Salesforce upgraded, Warner Bros. 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:

• Baird upgraded Salesforce (CRM) to Outperform from Neutral with a price target of $300, up from $240. The firm says it underestimated the company’s willingness to deliver margins, which drove strong performance last year.
• Jefferies upgraded American Airlines (AAL) to Buy from Hold with an $18 price target, arguing “defense is the best offense in 2024” in the U.S. airlines group. The firm cites American’s improving aircraft utilization, modern fleet age and “prudence” to 75% short-haul, 25% long-haul flights, adding that it views the March 4 Investor Day as likely to highlight premium upside and AAdvantage.
• Barclays upgraded Chewy (CHWY) to Overweight from Equal Weight with a price target of $30, up from $19. The firm thinks the company’s growth inflects in the second half of fiscal 2024 and sees upside to consensus estimates in fiscal 2025, with “incremental upside optionality” from vet clinics, international and advertising.
• Oppenheimer upgraded MasterCard (MA) to Outperform from Perform with a $510 price target. Even with depressed consumer spending levels, MasterCard could produce greater than 11% earnings growth in 2024 as expense cuts offset declining revenue growth and buybacks increase, the firm tells investors in a research note.
• JPMorgan upgraded L3Harris Technologies (LHX) to Overweight from Neutral with a $240 price target. The firm says L3Harris is the defense product stock with the most upside potential, and sees a relatively attractive valuation, cash flow that should be inflecting higher, and an increased focus on shareholder value.

Top 5 Downgrades:

• Redburn Atlantic downgraded Warner Bros. Discovery (WBD) to Neutral from Buy with an $11 price target. Linear advertising is at a “negative tipping point” and consensus estimates do not adequately forecast declines across the media group, the analyst tells investors in a research note. The firm sees the most downside at Paramount (PARA), which it downgraded to Sell, with material downside at Warner Bros. Discovery, which it downgraded to Neutral.
• Goldman Sachs downgraded Lyft (LYFT) to Neutral from Buy with a price target of $15, up from $12. The firm sees a more balanced risk/reward skew in the stock following a nearly 35% increase in the share price since its last quarter’s earnings results in early November.
• Wells Fargo downgraded Yum! Brands (YUM) to Equal Weight from Overweight with a price target of $135, down from $150. Looking to 2024, consensus estimates create a relatively high bar amid slowing recent channel checks and a more limited slate of catalysts, the firm tells investors in a research note.
• Seaport Research downgraded KB Home (KBH) to Neutral from Buy without a price target. As the company pivots to “growth mode” in fiscal 2024, Seaport sees a balanced risk to return for the stock prospectively.
• Oppenheimer downgraded both Blackstone (BX) and Hamilton Lane (HLN) to Perform from Outperform without price targets. The firm cites valuation for the downgrades with the stocks rallying through the firm’s prior price targets.

Top 5 Initiations:

• BofA initiated coverage of DoubleVerify (DV) with a Buy rating and $47 price target. ” The firm thinks all stakeholders are motivated to adopt a standard for media quality, helping to preserve the fair exchange of value across the value chain, which supports its Buy rating.
• Wolfe Research initiated coverage of Vestis (VSTS) with an Outperform rating and $24 price target. Vestis, which separated from Aramark (ARMK) in October via a tax-efficient spinoff to become a pure-play uniform and workplace supply company, is the number two player in the market, notes the firm, which finds Vestis’ stock compelling given its “multiple organic growth prospects.”
• BofA initiated coverage of Commerce Bancshares (CBSH) with a Neutral rating and $55 price target. The firm views Commerce as “well positioned to navigate risks” with its minimal interest rate exposure, revenue diversity and historically lower-through-the-cycle losses, but thinks the valuation is “quite rich” compared to regional bank peers and sees better risk/reward elsewhere.
• UBS initiated coverage of Interpublic Group (IPG) with a Neutral rating and $36 price target. The firm expects Interpublic to grow close to the sector average, and therefore could see a re-rate alongside the sector in the medium term, but does not expect this to happen in 2024.
• UBS initiated coverage of Omnicom (OMC) with a Buy rating and $117 price target. Omnicom has outperformed the sector on organic growth in almost every year since 2009, and should continue to do so in 2023 and 2024, the firm tells investors in a research note.