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

Zillow upgrade, ServiceNow downgrade, and Coinbase 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:

• BofA analyst Curtis Nagle upgraded Zillow (Z) to Buy from Underperform with a price target of $42, up from $22. Nagle believes the real estate market may trough in early 2023 even though fundamentals still remain challenged and is more confident that growth can return to double digits in 2024 on improving affordability, the analyst tells investors in a research note.
• Piper Sandler analyst Alexander Potter upgraded Uber Technologies (UBER) to Overweight from Neutral with a price target of $33, up from $31. Vehicle prices are near all-time highs, and a quick reversion to historical pricing seems unlikely, Potter tells investors in a research note. As a result, he thinks "cash-strapped" consumers will increasingly opt to hail rides instead of trying to replace old cars.
• Piper Sandler analyst Brent Bracelin upgraded Oracle (ORCL) to Overweight from Neutral with a price target of $104, up from $85. The analyst sees room for both earnings and multiple expansion as Oracle’s acceleration to double-digit earnings growth materializes.
• Morgan Stanley analyst Ravi Shanker upgraded Saia (SAIA) to Equal Weight from Underweight with an unchanged price target of $185. Shanker, who believes that "Trucking is the best place to be in Transports in 2023," thinks the stock is now close to fair value and will see a return of investor interest if the less-than-truckload cycle inflects positively.
• KeyBanc analyst Josh Beck upgraded Visa (V) and MasterCard (MA) to Overweight from Sector Weight with price targets of $210 and $425, respectively. The analyst says his prior travel-related dislocation concerns have faded and that new flows beyond consumer card are improving the company’s diversification and growth durability.

Top 5 Downgrades:

• Truist analyst Joel Fishbein downgraded ServiceNow (NOW) to Hold from Buy with a price target of $420, down from $525. The company’s ascendance over the course of the last decade has been remarkable from both a business and a stock perspective, but too many investors are buying the story for what they have done in the past versus what the company will do going forward, the analyst tells investors in a research note.
• Piper Sandler analyst Alexander Potter downgraded DoorDash (DASH) to Underweight from Neutral with a price target of $40, down from $227. While a beneficiary of increasing labor supply, DoorDash does not benefit from growing demand for ride-hailing, the analyst said, adding that he believes DoorDash "will face more recessionary pressure on revenue."
• KeyBanc analyst Josh Beck downgraded PayPal (PYPL) to Sector Weight from Overweight with a fair value estimate of $80, down from $100. The analyst says sustained share gain of the branded PayPal is likely to be increasingly difficult as the company is facing intensified competition from Apple (AAPL) Pay, Shop Pay and buy now pay later.
• Jefferies analyst David Katz downgraded Penn Entertainment (PENN) to Hold from Buy with a price target of $34, down from $50. In the context of a recession, gaming stocks "will likely remain rangebound and out of favor," so Katz is narrowing focus to stocks with "a clear path to growth amidst a recession," with a continued preference for Las Vegas and Macau as well as regional operators with an identified growth pipeline. The analyst also downgrades Sportradar (SRAD) to Hold from Buy.
• Jefferies analyst Ashley Helgans downgraded e.l.f. Beauty (ELF) to Hold from Buy. The downgrade is based primarily on valuation, as Helgans sees the risk/reward as balanced, the analyst tells investors in a research note.

Top 5 Initiations:

• Jefferies analyst Trevor Williams initiated coverage of Coinbase (COIN) with a Hold rating and $35 price target. While Coinbase’s premium brand, scale, and "healthy" balance sheet should enable it to weather the industry-wide fallout from FTX’s collapse, Williams still sees "a steep climb to Street estimates in FY25," which he believes embed a recovery in Bitcoin to a price around $25,000.
• MoffettNathanson analyst Jackson Ader initiated coverage of Paycom (PAYC) with an Underperform rating and $310 price target. Ader argues that "at the poles," current multiples imply "too much optimism" for Paycom and "too much pain" for Workday (WDAY), which he started with an Outperform rating.
• Jefferies analyst John Colantuoni initiated coverage of DoorDash with an Underperform rating and $37 price target. Colantuoni estimates DoorDash’s market share in U.S. Restaurant Delivery increased from 18% in 2018 to 56% in 2022, but expects share gains to slow given past gains came from players that are now much smaller. The analyst also assumed coverage of Uber with a Buy rating and $38 price target, and Lyft (LYFT) with a Hold rating and $12 price target.
• JPMorgan analyst Brian Ossenbeck initiated coverage of RXO Inc. (RXO) with a Neutral rating and $19 price target. The analyst believes 2023 will prove more challenging for truckload brokers as freight market conditions are more balanced and spreads between spot and contract rates normalize from the widest on record.
• MoffettNathanson analyst Jackson Ader initiated coverage of Ceridian (CDAY) with a Market Perform rating and $68 price target. On the Human Capital Management, or HCM space broadly, Ader argues that strength in 2022 may "portend later cycle impact in 2023" after the group "held up remarkably well relative to the rest of software in 2022 from both a trading and a fundamental perspective."

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