What’s the full story? JPMorgan upgrades MSM to Overweight from Neutral, recognizing its historical leverage to domestic industrial production trends as a leader in metalworking distribution.
However, its growth has lagged in recent years due to slower market share gains, driven by a shift away from transactional sales toward solutions-based models like vending, in-plant services, and VMI. While these areas show traction, core customer growth remains weak, hindered by underinvestment in digital/web capabilities, pricing strategies, and salesforce effectiveness.
The firm sees MSM better positioned now than in years past, with self-help initiatives under way to capitalize on improving end-market growth and tariff-driven pricing. JPMorgan views the stock as relatively undervalued, with significant upside if the company executes its turnaround. The 4%+ dividend yield, notably higher than peers, adds to the appeal.
In JPMorgan’s view, MSM presents a compelling opportunity for investors willing to bet on its operational improvements and market recovery.
Cleveland-Cliffs
What happened? On Tuesday, GLJ Research double downgraded Cleveland-Cliffs Inc (NYSE:CLF) to Sell with a $3.91 price target.
*TLDR: CLF faces five crushing headwinds. Downside looms.
What’s the full story? Cleveland-Cliffs (CLF) is staring down five brutal headwinds that GLJ Research believes will hammer earnings through 2025E.
First, CLF is bleeding market share to Nucor (NYSE:NUE) and Steel Dynamics (NASDAQ:STLD), both of which ramped utilization in Q1 while CLF idled key plants. Auto demand is collapsing, yet CEO Goncalves clings to the delusion that CLF will dominate the sector—even as U.S. auto production declines for the sixth straight month.
Second, a widening HRC import arbitrage signals robust foreign steel demand, further undercutting domestic players like CLF.
Third, U.S. economic softness is hitting hard, with steel seasonality turning bearish through August.
Fourth, CLF’s valuation is a house of cards. The firm’s 8.5x 2029E EV/EBITDA multiple, discounted to 2025E, yields a price target of $3.91 (-38.7% downside). Risks skew heavily downward unless tariffs spike, China’s economy miraculously rebounds, or CLF aggressively buys back shares.
Bottom line: CLF is a sinking ship in a sea of steel headwinds.
Thursday
What happened? On Wednesday, Baird upgraded Fair Isaac Corporation (NYSE:FICO) to Outperform with a $1,900 price target.
*TLDR: Baird bets on FICO’s rebound. Regulatory risks manageable.
What’s the full story? Baird sees opportunity in FICO’s recent pullback, driven by shifting perceptions of regulatory risk.
The firm believes the current valuation sets the stage for solid multi-year upside while mitigating potential downside, creating a favorable risk/reward dynamic. FICO Scores, in Baird’s view, remain one of the most robust financial models, offering systemic value and a strong market position. The firm expects disciplined pricing management and eventual normalization in mortgage volumes to further bolster the outlook.
Regulatory risks are acknowledged—but Baird views them as now better priced into the stock and manageable over time. The firm’s confidence in FICO’s resilience and strategic positioning underscores its optimism for long-term growth, even as it maintains a measured perspective on near-term challenges.
eXp World Holdings
What happened? On Thursday, DA Davidson upgraded eXp World Holdings Inc (NASDAQ:EXPI) to Buy with a $10.75 price target.
*TLDR: DA Davidson upgrades EXPI. Agents grow, margins expand.
What’s the full story? DA Davidson upgrades EXPI, citing four pivotal catalysts:
First, proprietary checks reveal a reversal in U.S. agent count declines, with positive net adds over the past three weeks. The analysts estimate a 0.5% Q/Q growth, defying consensus expectations of a 0.8% drop. This uptick, driven by recruiting high-volume teams, could weaken the bearish narrative.
Second, international monetization is shining, with revenues surging 103% Y/Y in Q1’25. While international gross margins sit in the high teens—far above the U.S.’s 7-8%—DA Davidson expects a mid-teens drop as productivity rises, but sees margin expansion as international revenue mix grows to 25%-30%.
The analysts also spotlight accelerating industry migration to cloud/virtual platforms. With 85-90% of U.S. agents still tied to legacy brokerages, they argue the shift to cost-efficient models like EXPI is inevitable, potentially turbocharged by tech and regulatory shifts.
Finally, operational efficiency, particularly via AI, is a core focus. EXPI’s metrics outpace peers, but the analysts see room for improvement compared to leaders like REAX. Founder Glenn Sanford’s push for AI-driven automation could yield tangible gains by late 2025, further bolstering the bull case.
Unity Software
What happened? On Friday, Jefferies upgraded Unity Software Inc (NYSE:U) to Buy with a $29 price target.
What’s the full story? Jefferies upgrades Unity to Buy, betting on Vector’s ad targeting model to disrupt the status quo. Early signs show Vector delivering a 15-20% lift in app installs and in-app purchases, with AdTech surveys corroborating 5-7% ROAS (return on ad spend) improvements.
The broker sees significant upside to flat Grow expectations if Vector scales, though a full re-rate isn’t expected imminently.
Meanwhile, Create’s stability is setting the stage for double-digit growth, driven by price hikes (+6% Pro, +25% Enterprise), Unity 6 adoption, and a non-gaming recovery.
Post-restructure cost discipline is paying off, with $234M in OpEx cuts and 50%+ incremental margins. EBITDA margins, while still low at 20%, have room to hit 30% if Grow upside materializes, backed by 80%+ ad conversion leverage and S&M efficiencies. Management’s total overhaul, with Matt Bromberg and Jason Yahes at the helm, instills confidence in execution.
Valuation looks reasonable, with the PT lifted to $29 on a 29x EBITDA multiple. Unity’s high margin leverage and Vector’s potential could see it grow into its premium.
