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

AT&T upgrade, Boeing downgrade, and Macy’s coverage assumption 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:

• Wells Fargo analyst Eric Luebchow upgraded AT&T (T) to Overweight from Equal Weight with a price target of $22, up from $17. Luebchow named AT&T raised his top wireless pick for 2023 on upside potential to consensus estimates, its better balance sheet and attractive valuation.
• Evercore ISI analyst David Motemaden upgraded Travelers (TRV) to Outperform from In Line with a price target of $220, up from $183. He believes stronger than expected earnings power will be more apparent moving through 2023, driven by more exposure to a re-acceleration in commercial property rates and the potential for more to fall to the bottom line given less reliance on reinsurance. The analyst also upgraded Aon plc (AON) to In Line from Underperform with a price target of $330, up from $294.
• Morgan Stanley analyst Jamie Rollo upgraded Royal Caribbean (RCL) to Equal Weight from Underweight with a price target of $50, up from $40. In conjunction with the same report on the cruise lines, Morgan Stanley analyst Stephen Grambling downgraded Norwegian Cruise Line (NCLH) to Underweight from Equal Weight with a $11.50 price target after assuming coverage of the name.
• KeyBanc analyst Justin Patterson upgraded Bumble (BMBL) to Overweight from Sector Weight with a $27 price target. Credit and debit card data suggest payer trends remained solid in December, Patterson tells investors in a research note.
• UBS analyst Francois-Xavier Bouvignies upgraded NXP Semiconductors (NXPI) to Neutral from Sell with a price target of $167, up from $160. The analyst believes the company’s free cash flow will be resilient and that the stock’s risk/reward is more balanced at current levels.

Top 5 Downgrades:

• Morgan Stanley analyst Kristine Liwag downgraded Boeing (BA) to Equal Weight from Overweight with a price target of $220, up from $213. The analyst sees the stock approaching fair value at currency levels after its recent outperformance.
• UBS analyst Erika Najarian downgraded PNC Financial (PNC) to Neutral from Buy with a price target of $176, down from $190. While the fundamental outlook for PNC is still "generally positive," she thinks this is mostly priced in with the stock trading at a 20% premium to large regional peers.
• Jefferies analyst John Hecht downgraded Capital One Financial (COF) to Hold from Buy with a price target of $100, down from $120. The analyst believes there is incremental risk with Capital One in an economic downturn, due to its elevated delinquency rates versus peers given its sub-prime composition, auto exposure, and higher cost structure relative to peers.
• Morgan Stanley analyst Stephen Grambling downgraded Norwegian Cruise Line (NCLH) to Underweight from Equal Weight with a $11.50 price target after assuming coverage of the name. An uncertain consumer outlook, the company’s elevated debt and the industry’s supply growth create an unattractive risk/reward for the shares, Grambling tells investors in a research note.
• Barclays analyst Tim Long downgraded HP Enterprise (HPE) to Equal Weight from Overweight with an unchanged price target of $18. The downgrade is mostly a function of a more cautious view of the traditional IT hardware sector, Long tells investors in a research note. The analyst also downgraded Dynatrace (DT) to Equal Weight from Overweight with a price target of $39, down from $42.

Top 5 Initiations:

• Morgan Stanley analyst Alex Straton assumed coverage of Macy’s (M) with an Equal Weight rating with an unchanged price target of $21 after management lowered Q4 net sales guidance, which it attributed to deeper-than-anticipated lulls during non-peak holiday weeks.
• Morgan Stanley analyst Alex Straton assumed coverage of Abercrombie & Fitch (ANF) with an Underweight rating and an unchanged price target of $16. Despite the company’s better-than-expected Q4 result, his broader view remains unchanged as he continues to struggle to bridge the gap between this year’s forecasted operating margin of 2.6% and its "ambitious" long-term target of 8% in 2025 and 10% longer-term given that A&F "has not enjoyed EBIT margins at this level since 2012."
• Morgan Stanley analyst Kristine Liwag resumed coverage of Virgin Galactic (SPCE) with an Equal Weight rating and $4 price target. While "bullish" on its long-term potential as a first mover in a structurally high-margin business, her optimism is tempered by the execution track record, steep ramp ahead and what she describes as a "catalyst-lite" 2022.
• Goldman Sachs analyst Brett Feldman reinstated coverage of Dish (DISH) with a Neutral rating and $14 price target. The analyst e believes the company’s wireless initiatives entail significant execution risk" and could take longer to scale than Dish anticipates.
• UBS analyst Damian Karas initiated coverage of Watsco (WSO) with a Neutral rating and $280 price target. While Karas believes secular growth drivers abound the HVAC industry and Watsco is likely to remain a leading consolidator in the fragmented distribution market, cyclical factors will make for a more challenging near-term environment for the stock, the analyst tells investors in a research note.

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