PayPal downgraded, Block initiated: 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 Upgrades:
Societe Generale upgraded Philip Morris (PM) to Hold from Sell with an $87.50 price target. The company's organic sales growth remains strong and underlying margins are expected to improve in fiscal 2024, the firm says.
Evercore ISI upgraded Equifax (EFX) to Outperform from In Line with a price target of $310, up from $210. The firm sees headwinds abating this year, underscored by a trough and potential rebound in mortgage inquiries as interest rates likely decline and the employment picture remains stable.
OTR Global upgraded its view of Okta (OKTA) to Mixed from Negative. The firm cited checks that found partners mostly met their sales expectations during Q4 for the upgrade.
Piper Sandler upgraded Trimble (TRMB) to Overweight from Neutral with a price target of $68, up from $51, following the Q4 report. The firm sees upcoming catalysts in the re-segmentation disclosure, $1.1B of debt paydown, up to $800M of share repurchases in 2024, and a second half of 2024 analyst day with updated targets.
Top Downgrades:
Daiwa downgraded PayPal (PYPL) to Neutral from Outperform with a price target of $62, down from $64. The firm says it is difficult to envision medium- and long-term earnings growth until it sees a return to a clear growth trajectory for transaction margin dollars and benefits from ramped-up investments emerge.
Redburn Atlantic downgraded United Airlines (UAL) to Neutral from Buy with a $50 price target. Demand for air travel shows little signs of slowing, but following very robust pricing last summer, maintaining pricing growth throughout 2024 will become a challenge, the firm tells investors in a research note.
Rosenblatt downgraded Cadence Design (CDNS) to Neutral from Buy with a price target of $280, up from $265, post the Q4 report. The firm expects the stock to react negatively in the near term to the lower Q1 outlook and the weaker expected contribution from China in 2024.
B. Riley downgraded Children's Place (PLCE) to Sell from Neutral with a price target of $4, down from $19. The firm sees the probability that Children's Place's share price reaches $4 or less in the next 12 months as high and does not believe the upside potential is either high or likely enough to compensate for what would be a highly speculative investment thesis.
UBS downgraded Terex (TEX) to Neutral from Buy with a price target of $62, up from $61. The company's primary exposure is the U.S. non-residential construction market, which has downshifted to a phase of slow growth, the firm tells investors in a research note.
Top Initiations:
Benchmark initiated coverage of Block (SQ) with a Buy rating and $89 price target. The company's improving outlook for profitability reflects significant operating leverage, while its effort to control expenses should enable Block to achieve its goal of a mid-20s adjusted operating margin by 2026, the firm tells investors in a research note.
Benchmark initiated coverage of Shift4 Payments (FOUR) with a Buy rating and $95 price target. A wide gap exists between the company's strong growth prospects and the stock's discount valuation, the firm tells investors in a research note.
Scotiabank initiated coverage of Public Storage (PSA) with a Sector Perform rating and $267 price target. The firm, which also started Extra Space Storage (EXR) with a Sector Underperform rating, thinks both stocks will face relative valuation pressure based on its "more negative" 2024-2025 funds from operations per share growth outlook for Storage REITs than for U.S. REITs overall.
Morgan Stanley initiated coverage of Dynatrace (DT) with an Equal Weight rating and $60 price target. The firm believes the company's growth reacceleration out of the downturn will take some time.
JMP Securities initiated coverage of Travel + Leisure (TNL) with an Outperform rating and $50 price target. The firm initiated coverage on the timeshare industry with a positive outlook as strong demographic trends and consolidation across the vacation ownership industry has resulted in an environment where the top operators should be able to realize outsized value over the next decade. JMP also started Hilton Grand Vacations (HGV) and Marriott Vacations (VAC) with Outperform ratings.
