Estee Lauder upgraded, Petco 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:

• Citi upgraded Estee Lauder (EL) to Buy from Neutral with a price target of $175, up from $160. The firm believes the company is nearing a sales inflection point as channel inventories in Asia Pacific travel retail are normalizing and Estee Lauder is closer to balanced sell-in/sell-through.
• Argus upgraded McCormick (MKC) to Buy from Hold with an $88 price target. The firm says the company can reverse the weak volumes in certain regions, while noting that it should also benefit from new products, enhanced packaging, and its ability to narrow the pricing gaps with private-label brands.
• Barclays upgraded Eaton (ETN) to Equal Weight from Underweight with a price target of $300, up from $250. Eaton looks positioned to see among the highest organic sales growth rates in the mutely-industry sector over the next few years, the firm tells investors in a research note.
• Barclays upgraded Moody’s (MCO) to Overweight from Equal Weight with a price target of $450, up from $375. The firm believes Street estimates are underestimating the potential revenue uplift for the credit rating agencies.
• Barclays upgraded Array Technologies (ARRY) to Overweight from Equal Weight with a price target of $18, up from $15. The firm says Array should outperform Nextracker (NXT) in the coming months given its “de-risked” 2024 revenue guidance, early signs that the company could be taking back share, and relative valuation versus peers.

Top 5 Downgrades:

• BofA double downgraded Petco (WOOF) to Underperform from Buy with a price target of $1.50, down from $5. The firm says Petco “has lost much of its competitive bite.”
• BofA downgraded Humana (HUM) to Neutral from Buy with a price target of $342, down from $470. BofA sees the deteriorating rate environment becoming a risk to forward estimates.
• Barclays downgraded Nio (NIO) to Underweight from Equal Weight with a price target of $4, down from $5. The firm says weaker March sales suggest Nio’s troubles in selling its 2024 models, which launched in March, are putting its 2024 consensus estimates at “significant risk.”
• Wedbush downgraded D.R. Horton (DHI) to Underperform from Neutral with a $130 price target. The firm notes 2024 has been the most “normal” year seen for the home building industry since 2019 in terms of normal seasonality, and consequently, believes names in the space could see a normal seasonal stock price decline into the summer especially after the seasonal trade window closes in April/May. Wedbush also downgraded Lennar (LEN), Century Communities (CCS), Meritage Homes (MTH), and LGI Homes (LGIH) to Underperform from Neutral.
• Citi downgraded Clorox (CLX) to Neutral from Buy with a price target of $165, down from $170. The firm believes its call for a quick recovery post the company’s August 2023 cybersecurity incident has largely played out, with Clorox’s pace of shelf space and market share recovery expected to slow in fiscal Q3 and more tied with the spring shelf space resets in Q4.

Top 5 Initiations:

• Barclays initiated coverage of Zebra Technologies (ZBRA) with an Equal Weight rating and $292 price target. The firm says near-term visibility around a recovery in customer spend and automation efforts is unclear.
• Monness Crespi initiated coverage of Marqeta (MQ) with a Buy rating and $7.50 price target. The firm says the company is “ushering in the modern card issuer process era,” while expanding its domain from fintechs in need of narrow point solutions to the “greenfield of embedded finance.”
• RBC Capital initiated coverage of GE Vernova (GEV) with an Outperform rating and $160 price target. RBC sees a path for GE Vernova to generate 10% EBITDA margins by year-end 2026 – a year ahead of guide – and upside to the company’s longer-term growth rate. Meanwhile, JPMorgan started coverage of GE Vernova with a Neutral rating and $141 price target.
• JMP Securities initiated coverage of Grindr (GRND) with an Outperform rating and $14 price target. Grindr is a leading dating app focused on the LGBTQ+ community, and its position should strengthen as it continues to convert its large network of highly engaged users to paying users, the firm tells investors in a research note.
• Goldman Sachs initiated coverage of MoonLake Immunotherapeutics (MLTX) with a Neutral rating and $62 price target. The firm says the lack of catalysts for the rest of the year and MoonLake not prioritizing a partnership prior to Phase 3 data means little upside for the stock in 2024.