Analysts are intrested in these 5 stocks: ( (VEEV) ), ( (LUV) ), ( (NBIS) ), ( (AVAV) ) and ( (KTOS) ). Here is a breakdown of their recent ratings and the rationale behind them.
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Forget margin or options. Here's how the pros trade NBISVeeva Systems has suddenly swung back into favor with Morgan Stanley’s Craig Hettenbach, who upgraded the stock to Equal-weight after a long period at Underweight. The analyst argues that fears over Salesforce competition and AI disruption have pushed sentiment from overenthusiasm to extreme pessimism, leaving VEEV trading near a 10-year low on EV/FCF despite a strong balance sheet and a $2 billion buyback.
Hettenbach trimmed his price target from $222 to $205 as software valuations compressed, but still sees support from Veeva’s $6.6 billion cash pile, zero debt, and roughly $1.4 billion in annual free cash flow. With Q4 FY26 earnings due March 4 and expectations for a modest beat and in-line FY27 guidance, the key watchpoint is whether rapid AI developments slow sales cycles even as Veeva’s own AI traction becomes a potential upside swing factor.
Southwest Airlines is stirring debate on Wall Street after UBS analyst Atul Maheswari upgraded LUV to Buy with a $73 target, a call that has drawn more skepticism than agreement. Bears question whether 2026 free cash flow will really materialize, arguing that faster revenue recognition from loyalty accounting changes is largely non-cash and could drag on working capital even as revenues and margins rise.
Critics also challenge Maheswari’s 12x earnings multiple, contending that Southwest now resembles legacy carriers and should trade closer to 10x, while also warning that customer pushback on policy changes could depress load factors. Supporters of the upgrade counter that Southwest should still generate solidly positive FCF in 2026, helped by richer economics from its Chase co-branded card, meaning not all loyalty-driven growth is accounting smoke and mirrors.
Nebius Group, trading under the NBIS ticker, is emerging as a fresh AI infrastructure story as analyst Michael Donovan initiated coverage with a Buy rating and a $150 target, implying sizable upside from recent levels. Born out of the former Yandex N.V. structure but now fully divested from its Russia operations, Nebius has repositioned itself as a Netherlands-based, full-stack AI cloud player with a “builder DNA” focused on GPU compute and software.
Donovan’s bullish thesis leans heavily on Nebius’ ability to convert scarce, energized data center capacity into durable, contracted revenue as it deploys tightly integrated hardware and proprietary cloud software. With hyperscaler agreements with Microsoft and Meta underpinning demand, and a dual offering of the Aether AI Cloud for training and Token Factory for inference, the story is about execution and high utilization rather than just owning racks of GPUs.
AeroVironment is getting a more cautious reception as Gavin Parsons at UBS initiated coverage with a Neutral rating and a $259 12‑month price target, despite a booming unmanned systems market. Parsons sees a rich opportunity, projecting a 15% revenue CAGR and record 18.5% EBITDA margins by 2030, helped by the BlueHalo acquisition and a U.S. spending surge through FY26.
Yet he notes that investor expectations already look stretched, with consensus price targets around $387 implying far higher EBITDA than his models and a hefty valuation premium to defense primes. His work highlights a crowded competitive field, fixed-price contracts in a cost-conscious Pentagon environment, and a more conservative ramp on growth and margins than the uniformly bullish Street, leaving AVAV in the middle of a very wide trading range.
Kratos Defense faces a similar valuation conundrum, as UBS’s Gavin Parsons also initiated KTOS at Neutral with a $79 target, even while acknowledging a large long-term opportunity in unmanned systems and advanced defense technologies. His model supports revenue doubling and EBITDA tripling by 2030, with margins rising to a record 12%, yet he argues the stock already discounts even more aggressive outcomes.
Kratos now trades at about 86x next-12-month EV/EBITDA, roughly five times its historical multiple and at a premium even to high-profile names like Palantir, implying the market is betting on EBITDA rising six to nine times by 2030. Parsons agrees a premium is warranted given a projected 25% five-year EBITDA CAGR and meaningful upside in hypersonics, space, and rocket motors, but warns that heavy capex and working capital needs, plus strengthening growth at cheaper defense primes, make the current valuation hard to justify.