🤖 NVDA's Next Catalyst?

Happy Sunday to everyone on The Street. 

In 2024, Nvidia (NVDA) was the third top-performing stock in the S&P 500 behind Palantir (PLTR) and Vistra (VST). So does it still have room to run in 2025? According to Bank of America, the answer is yes and the first catalyst is on the horizon this week.

BoA has reiterated its Buy rating on Nvidia, naming it a "sector top pick" ahead of the CES tradeshow, which kicks off tomorrow in Las Vegas with a keynote and other events featuring CEO Jensen Huang.

While acknowledging that "the big themes have already been highlighted in the media," the firm views CES as a positive catalyst to reinforce Nvidia's "platform dominance" and its growth opportunities in high-potential markets.

Keep an eye on the following updates as potential stock movers:

• The company's robotics strategy, particularly developments with "Jetson Thor," spanning silicon to software, and the emergence of a "physical AI" theme.

• The launch of RTX 50xx, Nvidia's Blackwell-based PC gaming cards, featuring enhanced "neural rendering" capabilities and faster GDDR7 memory.

• Potential expansion into AI PCs, either through partnerships or a "small" possibility of unveiling a standalone PC CPU.

• Data center updates, including progress on current-gen Blackwell products, upgraded variants, and a potential teaser for the next-gen Rubin architecture, slated for 2026.

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Raymond James Wants to Jet

A Revenue Rebound in Sight

Raymond James (RYMD) recently upgraded American Airlines (AAL) from “Market Perform” to "Outperform," citing stronger revenue and a favorable risk-reward potential.

The firm also raised its price target to $24, signaling confidence in the airline’s near-term potential. Key drivers included a stronger-than-expected December revenue update and increasing corporate customer engagement.

While the company’s co-branded card deal with Citi (C) may yield modest gains, impressive domestic business and the intention to reshuffle cabin layouts should help American capture price-sensitive demand.

Tailwinds for Earnings

A much-needed earnings boost could be in the cards for American thanks to a revised fuel cost forecast, though still higher than the forward curve.

Raymond James also pointed to broader tailwinds benefiting US carriers, including a strong dollar strengthening international demand—an area where American's focus on South America could prove advantageous.

However, the firm acknowledged that legacy competitors like Delta (DAL) and United (UAL) could reap more benefits due to their extensive international networks.

Shifting Industry Dynamics

The airline industry is experiencing notable changes in cabin configurations, with low-cost carriers introducing more premium seating options.

This trend could limit growth in main cabin seats, fostering a more premium-focused market. Additionally, a potential decrease in regulatory risks under the incoming US administration could pave the way for increased M&A activity in the industry.

Whatever the future holds, Raymond James has its eye on American in 2025.

Canoo is Sinking

Canoo Hits a New Low

Canoo’s (GOEV) turbulent journey took another hit this past week, with shares dropping 11% to $1.37 on Monday following a downgrade by Stifel analyst Stephen Gengaro.

Once praised for its in-house EV technology, the company is now valued at just $7 million—its lowest market cap to date. Gengaro slashed the price target from $4.50 to a mere $0.50, citing suspended production and an urgent need for capital.

It’s a dramatic fall for this company, which boasted a $2 billion order book just two years ago.

The 'Butch Huskey' of EVs

Gengaro likened Canoo to former Mets player Butch Huskey, who showed early promise but wasn’t ready for the pressures of the major league.

Similarly, Canoo has an ambitious vision for commercial EV trucks and vans, yet the company hasn’t commenced mass production. Recent furloughs and the idled Oklahoma factories highlight deeper issues.

Former employees are speaking out to local news outlets, wanting the state of Oklahoma to take action.

For a company that once symbolized innovation, Canoo’s trajectory now raises concerns about its future viability.

Barely Staying Afloat

Last month, the EV company enacted its second reverse stock split to meet Nasdaq’s listing requirements. Adding to its woes, Canoo plans to auction off manufacturing and engineering equipment online later this month.

While the stock split move kept Canoo above the $1 bid price threshold, the auction signals a dire financial situation. Investors hoping for a turnaround face an uphill battle, making Canoo a cautionary tale of unrealized potential.

Rare Cancer, Rare Cure?

A Game-Changing Approval

Last week, biopharmaceutical company Verastem (VSTM) saw its shares surge nearly 25% after the FDA granted Priority Review for its new drug combination. The company aims to combine drugs avutometinib and defactinib to target recurrent low-grade serous ovarian cancer (LGSOC) with KRAS mutations.

This treatment, the first aimed at this subset of ovarian cancer, addresses a pressing unmet need for thousands of women in the US annually.

With Phase 2 RAMP 201 study results showing impressive response rates and tolerability, Verastem is poised for a potential 2025 commercial launch pending regulatory approval.

Breakthrough Therapy Potential

The FDA’s Breakthrough Therapy and Orphan Drug designations for Verastem’s treatment underscore its significance. Additionally, the company is conducting Phase 3 RAMP 301 trials and exploring broader applications for avutometinib and defactinib.

Verastem has also teamed up with Amgen (AMGN) to test a triplet therapy—adding Amgen’s drug Lumakras to the mix—to target non-small cell lung cancer. Early data from these studies looks promising, reinforcing the potential of this cutting-edge combination.

BTIG Maintains a Buy

The optimism around Verastem extends to Wall Street. BTIG recently raised its price target to $20, up from $13, and maintained a Buy rating on the shares. The firm’s confidence stems from the FDA’s Priority Review and a strong data package for avutometinib and defactinib.

BTIG increased its modeled probability of success for FDA approval from 65% to 80% following positive feedback from a key opinion leader call. If successful, this approval could underscore Verastem’s position as a leader in targeted cancer therapies.

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