IBM upgraded, Hertz 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:

• Evercore ISI upgraded IBM (IBM) to Outperform from In Line with a price target of $200, up from $165. The firm thinks that as Enterprises look to deploy AI tools to enhance productivity the process will be “complicated and messy,” arguing that IBM, with their unique set of consulting and software assets, can help solve this bottleneck.
• Stifel upgraded DraftKings (DKNG) to Buy from Hold with a price target of $45, up from $40. The stock’s recent correction affords an attractive entry point, with the company’s market share headwinds easing, the analyst tells investors in a research note.
• Seaport Research upgraded Roku (ROKU) to Neutral from Sell with no price target. The firm’s downgrade last month was more of a valuation call, but this upgrade is due to incremental data points that suggest there could be upside to estimates, says the analyst.
• Oppenheimer upgraded AT&T (T) to Outperform from Perform with a $21 price target. The shares have underperformed the market and peers the past few years, but believes headwinds “have moved to the rearview” while AT&T should now benefit from a number of tailwinds, including “massive improvements” to network capacity, improved broadband subscriber and revenue trends, and the potential to merge DirecTV with EchoStar’s (SATS) Dish, the firm says.
• BMO Capital upgraded Crown Castle (CCI) to Market Perform from Underperform with a price target of $110, up from $107. Following pressure from Elliott Management, Crown Castle has quickly moved to reassess its fiber strategy which has been a key driver of its long-term underperformance versus peers, the analyst tells investors in a research note.

Top 5 Downgrades:

• Jefferies downgraded Hertz (HTZ) to Hold from Buy with a price target of $8, down from $12. The analyst says electric vehicle repair issues, higher operating expenditures and depreciation per unit will limit the company’s near-term profitability.
• HSBC downgraded Discover Financial Services (DFS) to Hold from Buy with a price target of $107, down from $121. The analyst cites a softening earnings outlook post the Q4 results for the downgrade.
• Citi downgraded Universal Display (OLED) to Neutral from Buy with a price target of $180, up from $161. The analyst cites valuation for the downgrade.
• BofA downgraded Celsius Holdings (CELH) to Neutral from Buy with an unchanged price target of $65. Celsius’ market share is “unexpectedly declining” and still down versus the August peak, notes the analyst, who says uncertainty around sales growth now weighs on “what had been a more favorable risk/reward profile” when the company had been benefiting from the momentum of the Pepsi (PEP) distribution deal.
• Truist downgraded LCI Industries (LCII) to Hold from Buy with a price target of $110, down from $140. The analyst continues to expect material earnings recovery over the next 12-24 months but now sees increasing risk to consensus expectations in 2024 and 2025 given mounting towable recreational vehicle content and market share headwinds.

Top 5 Initiations:

• Goldman Sachs reinstated coverage of Broadcom (AVGO) with a Buy rating and $1,325 price target, which represents 16% potential upside. The analyst expects “strong double-digit revenue growth” in the company’s artificial intelligence-related businesses, a cyclical recovery in Broadcom’s classic semiconductor business, and synergy capture following the acquisition of VMware to drive operating margin expansion and earnings growth well in excess of the industry average.
• Oppenheimer initiated coverage of Builders FirstSource (BLDR) with an Outperform rating and $220 price target, calling it the firm’s Top Pick in the Building Products space. The company has “a market-leading position in a fragmented industry” and should benefit from single-family housing starts in 2024, on which the firm has an “optimistic view,” the analyst tells investors.
• Jefferies initiated coverage of Inspire Medical (INSP) with a Buy rating and $245 price target. The company holds the dominant share in the fast growth, $10B U.S. hypoglossal nerve stim market for obstructive sleep apnea, which is only 5% penetrated, the analyst tells investors in a research note.
• Deutsche Bank initiated coverage of Motorola Solutions (MSI) with a Buy rating and $350 price target. The analyst says the company’s “unique exposure” to both public and enterprise safety spending is a “key differentiator.”
• BTIG initiated coverage of AppFolio (APPF) with a Buy rating and $215 price target as the analyst launched coverage on four companies in the PropTech sector. As an innovator in the “high-barrier-to-entry” Property Management Software market, AppFolio successfully gained market share and drove 30%-plus top-line growth in FY23, the analyst tells investors.