Reddit, Astera Labs initiated: 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 Lockheed Martin (LMT) to Overweight from Neutral with a price target of $518, up from $475. The defense industry got the fiscal 204 budget it needed last month, which had been a concern, with JPMorgan also expecting some supplemental funding for Ukraine, Israel and Taiwan.
• Argus upgraded Constellation Brands (STZ) to Buy from Hold with a $306 price target. The stock is trading at 18.6-times the firm’s revised FY25 earnings estimate, but a higher multiple is warranted given the company’s prospects for strong sales and earnings and management’s plans to increase beer output, the firm tells investors in a research note.
• Wedbush upgraded PVH Corp. (PVH) to Outperform from Neutral with a price target of $128, up from $113. The firm views the roughly 25% selloff since earnings as a buying opportunity as it believes PVH still has “hundreds” of basis points of margin expansion opportunity.
• BofA upgraded Cisco (CSCO) to Buy from Neutral with a price target of $60, up from $55. The firm sees three catalysts for growth acceleration, namely networking to normalize and see renewed growth driven by share gains, security growth to accelerate with the help of firewall stabilization and new product launches, and growth synergies from the Splunk acquisition.
• Wells Fargo upgraded Churchill Downs (CHDN) to Overweight from Equal Weight with a price target of $141, up from $137. Following a period of year-to-date underperformance, the firm sees an attractive entry point here.

Top 5 Downgrades:

• Guggenheim downgraded ServiceNow (NOW) to Neutral from Buy without a price target. The firm says the current valuation leaves “little room for hiccups,” which could happen over the next few quarters.
• Morgan Stanley downgraded Logitech (LOGI) to Underweight from Equal Weight with a price target of $75, down from $85. Following an analysis, the firm forecasts “just” 3% annual revenue growth for the company through fiscal 2027, 200 basis points below consensus and 500-700 basis points below it believes is priced into the shares today.
• Raymond James downgraded Malibu Boats (MBUU) to Market Perform from Outperform without a price target. The downgrade is in response to the loss of Tommy’s Boats, one of Malibu Boats’ largest dealers, which last week filed a civil complaint alleging breach of contract among other transgressions, for which it is seeking compensatory and punitive damages, the firm tells investors in a research note.
• Goldman Sachs downgraded AvidXchange (AVDX) to Sell from Neutral with a price target of $11.50, down from $13. The firm sees AvidXchange’s risk/reward as more negative, saying the shares trade roughly in-line to higher growth competitor Bill (BILL).
• Exane BNP Paribas downgraded Brunswick (BC) to Neutral from Outperform with a price target of $82, down from $94. The firm thinks there is investor appetite for early cyclical names if earnings are troughing, but sees risks to 2024 guidance and sees regulations risk in 2025 for Brunswick.

Top 5 Initiations:

• Piper Sandler initiated coverage of Reddit (RDDT) with an Overweight rating and $50 price target. The firm views Reddit as an “iconic internet asset likely to grow users and revenues rapidly in coming years.” JMP Securities, Roth MKM, Needham, and Citi also started the name with Buy-equivalent ratings, while Goldman Sachs, Morgan Stanley, and JPMorgan initiated the stock with Neutral-equivalent ratings.
• Deutsche Bank initiated coverage of Astera Labs (ALAB) with a Buy rating and $85 price target. The firm believes Astera offers a “unique” artificial intelligence-enabling growth story as the company addresses the “sizable and rapidly growing” cloud mega-trend via a broadening portfolio of connectivity solutions. Barclays, JPMorgan, Roth MKM, Stifel, Needham, Jefferies, and Craig-Hallum also started coverage of the name with Buy-equivalent ratings, while Morgan Stanley initiated the stock with an Equal Weight.
• Barclays initiated coverage of Cava Group (CAVA) with an Equal Weight rating and $58 price target. The firm says that while Cava offers industry-leading comp and unit growth along with a highly efficient business model and impressive margins, valuation “looks outsized.”
• Daiwa initiated coverage of AppLovin (APP) with a Neutral rating and $80 price target. The firm says the company is a niche player in a $131B digital ad spending in-app market estimated for 2024 in the U.S., but cites valuation for the rating.
• Mizuho initiated coverage of GE Vernova (GEV) with a Buy rating and $154 price target. The company benefits from leadership in the gas power business that generates recurring and increasing cash flow, margin expansion in wind due to pricing power and an unprofitable offshore backlog ending by 2026, and its strong presence in grid services and electrification, the firm tells investors in a research note.