Roku downgraded, Seagate 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 5 Upgrades:

• Argus upgraded Domino’s Pizza (DPZ) to Buy from Hold with a $530 price target. The firm is positive on the company’s economies of scale, early entry into the pizza delivery business and prospects for growth in international and domestic markets.
• Piper Sandler upgraded Unity (U) to Neutral from Underweight with a price target of $30, down from $35. The firm says the 19% after-hours selloff creates a more balanced risk/reward profile.
• BofA double upgraded Sprouts Farmers Market (SFM) to Buy from Underperform with a price target of $70, up from $30, citing a raised 2025 EPS estimate and a higher multiple to reflect Sprouts’ shift to a higher store growth rate and higher sustained gross margin outlook.
• Wells Fargo upgraded Kroger (KR) to Equal Weight from Underweight with a price target of $50, up from $42. The firm says the stock’s risk/reward is more balanced with industry headwinds “near a bottom” and the Albertsons (ACI) merger “coming to a head.”
• Baird upgraded Itron (ITRI) to Outperform from Neutral with a price target of $108, up from $68, after the company reported Q4 and 2023 results that beat estimates across the board as improving component availability and a favorable product mix drove higher margins. Canaccord also upgraded Itron to Buy from Hold with a price target of $105, up from $68, following the Q4 report.

Top 5 Downgrades:

• Wells Fargo downgraded Roku (ROKU) to Underweight from Equal Weight with a price target of $51, down from $77. The firm thinks Walmart’s (WMT) acquisition of Vizio (VZIO) creates “substantial risk” for Roku.
• New Street downgraded Arm (ARM) to Neutral from Buy with a $110 one-year price target, which represents 26% downside versus the stock’s current price of $146. The firm expects EBIT of $3.8B in FY28, which it notes is 5% above consensus expectations, but “even with a generous 40x multiple on our above-consensus expectations,” New Street doesn’t see a rationale to buy Arm above $110.
• JPMorgan downgraded Domino’s Pizza (DPZ) to Neutral from Overweight with a price target of $430, up from $420. The shares have returned 59% since June 1 and now is the right price to take profits, the firm argues.
• Janney Montgomery Scott downgraded Sunrun (RUN) to Neutral from Buy with a fair value estimate of $13, down from $20. While the firm remains bullish on margins moving higher, it is “less confident in demand.”
• Janney Montgomery Scott downgraded Sunnova Energy (NOVA) to Neutral from Buy with a $12 fair value estimate. The firm’s 2024 and 2025 estimates are both below current Street estimates and company guidance as it sees a “difficult and uncertain demand environment,” especially beyond the second half of 2024.

Top 5 Initiations:

• Evercore ISI initiated coverage of Seagate (STX) with an Outperform rating and $110 price target. The firm thinks not just the Hard Disk Drive industry, but Seagate specifically, is positioned to benefit from a combination of a cyclical recovery with Hyperscalers and beyond, a more disciplined HDD marketplace, margin expansion as Heat Assisted Magnetic Recording, or HAMR, technology scales up and capital allocation that will skew to buybacks going forward.
• Edward Jones initiated coverage of Goldman Sachs (GS) with a Buy rating. The firm also added the shares to its U.S. Stock Focus List and U.S. Equity Income Buy List. With a premier investment banking franchise, Goldman is well positioned to benefit from a more favorable environment for capital markets activity, the firm says.
• Seaport Research initiated coverage of Duolingo (DUOL) with a Buy rating and $222 price target. The firm has a positive fundamental view, calling Duolingo the “clear leader in a large language learning market increasingly shifting online” and believes the company can drive 20%-plus long-term revenue growth.
• Benchmark initiated coverage of MicroStrategy (MSTR) with a Buy rating and $990 price target. The firm’s sum-of-the-parts analysis combines its estimate of the year-end 2025 value of the company’s bitcoin holdings and its estimate of the year-end 2025 value of its business intelligence software business, the firm tells investors.
• Deutsche Bank resumed coverage of FIS (FIS) with a Hold rating and $70 price target. While the spinoff of Worldpay was likely a necessary step to take in light of the deteriorating organic profile of the business and growth constraints of the combined company, Deutsche continues to see a number of headwinds across the business, including Worldpay dis-synergies, continued reliance on non-recurring/professional services revenues, and exposure to lower growth end markets.