Salesforce upgraded, Chipotle 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:

• Wedbush upgraded Cheesecake Factory (CAKE) to Outperform from Neutral with a price target of $40, up from $34. The firm views Cheesecake Factory’s 2024 same-store sales growth estimates as realistic and is hopeful that a declining interest rate environment will alleviate the outsized pressure on its valuation.
• Morgan Stanley upgraded Salesforce (CRM) to Overweight from Equal Weight with a price target of $350, up from $290. The firm sees “several vectors” for Salesforce to drive top-line upside versus “muted” investor growth expectations.
• Pivotal Research upgraded Spotify (SPOT) to Buy from Hold with a price target of $265, up from $170. The firm forecasts higher medium- to long-term EBITDA and free cash flow given the company’s renewed focus on financial discipline, while seeing “continued strong results” and what appears to be an ability to take price without significant churn.
• Baird upgraded Insulet (PODD) to Outperform from Neutral with a price target of $238, up from $180. The firm sees fundamental tailwinds for this stock into 2024.
• Morgan Stanley upgraded JFrog (FROG) to Overweight from Equal Weight with a price target of $42, up from $32. The firm sees JFrog benefitting from a rebound in software development initiatives, which should translate to durable 20%-plus revenue growth and 40% free cash flow growth when coupled with a new product cycle and accelerating cloud growth.

Top 5 Downgrades:

• Wedbush downgraded Chipotle (CMG) to Neutral from Outperform with a $2,400 price target. The firm believes slowing transaction growth at Chipotle as 2024 progresses may jeopardize its current valuation while it also views a consumer “more focused on check management as a threat.”
• Wedbush downgraded Wendy’s (WEN) to Neutral from Outperform with a $21 price target. The firm views Wendy’s premium quick-service positioning as particularly at risk in an increasingly value-oriented QSR environment and believes risk exists to Q4 and 2024 same-store sales growth expectations.
• Morgan Stanley downgraded Simon Property (SPG) to Equal Weight from Overweight with a price target of $143, up from $132. The discount to open air center peers has narrowed significantly from lows of -40% to -16% currently, and rising interest costs limits the firm’s FFO growth to 1%-2% in the next couple of years vs. high quality open air center peers in the mid-single digits, the firm says.
• Canaccord downgraded Nevro (NVRO) to Hold from Buy with a price target of $23, down from $30. The firm, which notes it had upgraded Nevro in its 2023 kick-off note, says “frankly, we were wrong” as the core SCS market did not recover as expected and PDN continued to ramp, but just not fast enough to offset the weak SCS market.
• Brookline downgraded Point Biopharma (PNT) to Hold from Buy with a price target of $12.50, down from $27, as the firm notes that Biotechnology Value Fund, the shareholder that was stalling the acquisition of Point by Eli Lilly (LLY), has sold or tendered their stake in the wake of the SPLASH readout.

Top 5 Initiations:

• Macquarie initiated coverage of Genius Sports (GENI) with an Outperform rating and $11 price target. The firm, which thinks the sports tech company “has been and will continue to be a critical driver of sports fan engagement and values for sports leagues/teams,” believes shares can double in value over the next one to two years given the importance of Genius’ player stats, AI data and “the ability to bring this to life.”
• Piper Sandler initiated coverage of Myriad Genetics (MYGN) with a Neutral rating and $23 price target. While the firm believes CEO Paul Diaz has fixed the operational and innovation problems at Myriad and sees the base business as largely returned to growth, it notes the company operates in competitive markets and so would rather wait to see commercial traction.
• Jefferies initiated coverage of Crinetics (CRNX) with a Hold rating and $35 price target. Crinetics should report positive Phase III PATHFNDR-2 date in acromegaly to derisk the U.S. filing in 2024 for oral paltusotine, but positive data is “well appreciated” at the current $2.5B market cap, the firm tells investors.
• Morgan Stanley initiated coverage of Rollins (ROL) with an Equal Weight rating and $42 price target. As one of the two leading pest control providers in the United States, Rollins has “best-in-class” growth and strong margins, but the firm thinks this is already priced in and would wait for a better entry point.
• Oppenheimer initiated coverage of Catalyst Pharmaceuticals (CPRX) with an Outperform rating and $30 price target. The firm notes its physician survey indicates that the market is underestimating Agamree’s launch for Duchenne muscular dystrophy, or DMD, and says it expects the treatment to “quickly ramp” toward its roughly $300M peak sales projection.