4 big analyst picks: Adidas a Buy at BofA - ‘brand is inflecting’
Here is your Pro Recap of the biggest analyst picks you may have missed since yesterday: Upgrades at Adidas, Redfin, Keurig Dr Pepper, and Hannon Armstrong.
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Adidas upped to Buy at BofA
Bank of America upgraded Adidas (OTC:ADDYY) to Buy from Neutral, with a revised price target of $129.00 (previously $98.30) on its U.S.-traded shares, as reported in real time on InvestingPro.
According to the bank, the Q2 gross margin beat is the clearest indication so far that the Adidas brand is undergoing a positive change:
"The beat was underpinned by higher full price sell-through, with cyclical tailwinds yet to come. This leaves adidas 1.5ppts away from its 50% mid-term guidance, which we think could now be exceeded (BofA estimate 51%)."
These developments further bolster Bank of America's confidence in the ongoing turnaround of Adidas and its potential for medium-term earnings growth.
The bank also pointed out upcoming potential catalysts, including a potential guidance increase in Q3/23, the launch of new products in the second half of 2023, and Capital Markets Day in 2024.
Frankfurt shares were recently up about 2% to 183.14 euros.
Redfin upgraded to Perform after a 41% stock drop
Oppenheimer upgraded Redfin (NASDAQ:RDFN) to Perform from Underperform based on the company’s valuation, with the stock down more than 41% in the last month. However, the firm stated that Redfin's agent-employee model is still in question.
"We believe the shares are fairly valued at their current 26% discount to peers on '24E gross profit,” mentioned Oppenheimer. The firm believes that Redfin positioning agents as full-time employees leaves the company with too many agents in a downturn and not enough to gain market share when the housing market improves.
Two more upgrades
UBS upgraded Keurig Dr Pepper (NASDAQ:KDP) to Buy from Neutral and raised its price target to $42.00 from $37.00.
"With shares trading below historical averages and at a deep discount to US Beverage peers, KDP is currently pricing in a decline in earnings power over the next twelve months. We view this as misplaced."
BofA Securities upgraded Hannon Armstrong (NYSE:HASI) to Buy from Neutral and raised its price target to $27.00 from $24.00 driven by the stronger-than-anticipated impact of the Inflation Reduction Act (IRA) tailwinds.
"HASI’s pipeline of investment opportunities has expanded 25% since February to >$5Bn. With strong conversion rates YTD and originations up 20% YoY, we raise our EPS expectations and now sit at the high-end of FY24 guidance."
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