VIDEO: Why We Boosted Our Price Target for This Financial Holding

In today’s Daily Rundown video, Chris Versace discusses our price target increase on Thursday for Morgan Stanley MS shares and what we’re watching next for those shares as well as the ones for Bank of America BAC. He also touches on a new acquisition at ServiceNow NOW and why it has the potential to help foster customer adoption of the firm's AI services.

Chris also gives his reaction to Friday's economic data, sharing why it offers more reasons to think the Fed will slow walk its way to the next rate cut. He shares which of next week’s data points should bring hints about that timing. 

And he ends today’s video sharing expectations for a busy start for the Trump White House, and why we’ll have our eyes and ears open when it comes to Inauguration Day. 

Transcript

CHRIS VERSACE: Hey, folks, Chris Versace here. Friday, January 17, end of the week. So happy Friday. Before we get started with today's video, just a quick reminder. Please drop on by to the Daily Diary today. I'm sitting in for Doug Kass, and we've already covered quite a bit of ground over there. And I think you're going to find some of it rather helpful.

I would also encourage you to participate in the comment section below. Drop in, say hi, or even just ask a question. It's a great community over there. And I would really encourage you to participate. But with that, let's turn to today's video.

And as I'm sure you've seen by now, the market looks to end the week on a very strong note. And that is helping push the portfolio even higher. We do have some fresh items to discuss when it comes to the portfolio. First and foremost, we are seeing some price target adjustments for Bank of America and Morgan Stanley, from a variety of Wall Street firms.

Remember yesterday, we increased our price target on Morgan Stanley shares to 145 from 140. But we did keep our Bank of America price target steady at 53, at least for now. Our thinking on these price targets, are that as robust investment banking pipeline translates into announced deals, price deals. Whether they're M&A transactions or IPOs, we will look to revisit those price targets. And again, the backdrop for that investment banking pipeline, whether it's comments from JP Morgan, Goldman Sachs, Jefferies, Morgan Stanley, or even Bank of America, the outlook remains rather bright. So we are inclined to continue to be owners of both Morgan Stanley and Bank of America shares as that strength flows through their P&Ls.

Now yesterday, we also talked about an acquisition that was made by Trade Desk. Well, today I want to shift gears a little bit and discuss one that is being made by ServiceNow. ServiceNow is acquiring a company called Cuein, which is expected to help its AI agent offering, as ServiceNow looks to help companies drive productivity with, of course, AI adoption.

Now as ServiceNow expands the roles and use cases for these AI agents, we think that it's going to help spur AI adoption from its clients, the positive for ServiceNow being that greater AI adoption would be a positive catalyst for pricing margins and its bottom line. Now one other thing just about ServiceNow shares, this news kind of comes on the heels of a fresh, overweight waiting at Cantor Fitzgerald. Cantor initiated coverage yesterday with a 1,332 price target on ServiceNow.

As it relates to our price target, we're hanging out at 1,200. We upgraded that earlier this year. But again, as we move through the earnings season and we hear more about AI adoption, we will revisit that ServiceNow price target as needed.

In terms of the economic landscape today, we did get a couple pieces of fresh economic data. Housing starts, industrial production, both were stronger than expected. From my perspective, yesterday we saw the GDP Now forecast by the Atlanta Fed get bumped up to 3.0% from 2.7. We add this data in, and it just tells us that the US economy is continuing to perform.

It's on solid ground. It's robust, whatever you want to call it. But the bottom line is that there's simply no need for the Fed to rush to deliver another rate cut, especially as the effects of the 100 basis points that it delivered last year really have yet to be felt on the economy, just given the lag effect that we tend to see with monetary policy. Now, what does this all mean?

As of now, the market continues to see just one rate cut this year, and that's kind of shaping up to look like around the June policy meeting. But here's the thing. Next week, late in the week, we will get the Flash February PMI data and what it says about inflation, pricing, and new order strength, both for manufacturing and services. That's going to give us some hints as to how likely that June time frame is. So we'll be paying very close attention to that data.

But as we think about next week, a couple of reminders. One, US equity markets are closed on Monday in observation of the Martin Luther King holiday. But that is also Inauguration Day. And it does look like President-elect Trump is going to come out swinging with some reports saying, he could issue as many as 100 executive orders in his first day or first few days in office.

Now whether these executive orders touch on budget cuts, immigration, trade issues, tariffs, energy policy, TikTok, or even crypto, well, we'll have to see as they're issued. And based on what we learn, we will, of course, make adjustments within the portfolio as needed. Now before we close out today's video, just a couple other reminders.

Later today you will get the latest Weekly Roundup. I'm sure you'll want to take a look at that. Please do. Tomorrow is Saturday. We have our usual signals alert. These ripped from the headlines points of confirmation for the strategies that we employ at the portfolio.

And then Sunday, we have our, what we call, lighter alert, if you will, The Soup, where we share just some other things that caught our eyes and ears this week, whether they're articles, podcasts, or even a new book. So by all means, please check all of those things out. And remember too, if you haven't voted in our poll of the week, please do. We'll be sharing those results with you on Tuesday. And Tuesday is when we will see you back here.

So again, a lot of stuff going on. Remember just generally speaking, check your emails, your alerts. We want to make sure you're getting all our latest thoughts. And if we make any moves with the portfolio, we, of course, want you right there with us. Thanks for watching today's video. Have a great long weekend.

At the time of publication, TheStreet Pro Portfolio was long MS, BAC and NOW.