Salesforce downgraded, Starbucks 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:

• Citi upgraded Discover (DFS) to Buy from Neutral with a price target of $133, up from $93. The firm sees several potential catalysts for the shares over the next year, including the reinstatement of regular share repurchases, the sale of its student loan business, a likely peaking of credit losses in 2024 and less expense pressure.
• Wells Fargo upgraded Paramount (PARA) to Equal Weight from Underweight with a price target of $18, up from $15. Noting that Deadline, The New York Times, Puck News and the Financial Times have all reported potential interest in National Amusements and Paramount’s controlling A shares, the firm increases its view of the probability of a 2024 M&A event that brings with it a “value-unlocking” strategy and management.
• Wells Fargo upgraded Guidewire (GWRE) to Overweight from Equal Weight. Regardless of if macro improves in 2024, Wells is expecting some of these forgotten names with company specific catalysts and/or inexpensive valuations to stage a comeback, given potential upside to estimates plus favorably skewed risk/reward.
• Morgan Stanley upgraded Spirit AeroSystems (SPR) to Equal Weight from Underweight with a price target of $35, up from $22, as the firm factored in recent capital raises and shifting market sentiment and re-visits margin expectations.
• Stephens upgraded KeyCorp (KEY) to Overweight from Equal Weight with a price target of $16.50, up from $13. The stock is being upgraded following the underperformance in 2023, and given that the firm now sees the outsized growth in net interest income through 2025 to be a catalyst for multiple expansion.

Top 5 Downgrades:

• Wells Fargo downgraded Salesforce (CRM) to Equal Weight from Overweight with a $280 price target. While the value trade was a lucrative one during 2023, the firm is expecting to see a gradual rotation back towards growth in 2024 and as such Wells is taking profits and shifting toward those with near-term re-acceleration potential plus long-term durable growth.
• Wells Fargo downgraded Zoom Video (ZM) to Underweight from Equal Weight with a $70 price target. The firm says that while it has “exercised patience with some of the pandemic ‘winners,'” it has become clear over the course of the past year that many are still struggling to find stable footing. Wells Fargo downgraded DocuSign (DOCU) to Underweight from Equal Weight.
• Northcoast downgraded Costco (COST) to Neutral from Buy with a $620 price target. The firm thinks the current share price “adequately reflects” Costco’s “powerful and loyal membership base” as well as the next membership fee increase and it downgrades the shares “solely on the basis of valuation.”
• Stifel downgraded Lowe’s (LOW) to Hold from Buy with a price target of $240, up from $235. The firm said its updated outlook takes a more cautious approach to 2024 and the company’s ability to leverage market share gains to contend with a more anemic category.
• BTIG downgraded Opendoor Technologies (OPEN) to Neutral from Buy after the stock topped the firm’s prior price target of $3.50. Opendoor is re-ramping overhead as it gears up to accelerate purchase activity, but the ability to ramp remains uncertain in a still tough housing market backdrop, says the firm, which has dialed back 2024-2025 estimates.

Top 5 Initiations:

• HSBC initiated coverage of Starbucks (SBUX) with a Hold rating and $107 price target. Starbucks leverages its scale to unlock efficiencies across the value chain and is targeting a 45% rise in locations globally to 55,000 by 2030, but headwinds for mainland China, its second-largest market, keep the firm on the sidelines.
• HSBC initiated coverage of McDonald’s (MCD) with a Buy rating and $317 price target. A return to U.S. capacity growth, combined with multi-pronged sales initiatives, provide upside potential for the “global brand icon with diversified, resilient revenue streams,” the firm tells investors. HSBC initiated coverage of Domino’s Pizza (DPZ) with a Buy rating and $466 price target.
• Cantor Fitzgerald initiated coverage of Biogen (BIIB) with an Overweight rating and $311 price target. Cantor sees value creation being unlocked through the gradual but significant adoption of Leqembi in Alzheimer’s, Skyclarys’ rapid ascent toward $2.6B in Friedreich’s Ataxia, as well as improved oversight and profitability associated with Biogen’s still substantial business.
• Guggenheim initiated coverage of WW (WW) with a Buy rating and $14 price target, calling it “a high-risk, high-reward opportunity to play the GLP-1 theme at a time when the stock appears to price in most of the downside risk.”
• Janney Montgomery Scott initiated coverage of Travelers (TRV) with a Buy rating and $215 fair value estimate. The “leading provider” of P&C insurance for autos, homes, and businesses offers a wide range of coverages, notes the firm, which contends that shares are “modestly undervalued relative to performance expectations.”