Wendy’s downgraded, Yum Brands upgraded: 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:
Barclays upgraded Yum! Brands (YUM) to Overweight from Equal Weight with a price target of $146, up from $126. The firm believes the quick-service segment will benefit from trade-down to value and franchised as it insulates against volatility, generating a high margin annuity stream of royalty income without having to actually operate any restaurants.
KeyBanc upgraded Verizon Communications (VZ) to Overweight from Sector Weight with a $45 price target. Verizon should show better postpaid phone net add performance this year and its broadband subscriber growth is far outpacing AT&T's (T), the firm tells investors in a research note.
Wolfe Research upgraded Citi (C) to Outperform from Peer Perform with a $58 price target. Citi shares have lagged since Wolfe's downgrade, and given a number of emerging tailwinds from a regulatory roll-back and meaningful cost savings from headcount actions, the stock's risk/reward is more compelling, the firm tells investors in a research note.
Piper Sandler upgraded Discover Financial (DFS) to Overweight from Neutral with a price target of $129, up from $104. The firm believes the company's default rates on credit cards will show improvement off easier compares and sees a potential re-start of stock repurchases in mid-2024.
UBS upgraded Rockwell Automation (ROK) to Buy from Neutral with a price target of $360, up from $305. The stock has de-rated to a five-year low into the early innings of U.S. reshoring momentum, a multi-decade opportunity that should accelerate Rockwell's long-term growth algorithm, the firm argues.
Top 5 Downgrades:
Barclays downgraded Wendy's (WEN) to Equal Weight from Overweight with a price target of $21, down from $23. Wendy's unit growth acceleration is expected to come from international, which remains a challenge at a brand with limited global recognition, especially in the near-term, where a more difficult operating, building cost and interest rate environment could prove an incremental headwind for franchisees, the firm tells investors in a research note.
Morgan Stanley downgraded Keurig Dr Pepper (KDP) to Equal Weight from Overweight with an unchanged price target of $37. The company's earnings visibility is now priced into the shares, the firm says.
Mizuho analysts downgraded eight names in oil and gas sector - Exxon Mobil (XOM), Occidental Petroleum (OXY), Antero Resources (AR), Gulfport Energy (GPOR), Callon Petroleum (CPE) and Crescent Energy (CRGY) to Neutral from Buy and Southwestern Energy (SWN) and Comstock Resources (CRK) to Underperform from Neutral - and upgraded three names - Civitas Resources (CIVI) and PBF Energy (PBF) to Buy from Neutral and CNX Resources (CNX) to Neutral from Underperform. The firm enters 2024 with a preference for more defensive stock selection in oil and gas.
Needham downgraded Masimo (MASI) to Hold from Buy without a price target. Apple Watch (AAPL) royalties are far from certain, though they may be significant, and are mostly priced into Masimo shares, the firm says.
Baird downgraded Sherwin-Williams (SHW) to Neutral from Outperform with a price target of $300, up from $270. The firm says its investment thesis specific to price-cost driven margin expansion has largely played out and is priced into the shares.
Top 5 Initiations:
Lake Street initiated coverage of Silk Road Medical (SILK) with a Buy rating and $20 price target. The firm believes "the reimbursement noise is overdone," sees a long runway for share taking opportunity, and has confidence in new CEO Chas McKhann's ability to execute a growth strategy.
Barclays initiated coverage of 26 names in the healthcare technology and distribution sector with a Neutral industry view. Following a period of outsized correlation across the group, 2024 will likely feature increased dispersion, says the firm, which takes a selective stance in its stock picking as a result. Barclays' Overweight rated named are Cardinal Health (CAH), Cencora (COR), Evolent Health (EVH), GoodRx (GDRX), Health Catalyst (HCAT), HealthEquity (HQY), HealthStream (HSTM), McKesson (MCK), Progyny (PGNY), Phreesia (PHR), R1 RCM (RCM) and Teladoc (TDOC), Veeva (VEEV). The firm's Underweight-rated names are LifeStance (LFST), Omnicell (OMCL), Walgreens Boots Alliance (WBA) and WW (WW).
Needham initiated coverage of Utz Brands (UTZ) with a Buy rating and $20 price target. The firm has also named the stock to its Conviction List for 2024, removing BellRing Brands (BRBR). Utz has the right playbook and a new management team in place to transition from a family-run regional company to a national competitor in the salty snack category, and the company's sales growth rate could outpace the category for years, the firm says.
Goldman Sachs initiated coverage of Nio (NIO) with a Neutral rating and $8.40 price target. Nio is one of the first pure EV start-ups in China with a focus on the premium BEV segment, but it has been losing market share in China and the firm has concerns over soft growth momentum due to relatively fewer new product launches compared to peers and cost control and cash flow management, the firm tells investors.
Goldman Sachs initiated coverage of Li Auto (LI) with a Buy rating and $52.90 price target. Li is a "leading" pure NEV player with 5% NEV market share in China and the firm expects the competitive positioning of BEV models and deepening sales network to drive another leg of growth for Li Auto.
