Weekly Analyst Recommendations

Monday – U.S. markets were closed for Martin Luther King Jr. Day.

Ciena Corp

What happened?
On Tuesday, Bank of America lowered its rating on Ciena Corp. (NYSE: CIEN) to Neutral and set a price target of $260.

TL;DR:
Ciena shares have jumped on strong hyperscaler-driven growth, but BofA turned more cautious due to concerns over potential backlog risks.

What’s the full story?
Ciena’s shares have surged to record levels, now trading at roughly 40x forward earnings, about twice its 10-year average, reflecting strong expectations for sustained growth. Demand from hyperscale cloud providers has driven a sharp acceleration in revenue growth—from around 8% to approximately 30% in 1Q26—supported by a $5 billion backlog that provides solid visibility into next year’s revenues.

Analysts believe the current cycle has durability, fueled by rapid expansion in scale-across deployments, which are projected to rise 11-fold to $808 million by 2026, alongside continued leadership in 800G optical technology. Ciena’s market share has increased from 18% in 2024 to 22% in 9M25, with the company commanding roughly 50% share among major cloud providers, driven by its RLS systems and WaveLogic 6 Nano built on 3nm DSP, offering superior power efficiency versus competitors such as Cisco and Marvell.

However, risks remain. The company’s history offers a cautionary example: in 2022, backlog coverage fell sharply—from levels that once covered 96% of revenue to a 38% decline, triggering a 12% drop in the stock. With shares now valued at about 45x earnings, assumptions of peak growth leave little room for disappointment if backlog momentum weakens.

As a result, Bank of America downgraded the stock to Neutral, maintaining a $260 price objective, which implies only around 7% upside, suggesting much of the optimism is already reflected in the valuation.

Ulta Beauty

What happened?
On Wednesday, Raymond James upgraded Ulta Beauty Inc. (NASDAQ: ULTA) to Strong Buy and raised its price target to $790.

TL;DR:
Raymond James turns more bullish on ULTA, citing earnings upside from growth initiatives despite competitive and execution risks.

What’s the full story?
Raymond James upgraded Ulta to Strong Buy from Outperform, lifting its price objective to $790 and modestly increasing its FY26 EPS forecast to $28.60 from $28.51. The firm sees a combination of strategic initiatives reigniting growth as Ulta enters FY26 following a year of restructuring.

Beauty demand remains resilient, while the company benefits from operational improvements implemented over the past year, including a refreshed leadership team, enhancements to its loyalty program, stronger digital capabilities, and expanded assortments in Wellness and Marketplace categories. Looking ahead, Raymond James highlights opportunities from deeper data analytics, adoption of agentic AI, and early-stage international expansion—initiatives expected to drive earnings growth without relying on valuation multiple expansion.

The firm believes Ulta is transitioning from an investment phase toward a period of return realization, with contributions expected across physical stores, e-commerce, and potential international markets. However, risks persist, including intensifying competition in beauty retail, potential softness in U.S. consumer demand, rising cost pressures, and execution risks tied to overseas expansion.

Overall, Raymond James views Ulta’s balanced exposure to both prestige and value-conscious consumers, its strong loyalty ecosystem, and improving operational leverage as creating an attractive risk-reward profile, supporting the Strong Buy rating.

Palantir

What happened?
On Thursday, PhillipCapital initiated coverage of Palantir Technologies Inc. (NASDAQ: PLTR) with a Buy rating and a $208 price target.

TL;DR:
PhillipCapital sees Palantir as a buying opportunity, driven by strong revenue and profit growth, and sets a $208 target.

What’s the full story?
PhillipCapital expects Palantir’s FY25 revenue to rise 47% year over year to $4.2 billion, supported by a growing contribution from its commercial segment, which is forecast to expand 51% YoY, outpacing 43% growth in government revenue. The shift reflects accelerating enterprise adoption of AI-driven platforms beyond Palantir’s traditional defense and public-sector base. Net profit is projected to increase by approximately 1.9x, reflecting improving operating leverage.

The U.S. market, which accounts for roughly 66% of total revenue, is expected to remain the key growth driver. Revenue in the region is forecast to grow 66% YoY, supported by elevated government spending amid geopolitical tensions and a sharp acceleration in commercial contracts—nearly doubling in 3Q25—driven by demand for Palantir’s Artificial Intelligence Platform (AIP) and its ontology-based productivity tools.

PhillipCapital’s $208 price objective is derived from a discounted cash flow valuation, assuming an 8.3% WACC, 4.2% risk-free rate, and 8% terminal growth rate. While the stock trades at a lofty ~170x forward P/E, the firm argues this remains below prior peak valuation levels, leaving room for a potential re-rating as earnings visibility improves and Palantir’s addressable markets continue to expand.

Starbucks Co.

What happened?
On Friday, William Blair upgraded Starbucks Corporation (NASDAQ: SBUX) to Outperform, without assigning a price target.

TL;DR:
William Blair sees an imminent return to positive U.S. comparable sales, prompting an upgrade to Outperform.

What’s the full story?
William Blair expects Starbucks to deliver its first positive domestic comparable-sales growth in two years during the December quarter, setting the stage for improved performance into fiscal 2026. While sales momentum is turning, the firm highlights margin recovery as the central investment debate. Americas operating margins are projected to fall to 13.4% in FY25, down from a peak of 20.8%, with an additional $500 million in labor-related cost pressures anticipated in the following year.

The firm is looking to Starbucks’ January 29 investor day for further clarity, anticipating a multi-year strategy focused on general and administrative cost reductions, productivity initiatives, and sustained comparable-sales growth. Over the longer term, William Blair models approximately 3% global unit growth combined with low-single-digit comparable sales, allowing consolidated margins to gradually approach 2023 levels by 2030.

Under this framework, Starbucks could generate a 15–20% compound annual growth rate in EPS over the next five years. Despite the stock being up roughly 15% year to date, William Blair sees a potential valuation path toward $140+ per share by 2029, based on a 30x multiple applied to $4.70+ in EPS, implying roughly 10% annual share price appreciation, with upside if comparable sales accelerate faster than expected.

As a result, William Blair upgraded Starbucks to Outperform, arguing that the recovery in sales is likely to precede and ultimately drive a more meaningful rebound in profitability beginning around 2027.

Sources: Investing