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

Netflix upgrade, Roku downgrade, and State Street reinstatement 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:

• Jefferies analyst Andrew Uerkwitz upgraded Netflix (NFLX) to Buy from Hold with a price target of $385, up from $310. The analyst says that with a potential recession looming, he’s looking for safety and media names that have "downside de-risked."
• Credit Suisse analyst Scott Deuschle upgraded Boeing (BA) to Neutral from Underperform with a price target of $200, up from $121, as several key parts of his original thesis are no longer defensible in light of the company’s improved operational performance.
• Credit Suisse analyst Kevin McVeigh upgraded FactSet (FDS) to Outperform from Neutral with a price target of $500, up from $485, citing the 20% pullback in the shares on concerns of a more challenging environment.
• RBC Capital analyst Brad Erickson upgraded Wix.com (WIX) to Outperform from Sector Perform with a price target of $100, up from $80. The analyst sees WIX as a "solid defensive play," benefiting from structurally higher new business formation versus pre-COVID levels.
• Credit Suisse analyst Jamie Cook upgraded Aecom (ACM) to Outperform from Neutral with a price target of $98, up from $95. As a pure play in professional infrastructure services, the analyst believes Aecom stands to benefit from secular tailwinds tied to infrastructure stimulus in the U.S. and globally.

Top 5 Downgrades:

• Jefferies analyst Andrew Uerkwitz downgraded Roku (ROKU) to Underperform from Hold with a price target of $30, down from $45. A "significantly slower" digital advertising market is not reflected in near-term consensus expectations for Roku while the long-term trajectory of the business "remains unclear," Uerkwitz tells investors in a research note. The analyst also downgraded Spotify (SPOT) to Hold from Buy and Unity (U) to Underperform from Hold.
• Wedbush analyst Alicia Reese downgraded Logitech (LOGI) to Neutral from Outperform with a price target of $60, down from $70, after the company was forced to cut its full year 2023 guidance again due to macro and currency pressures.
• Wedbush analyst Seth Basham downgraded Advance Auto Parts (AAP) to Neutral from Outperform with a price target of $145, down from $165. While shares have sharply underperformed peers in the past six months, the analyst sees mounting risks to consensus expectations as the company embarks on price and inventory investments to improve market share performance and faces enormous LIFO charges.
• Morgan Stanley analyst Hamza Fodderwala downgraded Zscaler (ZS) to Equal Weight from Overweight with a price target of $120, down from $162. While stating that cybersecurity remains a top priority in 2023 and "by far the least likely area of IT spend to be cut relative to other categories," Fodderwala argues that the group is now in the early innings of negative estimate revisions that have lagged broader software by about two quarters. The analyst also downgraded SentinelOne (S) to Equal Weight from Overweight, with a price target of $16, down from $30.
• Jefferies analyst David Windley downgraded Charles River (CRL) to Hold from Buy with a price target of $233, down from $250. His previous work on the non-human primate, or NHP, supply chain work concluded that Charles River’s NHP tox business was "in a privileged position and controlled its own destiny," but the indictment of Vanny and other Cambodian officials has altered that view, Windley tells investors.

Top 5 Initiations:

• BofA analyst Ebrahim Poonawala reinstated coverage of State Street (STT) with a Neutral rating and $86 price target. Earnings growth should be helped by accelerated capital return following the termination of the Brown Brothers acquisition, but he sees the risk/reward as balanced following recent outperformance in the shares.
• Morgan Stanley analyst Alex Straton assumed coverage of American Eagle (AEO) with an Underweight rating and unchanged price target of $12 following the company’s ICR presentation and meetings.
• BofA analyst Ebrahim Poonawala reinstated coverage of BNY Mellon (BK) with a Buy rating and $56 price target. While he thinks revenue growth will be driven by "how markets behave," Poonawala believes management’s focus on right sizing the cost base and capital leverage will provide earnings defensibility.
• BTIG analyst Matthew VanVliet initiated Braze (BRZE) with a Buy rating and $34 price target. The analyst believes Braze’s ability to allow its 1.7K-plus customers to "adapt in real time to engage effectively with their consumers to drive a specific call to action is a testament to the growing demand this space will see in the coming years," and feels that, overall, Braze is in the "early stages" of operating in a $10B TAM.
• Susquehanna analyst James Friedman initiated coverage of Kyndryl Holdings (KD) with a Neutral rating and $14 price target. The spinoff from IBM is "off to a good start" with existing clients that include 75% of the Fortune 100 and a "newfound freedom" to address a significantly larger total addressable market, Friedman tells investors in a research note.

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