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

Etsy upgrade, Microsoft downgrade, and Amazon initiation among today’s top calls on Wall Street

Institutional investors and professional traders rely on The Fly to learn which companies the best analysts on Wall Street are saying to buy and sell.

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:

• Needham analyst Anna Andreeva upgraded Etsy (ETSY) to Buy from Hold with a $160 price target. The stock underperformed in 2022 as multiples contracted, but the company’s operating model is proving to be "sticky" exiting the pandemic, the analyst tells investors in a research note.
• Loop Capital analyst Laura Champine upgraded Burlington Stores (BURL) to Hold from Sell with a price target of $200, up from $105. The analyst says that her store checks for the company are "the best in well over a year," and her outlook for Burlington sales and earnings are now in line with consensus estimates.
• BofA analyst Geoff Meacham upgraded Merck (MRK) to Buy from Neutral with a price target of $130, up from $110. The analyst cites expectations for a continuation of the strong growth trends seen last year and "substantial progress" in diversifying away from Keytruda.
• BofA analyst Koji Ikeda upgraded JFrog (FROG) to Buy from Neutral with a price target of $32, up from $28. The analyst believes JFrog is an "underappreciated" enterprise DevSecOps vendors that is positioned to deliver revenue growth above the infrastructure peer group average.
• Barclays analyst Saket Kalia upgraded Veeva Systems (VEEV) to Overweight from Equal Weight with an unchanged price target of $205. The company offers "defensiveness" given its life sciences base, where spending can grow in 2023, Kalia tells investors in a research note.

Top 5 Downgrades:

• UBS analyst Karl Keirstead downgraded Microsoft (MSFT) to Neutral from Buy with a price target of $250, down from $300. The analyst cites a weaker round of field checks on the cloud providers including Azure, a view that Office seat growth is likely to moderate in 2023, and a stock multiple that "already feels fair, not cheap" for the downgrade.
• Wells Fargo analyst Edward Kelly downgraded Target (TGT) to Equal Weight from Overweight with a price target of $142, down from $170. The analyst notes Target’s outlook has deteriorated meaningfully and says he no longer sees it as an attractive investment into an uncertain 2023.
• UBS analyst Thomas Wadewitz downgraded J.B. Hunt (JBHT) to Sell from Neutral. The firm’s analysis of intermodal pricing and accessorial revenue points to an estimated decline in revenue per load excluding fuel of 7% for J.B. Hunt in 2023, which, along with cyclical pressure in its brokerage business, drives an expectation of a significant cyclical decline in EPS, Wadewitz tells investors in a research note.
• BofA analyst Geoff Meacham downgraded Pfizer (PFE) to Neutral from Buy with an unchanged price target of $60. The analyst cites uncertainty around the magnitude of the revenue decline for Comirnaty and Paxlovid in 2023 and the collective impact from launches to offset the roughly $17B loss of exclusivity "hole" in 2025-2030.
• UBS analyst Chris Snyder double downgraded Honeywell (HON) to Sell from Buy with a price target of $193, down from $220. While Honeywell’s outsized $29B backlog into the 2023 slowdown will likely protect near-term results, the backlog burn could intensify into 1H23 on further order compression amid the macro slowdown and normalizing lead times, Snyder tells investors in a research note. The analyst also downgraded Hubbell (HUBB) to Sell from Neutral, and Emerson Electric (EMR) to Neutral from Buy.

Top 5 Initiations:

• New Street analyst Dan Salmon initiated coverage of Amazon.com (AMZN) with a Buy rating and $130 price target, calling it his Top Pick across the U.S. Internet sector. He sees Amazon beginning to gain e-commerce share again as it takes advantage of a "massive" expansion of logistics and fulfilment investment from 2019-2022.
• New Street analyst Dan Salmon initiated coverage of Alphabet (GOOG) with a Buy rating and $118 price target. Alphabet offers the most stable profit growth profile in the group and he thinks both Search and YouTube revenue growth can rebound in the face of investor concerns about competition, Salmon said.
• New Street analyst Dan Salmon initiated coverage of Netflix (NFLX) with a Neutral rating and $304 price target. While he likes the long-term opportunity advertising offers, the analyst prefers stocks with greater ad exposure today.
• New Street analyst Dan Salmon initiated coverage of Meta Platforms (META) with a Buy rating and $145 price target. While noting Meta is "still likely the most controversial name in the coverage," the analyst has conviction that near-term operating expense and capital expenditure growth will ease and thinks Meta’s ad revenue can outperform near-term.
• New Street analyst Dan Salmon initiated coverage of Trade Desk (TTD) with a Neutral rating and $43 price target. While positive on its long-term opportunity to win more spending and greater share of the ad technology addressable market, he doesn’t think the current valuation properly accounts for risks to Trade Desk’s identity strategy and potential take rate headwinds.

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