Alibaba downgraded, Disney 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:

• Needham upgraded Disney (DIS) to Buy from Hold with a $120 price target based on expectations for “strong” 23% 2024 EPS growth, driven by additional cost savings, direct-to-consumer streaming breakeven by Q4 with “double-digit” margins at maturity and 5.5M-6M new subscribers from Charter (CHTR) in fiscal Q2.
• Barclays upgraded Roblox (RBLX) to Equal Weight from Underweight with a price target of $46, up from $26. The firm notes company had a constructive investor day in November and reported “robust” Q4 results on Wednesday. Goldman Sachs also upgraded Roblox to Neutral from Sell with a price target of $48, up from $35, post the Q4 report.
• Morgan Stanley upgraded Discover (DFS) to Overweight from Equal Weight with a price target of $133, up from $105 as a new analyst at the firm assumed primary coverage. Following Q4 reporting, the firm is incrementally more bullish on prospects of a softer credit landing and identifies Ally (ALLY) and Discover as two ways to play that theme.
• TD Cowen upgraded Spirit AeroSystems (SPR) to Outperform from Market Perform with a price target of $35, up from $27. The firm cites the company’s enhanced cash flow prospects for the upgrade.
• Stifel upgraded Idex Corp. (IEX) to Buy from Hold with a price target of $265, up from $215. After a challenging 2023, the firm sees a return to growth in the second half of 2024 with upside to current guidance from market recovery, margin expansion with typically high incremental margins early in the cycle, and a return to double-digit organic earnings growth in 2025.

Top 5 Downgrades:

• Macquarie downgraded Alibaba (BABA) to Neutral from Outperform with a price target of $85.40, down from $88.50, following the company’s Q3 results. Alibaba is balancing defense and expansion, which potentially caps earnings upside for now, the firm says.
• Morgan Stanley downgraded American Express (AXP) to Equal Weight from Overweight with a price target of $222, up from $212 as a new analyst at the firm assumed primary coverage. AmEx shares have outperformed peers since earnings, as management guided 2024 top-line growth above a slowdown investors feared, EPS guidance came in better-than-expected and the company raised its dividend by 17% in a sign of confidence, notes the firm, which now sees good news baked into the price.
• Citi downgraded ZoomInfo (ZI) to Sell from Neutral with a price target of $13, down from $20. The firm says leading indicators for ZoomInfo, including web traffic and competitive inputs, continue to trend weaker.
• Wedbush downgraded GoPro (GPRO) to Neutral from Outperform with a price target of $2, down from $4. The company’s prior sales growth targets appear unlikely in 2024 and possibly beyond, while its margin expansion opportunities are limited, the firm says.
• Morgan Stanley downgraded Hertz (HTZ) to Equal Weight from Overweight with a price target of $10, down from $15. Following Q4 results, follow-up calls with management, channel checks, and further negative EV data points, the firm believes the risks to Hertz’s business outlook are “more in balance with the potential reward.”

Top 5 Initiations:

• Oppenheimer initiated coverage of Cedar Fair (FUN) with an Outperform rating and $49 price target. The firm views Cedar Fair as an “interesting investment opportunity” into the merger with Six Flags (SIX).
• Scotiabank initiated coverage of Bio-Techne (TECH) with an Outperform rating and $80 price target. The firm, which cites the company’s “industry-leading top-line growth and margin profiles,” believes Bio-Techne is one of the best positioned companies to outperform the life science tools market growth.
• B. Riley initiated coverage of Torrid (CURV) with a Buy rating and $7 price target, representing 35% upside potential. The firm believes Torrid is a “largely undiscovered, underappreciated company and stock.”
• Barclays initiated coverage of PNM Resources (PNM) with an Overweight rating and $40 price target. The company is the “premier way” to benefit from Texas growth via small caps, the firm tells investors in a research note.
• Ladenburg initiated coverage of Biodexa Pharmaceuticals (BDRX) with a Buy rating and $8 price target. The “boring” Type 1 Diabetes, or T1D, market has been dominated by commoditized insulin variations for decades, but the recently approved Tzield with an FDA label implying the delay of the onset of Stage 3 T1D “opened the door for multiple therapeutic options,” says the firm, which notes that Biodexa recently in-licensed a Lyn kinase activator named tolimidone that was previously developed by Pfizer (PFE).