Here are Monday’s biggest calls on Wall Street:
Wells Fargo downgrades Costco to equal weight from overweight
Wells said Costco is a “high quality” stock but that it sees a growing number of hurdles
“We also are wary of how COST cycles the recent period of historic EBIT margin expansion given its typical stability and customer-first reputation. In the end, we see more risk to consensus estimates going forward than upside potential, not a good set-up for this name given its valuation.”
Bank of America reiterates Synchrony as buy
Bank of America said the financial services company is a “hidden” beneficiary of the PayPal-Apple partnership.
“Last week, PayPal announced it was enhancing its offerings, including enabling U.S. customers to add their PayPal and Venmo cards to Apple Wallets next year and to use them wherever Apple Pay is accepted. ... .We have long highlighted SYF’s enviable merchant partner roster which includes many leading digital and physical retailers.”
Morgan Stanley resumes AIG as overweight
Morgan Stanley resumed coverage of the insurance company and said it has a strong franchise.
“We view AIG’s P&C business as one of the strongest franchises in the industry, and expect the shares to earn a higher multiple over time now that the company has moved to become a more pure-play P&C carrier with the spin-off of its Life & Retirement business, Corebridge.”
Bank of America downgrades Funko to neutral from buy
Bank of America said in its downgrade ofFunkothat it sees a “challenging” holiday for the toy company.
“We expect continued headwinds in top line revenue thru 1H given continued risks from retailer destocking. However, we believe gross margins should sequentially accelerate on price increases on exclusive lines & other products, and benefit from lower freight rates.”
Atlantic Equities upgrades S&P Global to overweight from neutral
Atlantic Equities said the global markets company is “high quality.”
“Following 3Q22 results, we are upgradingS&P Globalto Overweight due to its improved valuation, diversified and high-quality business, self-help opportunities, and supportive capital return program.”
Oppenheimer upgrades DoorDash to outperform from perform
Oppenheimer said it sees improving margins for the food delivery company.
“We are upgrading DASH to Outperform from Perform and establishing a 12-18 month price target of $70. Increased disclosure shows improving US restaurant margins, and we’re now able to size Int’l. and US non-restaurant losses.”
Oppenheimer downgrades Redfin to underperform from perform
Oppenheimer said in its downgrade of the online housing company that it’s business model is flawed.
“We believe Redfin’s core business is fundamentally flawed with fixed-cost model for agents vs. 100% commission for industry.”
Deutsche Bank initiates Planet Labs as a buy
Deutsche said in its initiation of the space satellite company that it sees “substantial revenue” opportunities.
“Our positive stance on EO (earth observation) companies is in part due to them not falling prey to these qualities. Planet and BlackSky are both generating substantial revenue now and have visibility toward future growth similar to software companies.”
Citi opens a positive catalyst watch on Liberty SiriusXM
Citi said it’s bullish on the media company heading into its analyst day.
“Liberty Media is hosting an Investor Day on November 17th. We are opening a positive Catalyst Watch on LSXMA, as we believe Liberty may announce one or more steps to narrow the 37% discount to NAV.”
Morgan Stanley initiates Boston Beer as underweight
Morgan Stanley said in its initiation of Boston Beer that it’s concerned about growth prospects.
“Initiate coverage at UW due to downside to both ’23/24 consensus and LT growth expectations based on continued declines in malt-based hard seltzers and a dizzying array of new competition in the broader beyond beer space.”
UBS reiterates Berkshire Hathaway as a buy
UBS said shares of Berkshire represent a “meaningful discount to intrinsic value” after the company’s earnings report on Saturday.
“Share buyback is dependent on whether Buffett and Munger believe BRK’s shares are trading at a big enough discount to its intrinsic value and other uses of cash.”
Bernstein reiterates Apple as equal weight
Bernstein said Apple estimates may be too high after Apple warned of supply chain challenges on Sunday.
“Accordingly, yesterday’s announcement may reflect increased concern that current estimates are too high, though it is unclear if it is all attributable to incremental production challenges.”
Guggenheim upgrades Okta to buy from neutral
Guggenheim said Okta’s stock is “too compelling to ignore”
“While we recognize the company is facing challenges that could take several quarters to effectively address, we find current valuation levels too compelling to ignore.”
Bank of America reiterates Northrop Grumman as a top pick
Bank of America said the company has a “best in class” space business.
“As we highlighted in our 4Q22 top picks note, Northrop Grumman is the top beneficiary of the focus on space.”
Wolfe initiates Splunk as outperform
Wolfe said in its initiation of the software company that shares are attractive.
“Look, we get it. Splunk has a lot of things going against it: pricing, competition, product fit, high-ticket item during a weakening macro, new CEO, no CFO, and a black box model that provides little conviction in numbers.”
Berenberg downgrades Estee Lauder to hold from buy
Berenberg said it has limited visibilty on the stock. visibility.
“While we recognise FY 2023 could mark the trough inEstée Lauder’s earnings in the current cycle, we do not have enough visibility on the timing and pace of a recovery to support a Buy rating on the stock.”
Northcoast downgrades Papa John’s to neutral from buy
Northcoast said it sees “increasingly difficult” sales and earnings momentum.
“Though encouraged by the turn-aroundPapa John’snew management team implemented in 2019 and through the pandemic, we believe sales and earnings momentum will be increasingly difficult to generate going forward.”
Canaccord reiterates Tesla as a buy
Canaccord said “autonomy” will be a key differentiator for Tesla.
“This element of autonomy is a main driving force behind our view that it is a key contributing technology to a sustainable future.”
JPMorgan upgrades Sea Limited to overweight from neutral
JPMorgan said in its upgrade of the Singapore tech company that it it sees a “swift” improvement in profitability.
“SE’s urgency to achieve self-sufficiency and be cash flow positive supports positive earnings revisions, while the stock is pricing-in concerns regarding its ability to monetize and reduce losses.”
Oppenheimer reiterates Walmart as buy
Oppenheimer said investors should buy the dip heading into Walmart earnings next week.
“Looking forward, we believe the defensive attributes of the WMT business model, grocery share gains, growing contributions from alternative revenue streams, and easy comparisons support an outperformance case from here.WMTshares have generally struggled on recent prints, and we would take advantage of any such dips.”
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