Street Wrap: Today’s Top 15 Upgrades, Downgrades, Initiations

Darden upgrade, Best Buy downgrade and Archer Daniels initiation among today’s top calls on Wall Street

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Research analysts at Wall Street’s largest banks issue recommendations on whether a stock should be bought, held, or sold. The Fly’s team of financial market experts scours hundreds of research notes daily to uncover the best trading ideas. Check out today’s top analyst calls from around Wall Street, compiled by The Fly.

Top 5 Upgrades:

• Wedbush analyst Nick Setyan upgraded Darden (DRI) to Outperform from Neutral with a price target of $160, up from $134. Setyan expects Darden’s category share gains to accelerate in an increasingly uncertain consumer environment, rendering visibility into the company’s ability to achieve or exceed current consensus 2023 expectations relatively high.
• Oppenheimer analyst Ittai Kidron upgraded Datadog (DDOG) to Outperform from Perform with a $105 price target. The company’s unified, real-time view into the entire technology stack remains mission-critical to developers/enterprises as they focus on identifying/eliminating performance issues, the analyst argues.
• Barclays analyst Christine Cho upgraded SolarEdge Technologies (SEDG) to Overweight from Equal Weight with a price target of $396, up from $389. Following a trip to Europe, the analyst feels more confident about the macro dynamics in the country that will underpin SolarEdge’s growth and ability to take market share in the near-term.
• Barclays analyst Matthew Bouley upgraded Lennar (LEN) to Overweight from Equal Weight with a price target of $116, up from $85. The analyst has turned positive on the homebuilder subsector, saying valuations are already priced for a sharp housing recession.
• Morgan Stanley analyst Dillon Cumming upgraded Paccar (PCAR) to Overweight from Equal Weight with a price target of $136, up from $91. He views Paccar shares as "a high-quality way to express our view around a more resilient NA Class 8 market than appreciated," said Cumming, who thinks the company’s "conservative" margin estimates present a nearer-term catalyst for positive estimate revisions.

Top 5 Downgrades:

• BofA analyst Elizabeth Suzuki downgraded Best Buy (BBY) to Underperform from Neutral with a price target of $69, down from $80. The analyst also lowered her earnings estimates to account for a challenging demand environment in the near-term and sees it being a tough environment for Best Buy to achieve earnings growth in both the near- and medium-term.
• Citi analyst Smedes Rose downgraded Marriott (MAR) to Neutral from Buy with a price target of $175, up from $170. The analyst sees potential for weaker RevPAR growth versus expectations depending on the trajectory of economic forecasts. Rose also downgraded Hilton (HLT) to Neutral from Buy on European exposure.
• Chardan analyst Geulah Livshits downgraded Moderna (MRNA) to Neutral from Buy with a price target of $191, up from $186. With market’s "enthusiastic reception" of the personalized cancer vaccine mRNA-4157 data, Moderna’s share price has caught up with Chardan’s valuation, Livshits tells investors in a research note.
• BofA analyst Shaun Kelley downgraded Caesars (CZR) and Penn Entertainment (PENN) to Neutral from Buy with price targets of $55 and $40, down from $60 and $45, respectively. He thinks growth momentum is levelling out after casino gaming stocks, and especially regional operators, were the largest "over-earners" in his coverage versus pre-COVID.
• Wells Fargo analyst Eric Luebchow downgraded Digital Realty (DLR) to Equal Weight from Overweight with a price target of $115, down from $120. The analyst sees emerging risks to the 2023 outlook, including $1.7B of funding requirements at substantially higher rates, a reliance on asset recycling in an environment in which bid/ask spreads have started to widen, uncertainty on scale renewals, lack of clarity on power availability for 62 MWs of backlog in Ashburn, a slowdown in new lease volumes, and a levered balance sheet with $1.5B of floating rate debt.

Top 5 Initiations:

• UBS analyst Manav Gupta initiated coverage of Archer Daniels (ADM) with a Buy rating and $115 price target. Gupta sees the company delivering earnings of $7.75 per share by 2026 when factoring in productivity and innovation initiatives, even in a normalized margin environment, the analyst tells investors.
• UBS analyst Manav Gupta initiated coverage of Bunge (BG) with a Buy rating and $133 price target. The market is primarily focused on margin compression in 2024-2025 while "ignoring" the $13.50-plus per share in earnings Bunge should deliver in 2022, Gupta tells investors.
• Lake Street analyst Troy Jensen initiated coverage of Xometry (XMTR) with a Sell rating and $28 price target, describing the company as "an asset-light version of Proto Labs."
• Morgan Stanley analyst James Faucette initiated coverage of Broadridge Financial (BR) with an Equal Weight rating and $160 price target. The global technology provider to the financial services industry has record of "durable" growth, "dominant" proxy market share and "steady" margin expansion, but this is offset by a medium-term deceleration in distribution revenue, more earnings seasonality than peers and an elevated multiple relative to scaled incumbent processors, the analyst argues.
• UBS analyst Manav Gupta initiated coverage of Darling Ingredients (DAR) with a Buy rating and $91 price target. Darling Ingredients holds close to 15% market share when it comes to global rendering volumes and about 50% market share in used cooking oil business in the U.S., and demand for animal fats and UCO will see step change as new renewable diesel facilities come online in the next 3 years, Gupta tells investors in a research note.

Keywords: analyst, analyst calls, upgrades, downgrades, initiations, research, wall street