What has Wall Street been buzzing about this week? Here are the top 5 Buy calls and the top 5 Sell calls made by Wall Street’s best analysts during the week of March 13-March 17.
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Top 5 Buy Calls:
Wells Fargo upgrades JPMorgan on “Goliath is Winning” theme
Wells Fargo upgraded JPMorgan (JPM) to Overweight from Equal Weight with a price target of $155, up from $148. The firm says JPMorgan epitomizes the firm’s banking theme of "Goliath is Winning." The bank should benefit from both market share gains and its more diversified business "in these less certain times," Wells tells investors in a research note. JPMorgan is "battle-tested through downturns," aided by its "fortress balance sheet," the firm adds. Wells now forecasts the bank’s revenues will grow faster than expenses, even with its ongoing elevated investment spend.
Mizuho upgrades Block to Buy on "pivot to profitability"
Mizuho upgraded Block (SQ) to Buy from Neutral with a price target of $93, up from $80. The firm applauds management’s recent commitment to cost containment and notes that its analysis shows up to 30% potential upside to Block’s 2023 EBITDA guidance. In addition, Block "remains uniquely positioned" to achieve the ‘holy grail’ of creating a one-stop-shop network by connecting the point-of-sale, Cash App and buy now pay later ecosystems, Mizuho tells investors in a research note. The firm believes the company’s "pivot to profitability" warrants an upgrade to Buy.
Qualcomm upgraded at Susquehanna with China opening, Apple “de-risked”
Susquehanna upgraded Qualcomm (QCOM) to Positive from Neutral with a price target of $140, up from $130. In April 2021, the firm called for the top of the semiconductor cycle, but now it is calling for the bottom in this cycle, at least for consumer, PC and handset-related names. Asian checks suggest Chinese handset sell-through was better for both January and February, which the firm calls "the first positive surprises in our data for over a year." The firm also believes Qualcomm’s push into the midrange "comes at a fortuitous time given China’s reopening" and it sees the Apple (AAPL) business as "now de-risked."
Foot Locker upgraded to Outperform from Market Perform at Telsey Advisory
Telsey Advisory upgraded Foot Locker (FL) to Outperform from Market Perform with a price target of $50, up from $39. The firm believes Monday’s investor day could serve as a catalyst for the stock, with new CEO Mary Dillon outlining a transformation plan and financial objectives. Dillon has made changes to the leadership team and simplified the business by exiting international operations, while focusing on the core Foot Locker and Champs banners, Telsey tells investors in a research note.
FedEx upgraded to Buy at Stifel on “deeply-discounted” valuation
Stifel upgraded FedEx (FDX) to Buy from Hold with a price target of $222, up from $171. The firm states that while there are material risks to the environment macro this year, the emerging consensus around an inventory bottom and pull forward with early signs of execution on two significant tranches of cost savings initiatives present a compelling investment opportunity at the stock’s current "deeply-discounted" valuation. Stifel adds that Q3 should be the softest quarter of the year and sees market and execution risk, but FedEx’s cost savings pull-forward should help to ameliorate these headwinds.
Top 5 Sell Calls:
Nike initiated with a Sell, $100 fair value estimate at Redburn
Redburn initiated coverage of Nike (NKE) with a Sell rating and $100 fair value estimate. The firm’s currency-neutral sales growth expectation of 8% annually through 2027 is 50 basis points below consensus and hinges on a "sharp inflection" in Greater China given the likely slower growth in North America and smaller incremental contribution from the company’s direct-to-consumer shift.
Redburn bearish on Lululemon, initiates with a Sell
Redburn initiated coverage of Lululemon (LULU) with a Sell rating and $257 fair value estimate. The company’s international growth and category expansion "bring extra complexity, cost and capital," Redburn tells investors in a research note. The firm believes Lululemon’s next stage will challenge its ability to maintain the current luxury goods-type margins and consequently the degree of premium valuation.
Esperion downgraded to Underperform at Northland amid milestone uncertainty
Northland downgraded Esperion (ESPR) to Underperform from Market Perform with a price target of $1, down from $5. There is uncertainty around the company’s receipt of $300M in milestone payments from partner Daiichi Sankyo Group since the latter disagrees with Esperion’s assessment that the CLEAR Outcomes data supports payment of any milestones upon inclusion of certain required CVRR data in the EU label, the firm noted. Northland cites what it sees as "limited market potential" and the possibility of "significant dilution" in its downgrade.
Texas Capital initiated with a Sell, $51 price target at UBS
UBS initiated coverage of Texas Capital (TCBI) with a Sell rating and $51 price target. Consensus earnings forecasts and the current valuation "look stretched," said the firm, which notes that its own 2023 and 2024 earnings estimates are 4% and 11% below consensus, respectively. UBS expects Texas Capital to continue leaning into higher cost Bask for deposit gathering and it expects higher credit costs than consensus given a recessionary outlook and the bank’s "commercial orientation."
Cadence Bank initiated with a Sell at UBS on greater deposit mix shift
UBS initiated coverage of Cadence Bank (CADE) with a Sell rating and $21 price target. The firm cites a greater deposit mix shift, which should pressure net interest income relative to consensus expectations in 2023, along with higher-than-expected credit costs. The stock trades at about 7.5- to 8.5-times the bank’s expected earnings, which is " slightly elevated" given the current environment, the firm tells investors in a research note.
Published first on TheFly
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