GE upgraded, Northrop Grumman 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:

• Wells Fargo upgraded General Electric (GE) to Overweight from Equal Weight with a price target of $144, up from $115, following a transfer of coverage. GE combines an “attractive business with high aftermarket mix,” as well as solid management team and clean balance sheet, the analyst says.
• Bernstein upgraded Illumina (ILMN) to Market Perform from Underperform. Since the firm’s initiation, Illumina has pulled prior margin guidance and consensus revenue estimates have dropped the analyst tells investors in a research note.
• Morgan Stanley upgraded Omnicom (OMC) to Overweight from Equal Weight with a price target of $100, up from $90. The analyst sees advertising spending growth accelerating in 2024 as retail and commerce media builds, connected TV sees new entrants, technology vertical spending rebounds, and and cyclical factors like politics and Olympics contribute.
• Deutsche Bank upgraded L3Harris Technologies (LHX) to Buy from Hold with a price target of $240, up from $184, which reflects 16% upside potential. The analyst sees “three bifurcations” in L3Harris’ relative equity story.
• BofA upgraded AMD (AMD) to Buy from Neutral with a price target of $165, up from $135. The firm, which expects some intra-sector rotation after a 60% year-to-date run in the SOX, also expects continued secular growth tailwinds in Generative AI, chip complexity, auto content, fab reshoring, and CHIPS Act benefits.

Top 5 Downgrades:

• Deutsche Bank downgraded Northrop Grumman (NOC) to Hold from Buy with a price target of $473, down from $541. The firm says its previous investment thesis is “increasingly untenable” in the face of incremental cost challenges on the Sentinel program.
• JPMorgan downgraded BlackRock (BLK) to Neutral from Overweight with an unchanged price target of $708. The shares have outperformed meaningfully in Q4 as expectations build for BlackRock to be the leading beneficiary of a transition to fixed income products and exchange traded funds from other asset classes, the analyst tells investors in a research note.
• BofA downgraded Kimberly-Clark (KMB) to Underperform from Neutral with a price target of $115, down from $135. The company has seen margin expansion through 2023 due to benefits from pricing, cost savings and improved input costs, but looking out to 2024 the firm sees the gross margin landscape as “less certain” as pricing benefits wane and higher oil prices possibly impact raw material inputs, the analyst tells investors.
• MoffettNathanson downgraded Roku (ROKU) to Sell from Neutral. The firm had taken its prior Sell call off the stock heading into Roku’s Q3 earnings on a belief that the company was getting more focused on efficiency and margin expansion, but “at over $100 per share now, Roku’s share price has nearly doubled since then.”
• BofA downgraded Axcelis (ACLS) to Neutral from Buy with a price target of $150, down from $180. The firm, which expects some intra-sector rotation after a 60% year-to-date run in the SOX, also expects continued secular growth tailwinds in Generative AI, chip complexity, auto content, fab reshoring, and CHIPS Act benefits.

Top 5 Initiations:

• Jefferies initiated coverage of First Solar (FSLR) with a Buy rating and $211 price target. In times of economic uncertainty, alternative energy companies with exposure to utility-scale, strong backlog and balance sheets have better risk/rewards, the analyst tells investors in a research note.
• UBS initiated coverage of Box (BOX) with a Buy rating and $33 price target. While the firm doesn’t expect new offerings or plans to launch until late calendar year 2024, it is optimistic Box can deliver margin expansion ahead of expectations in the near-term.
• Susquehanna initiated coverage of Palo Alto Networks (PANW) with a Positive rating and $400 price target. Within the broader software universe, the firm is “bullish” on the cybersecurity software space as it see cyber budgets and use cases continuing to grow given “an ever-evolving threat landscape, internal and external innovation, and requirements from both regulators and insurers,” the analyst tells investors.
• B. Riley last night initiated coverage of Genesco (GCO) with a Buy rating and $43 price target. The analyst views Genesco as a “deep-value stock story with a combination of strategic positioning attributes, multiple self-help profit growth drivers, and one of the more experienced and talented senior management/board of director teams.”
• Wells Fargo initiated coverage of TE Connectivity (TEL) with an Equal Weight rating and $144 price target. The firm is cautious on margin upside given challenges in various end-markets, the analyst tells investors in a research note.