Constellation Brands upgraded, Block downgraded: Wall Street's top analyst calls
The most talked about and market moving research calls around Wall Street are now in one place. Here are today's research calls that investors need to know, as compiled by The Fly.
Top 5 Upgrades:
TD Cowen upgraded Constellation Brands (STZ) to Outperform from Market Perform with a price target of $300, up from $240. While the company had to take on debt to buyout the Sands family, that move has "meaningfully de-risked the capital allocation story," the firm argues.
Morgan Stanley upgraded First Solar (FSLR) to Equal Weight from Underweight with a price target of $206, up from $180. The firm continues to see long-term risk to First Solar's margin profile, but acknowledges that the company's "substantial" 77.8 GW backlog de-risks its earnings profile through 2026.
Argus upgraded Chewy (CHWY) to Buy from Hold with a $30 price target. The stock has underperformed over the past quarter, falling 29% vs. a gain of 3% for the Russell 2000 index, but the company's recent Q2 results topped consensus estimates and its internal metrics suggest better results in the coming quarters, the firm notes.
Needham upgraded ResMed (RMD) to Buy from Hold with an $180 price target, noting that shares are down 31% since the start of August. Concerns about the potential for GLP-1 obesity drugs to reduce demand for ResMed's sleep therapy devices and added pressure coming from Philips' (PHG) possible re-entry into the flow generator market are now priced in given the pullback, the firm says.
KeyBanc upgraded Celanese (CE) to Overweight from Sector Weight with a $149 price target. The firm expects Celanese's earnings per share to reach a "trough level" of $8.46 in 2023, with "meaningful recovery" to the normalized earnings per share potential of $16-$19 ahead within the next few years.
Top 5 Downgrades:
UBS downgraded Block (SQ) to Neutral from Buy with a price target of $65, down from $102. The company's gross profit growth will likely slow given softening of consumer discretionary spending, a slowdown in Cash App monthly active user growth and moderation of Cash App monetization in the second half of 2023 and 2024, the firm says.
Goldman Sachs downgraded Olin (OLN) to Neutral from Buy with a price target of $57, down from $67. The firm has concerns around the company's pricing and margin strategy following industry comments about more aggressive pricing to gain volume coupled with weaker macro conditions in chloralkali.
Citi downgraded Kinetik Holdings (KNTK) to Neutral from Buy with an unchanged price target of $34. The stock's risk/reward trade-off is now more balanced following the outperformance versus the broader midstream sector since May earnings, the firm says.
Morgan Stanley downgraded Stem (STEM) to Equal Weight from Overweight with a price target of $8, down from $12. Stem remains Morgan Stanley's preferred energy storage name given its software-heavy focus, but based on the company's year-to-date earnings, the firm sees risk to its ability to achieve its 65%-85% service and software revenue growth and EBITDA-positive target in the second half of 2023.
Citi downgraded Plains All American (PAA) to Neutral from Buy with a price target of $15.50, up from $14. The stock still offers a "compelling" free cash flow yield, but a lack of obvious catalysts could limit further upside from here, the firm says. Citi also downgraded Plains GP Holdings (PAGP) to Neutral from Buy with a price target of $15.50, up from $14.
Top 5 Initiations:
William Blair initiated coverage of Trade Desk (TTD) with an Outperform rating and no price target. Eventually, most or all of the $840B global advertising market will be digital, up from roughly 69% today, creating a "substantial" opportunity for Trade Desk, the firm argues.
Morgan Stanley initiated coverage of Penumbra (PEN) with an Equal Weight rating and $265 price target. The firm thinks near-term Street estimates "look sensible" and cites valuation for its Equal Weight rating.
Citi resumed coverage of Thermo Fisher (TMO) with a Buy rating and $625 price target following a period of restriction. The firm believes Thermo has one of the highest quality management teams in the space, with the ability to navigate the current uncertainty.
Baird initiated coverage of Lucid Group (LCID) with a Neutral rating and $7 price target. The firm argues that high starting prices and a niche market segment create a challenging near-term setup for the shares.
Raymond James initiated coverage of FICO (FICO) with an Outperform rating and $1,007 price target. Although the shares have performed well over the past year, further upside remains as investors fully appreciate the pricing power, resilience, and competitive position of the company's FICO Score business, the firm tells investors in a research note.
