "Buy" due to competitive pressures expected to weigh on growth. The firm also lowered its price target on the energy drink maker.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Angel Smith

Video Transcript

JOSH LIPTON: All right, let's get a check on some trending tickers in today's trade. We're going to start off with Spirit Airlines shares soaring in today's session, that's after raising fourth quarter guidance, now expecting revenue of $1.3 billion. So lots of headlines actually on this one, Jared.

JARED BLIKRE: Yes.

JOSH LIPTON: Spirit Airlines, I mean, obviously, listen, got crushed after the judge blocked the merger with JetBlue, said the tie up would hurt consumers. Now, the company though, says, OK, frankly, we still think a combination is the best opportunity. Reuters, by the way, is reporting that spirit is indeed pressing JetBlue to appeal that decision to block the merger.

So we'll see how that plays out. And then separately, the company also gave us some new financials to think about. Q4 revenue will reach the high end of its range and investors like that.

JARED BLIKRE: Sure. And avoiding the elephant in the room here, we got some famous traders-- some famous day traders on X, the platform formerly known as Twitter. Dave Portnoy, you know, yesterday, he managed to buy. He kind of-- I don't want to call it top tick, but as soon as he said he had bought Spirit with some news dropping, boom.

JOSH LIPTON: That headline hits.

JARED BLIKRE: Yeah, that headline that dominated yesterday hits, and he's out like 25%. But the stock had been done-- had been down considerably before that. Just in terms of all the drama here, I like Bloomberg Intelligence's recapitulation of it. They say a US judge's rejection of JetBlue-Spirit's merger leaves Spirit with few options and here's why. Low liquidity, muted operating margin, and cash generation, they are dwarfed by these purchase obligations.

For the future, their debt $1.5 billion due or needing refinancing in 2024. So without cash sources, they are going to have to scramble here. We've seen this before where we have an anticipated merger and I think this is number two that we're talking about today. And then we have some knock on effects when that just-- that program, that number one options get kind of thrown out the window.

JOSH LIPTON: Yeah, Portnoy, by the way, on X really a lot today I mean, he is swinging very hard on this name trying to boost his--

JARED BLIKRE: Well, he's winning. You know, I'd be talking my book too if I were finally winning on this trade that kind of beat me up yesterday. So good luck to Dave there.

NVIDIA has been knocked off the top spot for Citigroup's top specialty chip stock as it hands the crown to Marvell Technology. The stock jumping on the news with analysts Atif Malik citing strong AI optics growth and revenue potential. So here's another stock we're talking about. You've got to wonder where in the-- I'm sorry, I was trying to get a chart that's not coming up here.

But there have been a number of upgrades recently and it's not just by Raymond James. We have also Cowen. They raised their price target to $75-- from $75. William O'Neil reinstated price target at Susquehanna up to $80 from $65 and also at Citi up to Citi-- up to $75 from $61.

JOSH LIPTON: Yes, Citi just-- listen, they believe bottom line, this is just a smart play on the AI boom, right? We were just talking to Fred from Macquarie about that. The stock could move higher, they think, on growth in the AI optics market among other reasons.

They say Marvell could see a trough, it sounds like, for markets like enterprise networking and carrier. So he's got a buy on Marvell. But he does like NVIDIA too, we want to be clear about that. But note, listen and enjoy this 20% plus run into CES. I don't see-- both names have enjoyed these amazing runs. I mean we know the move NVIDIA has made, but Marvell is also up about 80% in the past year.

JARED BLIKRE: Yep, I agree. I was trying to-- I was fishing for my heat map. And my semiconductor heat map eludes me, but basically confirming what you just said.

JOSH LIPTON: And by the way, Citi is not alone. I mean, the Street loves this.

JARED BLIKRE: Yeah, I was just reading off this long list.

JOSH LIPTON: More than 85%.

JARED BLIKRE: I was a little surprised there's--

JOSH LIPTON: More than 85% say this one's a buy, zero sells.

JARED BLIKRE: Consensus trade right there.

JOSH LIPTON: All right, finally, shares of Celsius sliding as BofA Securities downgrades that one to neutral and lowers their price target to $65. So the team at Bank of America, Jared, no longer fans. They go from buy to neutral.

Why the lack of love? Well, they think pressure from competition, that's going to be a problem in their opinion. So names like Monster and Red Bull could weigh on growth this year. They talk about a lack of differentiation in the innovation, heightened competition. That's going to be a problem, they think, for Celsius to meaningfully kind of expand share here.

JARED BLIKRE: Yeah, the competition-- I mean, Monster has been a monster not only in terms of its name, but its stock performance over the last 25 years. But here is-- here's a note from an analyst-- from the analyst, "We're talking about uncertainty around sales growth now weighs on what had been a more favorable risk-reward profile than when they were benefiting from the momentum of the Pepsi distribution deal." And then here's another quote, "We flag a lack of differentiating innovation and heightened competition as potential hurdles to Celsius's ability to meaningfully expand market share, lowering the fourth quarter sales estimate to $340 million-- $341 million from $351 million." By the way, a minute left to the bell here and the adjusted EBITDA target, $55 million from $56.5. Also maintaining a $65 price target on the shares.

JOSH LIPTON: Yes, so he cuts his rating to-- he moves to the sidelines, but he does maintain his target. Nice run for the stock, by the way. It is up about 60% in the past 12 months, but listen, that obviously is enough for BofA. They moved to the sidelines.

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