Palo Alto downgraded, Dollar Tree upgraded: 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:

• JPMorgan upgraded Dollar Tree (DLTR) to Overweight from Neutral with a price target of $157, up from $122. The firm sees the cumulative combination of the cost-of-living adjustment, gas prices, tax refunds and student loans providing a $70B lift year-over-year to consumer spending in 2024.
• Citi upgraded American Airlines (AAL) to Buy from Neutral with a price target of $20, up from $14. The company’s diversified revenue streams and solid demand for premium cabin offerings appear to provide it with superior positioning in this post-pandemic environment, the firm argues.
• William Blair upgraded AbbVie (ABBV) to Outperform from Market Perform with a $190 fair value estimate. While “much uncertainty remains” about the pace of erosion for both Humira and Imbruvica, Blair sees greater confidence heading into 2024 in the company’s growth outlook over both the near and long term, the firm says.
• BofA upgraded ZoomInfo (ZI) to Buy from Neutral with a price target of $25, up from $20. The firm sees better execution driving revenue growth reacceleration, new AI products driving higher monetization, and says the coming end of the interest rate hiking cycle is bullish for small-to-mid cap software stocks like ZoomInfo.
• Bernstein upgraded Hershey (HSY) to Outperform from Market Perform with a $235 price target. The firm cites improving market share and volume trends for the upgrade, saying Hershey’s innovation is picking up as it laps last year’s Mars candy recall.

Top 5 Downgrades:

• WestPark Capital downgraded Palo Alto Networks (PANW) to Hold from Buy with a $340 price target. The firm believes Palo Alto is now fully valued at current levels based on the current outlook for the company’s sales and earnings in fiscal 2024 and 2025.
• Wells Fargo downgraded Warner Bros. Discovery (WBD) to Equal Weight from Overweight with a price target of $12, down from $16. The firm says lower earnings have been the story since the merger, and the trend limits future multiple expansion.
• Susquehanna downgraded KLA Corp. (KLAC) to Neutral from Positive with a price target of $675, up from $640. The firm increased estimates and the price target to reflect a bottoming in quarterly earnings by the March quarter, followed by a recovery, but says the updated price target “already reflects a steep recovery.”
• TD Cowen downgraded Norfolk Southern (NSC) to Market Perform from Outperform with a price target of $236, up from $233. The company’s Q4 beat was more than offset by a 2024 outlook that came in well below forecast and a three-year margin forecast that was disappointing, the firm tells investors in a research note. Stifel also downgraded Norfolk Southern to Hold from Buy, while Morgan Stanley cut Norfolk’s rating to Underweight from Equal Weight.
• TD Cowen downgraded Albemarle (ALB) to Market Perform from Outperform with a price target of $130, down from $220. With spot lithium pricing down 80% from one year ago, the firm expects further estimate and guidance revisions and as a result, lowered its pricing forecasts as it continues to await customer restocking.

Top 5 Initiations:

• MoffettNathanson initiated coverage of TKO Group (TKO) with a Neutral rating and $95 price target. The firm says Netflix (NFLX)-WWE rights deal is a “significant strategic step forward” by limiting TKO’s exposure to the disruption of linear TV while aligning with the leading global streaming player, but sees the stock is fairly valued.
• Leerink initiated coverage of Immunome (IMNM) with an Outperform rating and $30 price target. The firm’s longer-term thesis rests on the company’s ability to execute on its unique drug discovery platform, management’s proven track record, and the rapidly expanding class of drug conjugates.
• William Blair initiated coverage of AAR Corp. (AIR) with an Outperform rating. AAR is the largest independent distributor of aircraft parts and the leading provider of recycled plane components in the $110B aviation aftermarket services industry, “which appears to be in a supercycle,” the firm says.
• Argus initiated coverage of Cava Group (CAVA) with a Hold rating. While the company appears poised to take advantage of growth opportunities in its targeted Mediterranean niche as well as in the fast-casual segment of the restaurant industry, Cava Group shares appear fairly valued at 150-times expected 2024 earnings, the firm says.
• H.C. Wainwright initiated coverage of CalciMedica (CALC) with a Buy rating and $20 price target. Backed by strong preclinical data and now translating to positive clinical data, the company’s lead asset Auxora is being developed for several acute inflammatory indications, says the firm.