AMD upgraded, Cisco 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:

• Melius Research upgraded AMD (AMD) to Buy from Hold with a price target of $188, up from $125. The firm believes Generative AI is poised to deliver its “Halo Effect” on IT spending, starting in 2024, and also thinks that outperformers from 2023 can continue. Melius Research also upgraded Arista Networks (ANET) to Buy from Hold with a price target of $300, up from $210.
• Jefferies upgraded DoorDash (DASH) to Buy from Hold with a price target of $130, up from $90. The firm sees a “long runway” for elevated EBITDA growth supported by an expanding advertising business, improving economics in new verticals, and increased international penetration.
• Melius Research upgraded FedEx (FDX) to Buy from Hold with a price target of $310, up from $278. The firm is turning more constructive on FedEx as the company’s cost reduction plan starts to become more evident.
• Morgan Stanley upgraded American Airlines (AAL) to Overweight from Equal Weight with an unchanged price target of $20. After navigating “several black swan events” and one near-recession in the last four years, U.S. airlines enter 2024 “looking to settle several scores,” the analyst tells investors in a research note.
• JPMorgan upgraded Dell Technologies (DELL) to Overweight from Neutral with a price target of $90, up from $77. The upgrade of Dell is based on the company’s leverage to the artificial intelligence led compute investment cycle.

Top 5 Downgrades:

• Melius Research downgraded Cisco (CSCO) to Hold from Buy with a price target of $55, down from $60. The firm says that Cisco “seems like it is still finding its way in terms of AI customers” and managing the predictability of its own business as customers digest purchases.
• Bernstein downgraded Southwest Airlines (LUV) to Underperform from Market Perform with a $24 price target. The company’s discount airline model is disadvantaged in the new world of airline marketing, and it faces both secular and idiosyncratic cost pressures that will keep earnings power well below pre-pandemic levels near term, the firm argues.
• Mizuho downgraded Okta (OKTA) to Neutral from Buy with an unchanged price target of $85. The firm says the company continues to face increasing competitive pressure from Microsoft (MSFT), its execution has been choppy, and its latest security incident adds to the uncertainty.
• Baird downgraded American Express (AXP) to Underperform from Neutral with an unchanged price target of $190. The firm is curbing its enthusiasm on U.S. banks following the group’s significant outperformance and would “advocate patience and preference for regionals, but only on weakness.” Baird also downgraded Wells Fargo (WFC) and Capital One (COF) to Neutral from Outperform.
• Melius Research downgraded Alaska Air (ALK) to Hold from Buy with an unchanged price target of $43. While strategically the purchase of Hawaiian Holdings (HA) makes sense and the firm suspects that when looking back on the deal “come 2027 the market will like it,” there is a long road to recovery at Hawaiian and the complexity of airline mergers is “a lot to handle in an already challenging environment for the airlines,” Melius argues.

Top 5 Initiations:

• Wells Fargo initiated coverage of Couchbase (BASE) with an Overweight rating and $26 price target. Couchbase is essentially a “poor man’s MongoDB (MDB)” and is a cheaper way to play the AI market, the firm tells investors in a research note.
• Morgan Stanley initiated coverage of Deere (DE) with an Overweight rating and $430 price target, and Caterpillar (CAT) with an Equal Weight and $270 price target. Despite its outlook for a peaking U.S. Non-Residential cycle and uncertain macro backdrop, the firm sees “ample high conviction investment ideas within Machinery.”
• JPMorgan reinstated coverage of AIG (AIG) with a Neutral rating and $73 price target. The firm says concerns about a significant reduction in earnings forecasts following the deconsolidation of CRBG keep it from being more bullish on the stock.
• Truist initiated coverage of Aramark (ARMK) with a Buy rating and $33 price target. The company is approaching an inflection point with potential upside to FY24/FY25 operating income margin consensus driven by operational improvements, G&A leverage and moderating input cost inflation, the firm says.
• Raymond James initiated coverage of KeyCorp (KEY) with a Market Perform rating and no price target. The firm is confident that Key’s net inters margin has bottomed, but believes the shares’ premium multiple relative to peers banks is a relatively bullish case for the stock, limiting the near-term upside potential.