Here are Tuesday’s biggest calls on Wall Street:
Morgan Stanley reiterates Nio as overweight
Morgan Stanley said it thinks the electric vehicle company’s stock will begin to gain traction.
“With positive sector sentiment, investors are inclined to take opportunities on laggards, like NIO, to play the catch-up. Following start-up peer, XPeng’s share outperformance of +43% since late June, we also look for laggards, like NIO, to gain traction backed by improving monthly sales.
KeyBanc reiterates Nvdia as overweight
Key raised its price target on the stock to $550 per share from $500 and said it’s “fundamentally best positioned.”
“NVDA (positive, raising estimates, Overweight, raising price target to $550) – Fundamentally best positioned, as we are seeing increasing demand trends across the entire supply chain for generative AI servers.”
Morgan Stanley reiterates Microsoft as overweight
Morgan Stanley reiterated Microsoft as a top pick and said it has “compelling positioning.”
“Our CIO Survey shows stable, but muted, IT budget growth expectations for CY23. However, Microsoft appears uniquely well aligned to several key emerging themes. In the pole position as Gen AI race begins and possessing leverage to demand through consumption revenues, Microsoft is our Top Pick.”
Baird reiterates Tesla as outperform
Baird said it’s bullish on the company’s supercharger opportunity.
“We estimate that TSLA Superchargers currently operate at 8.75% utilization. Including Tesla and non-Tesla vehicles, the Supercharger network could contribute up to $5.2B-$15.7B in revenue by 2030 and add $0.15-$0.45 to full year EPS using our charging scenarios.”
Cowen reiterates Netflix as outperform
Cowen said it’s standing by its outperform rating on the stock heading into earnings next week.
“Our 2Q survey suggests NFLX is holding steady as #1 choice for living room viewing, while TikTok & IG gained on Mobile. Reiterate Outperform & $500PT.”
UBS initiates Commercial Metals as buy
UBS said the metals company has an attractive valuation.
“We initiate coverage of Commercial Metals Company (CMC) with a Buy rating, supported by multi-year domestic rebar shipment growth, sustainable high margins and attractive valuation.”
Piper Sandler upgrades Zillow to overweight from neutral
Piper said it likes the stock’s optionality.
“We like the setup for ZG driven by: (1) continued Premier Agent share gains, and (2) product optionality & new initiatives, and (3) a bottoming in the housing macro with sequential improvements forecast through ’24.”
Wells Fargo names Amazon a top pick
Wells added Amazon to its signature picks list and said it sees a positive risk/reward heading into earnings later this month.
“Buy-side AWS expectations rising ahead of print, believe 2Q:23 ‘bar’ is now in line w/ Street +10% y/y growth vs. 8% two weeks ago.”
Evercore ISI names Uber a top pick
Evercore named Uber a top pick in place of Meta and said it has a strong growth outlook.
“UBER has one of the strongest top-line growth outlooks among the companies we cover and faces a series of potential “value catalysts” – the attainment of GAAP profitability in H2, the initiation of capital returns, possibly also in H2, and S&P 500 inclusion.”
Evercore ISI adds a tactical underperform on Netflix
Evercore added a tactical underperform on the stock heading into earnings next week and says it’s concerned about “elevated” market expectations.
“Our TAP Underperform on NFLX is based on our concern that market expectations have become highly elevated into the print, especially in terms of Sub Adds.”
Argus upgrades Generac to buy from hold
Argus said the battery backup company it’s benefitting from cost-cutting efforts.
“Upgrading to BUY. Generac has benefited from stronger-than-expected growth in its Commercial & Industrial business, as well as from cost-cutting efforts.”
Canaccord initiates Newell Brands as buy
Canacccord said in its initiation of Newell that better days are ahead for the consumer goods company.
“After a well telegraphed ugly H1 2023 driven by retailer destocking and a pinched consumer after one-off demand in 2021, we believe better days are ahead with new management at the helm and a reasonable strategy that we believe will reignite modest top-line growth, improve profitability and cash flows, and reduce leverage.”
Citi opens a positive catalyst watch on Hewlett Packard
Citi added a positive catalyst watch on the stock and says it’s gaining PC market share.
“From a vendor perspective, HP Inc (#2, at 22% share) and Apple (#4, at 9% share) each gained share YoY in the quarter, capturing +3pts and +2pts, respectively. These preliminary PC results suggest potential for upside for HPQ and AAPL’s PC segment revenues. We are opening a positive catalyst watch for HPQ as these preliminary results suggest potential for upside to July quarter PC revenues.”
Wolfe upgrades Vale to outperform from peer perform
Wolfe said it likes the mining company’s free cash flow.
“We upgrade VALE to Outperform as we see cost support for iron ore prices at $95-100/t and given its strong FCF/payout profile.”
Jefferies initiates Toast as buy
Jefferies said the restaurant tech platform’s profitability should “inflect positively in 2023.”
“TOST has experienced rapid rev growth via share gains and expansion of its software product portfolio.”
Jefferies upgrades JPMorgan to buy from hold
Jefferies said the banking giant is “best-in-class.”
“While JPM has been a recent winner, we upgrade the stock to Buy given a stable earnings outlook, best-in-class ROE profile, conservative reserving history, and better revenue diversity.”
Bank of America upgrades 3M to neutral from underperform
Bank of America said it sees a more “balanced” risk/reward for the stock.
“We upgrade 3M to Neutral (from Underperform), reflecting near-term catalysts balanced by continuing legal risks with potentially severe financial impact.”
Bank of America upgrades US Bancorp to buy from neutral
Bank of America said the bank stock is underappreciated.
“We upgrade our rating on US Bancorp (USB) from Neutral to Buy. We believe investor focus on capital build has distracted attention away from what is among the highest quality franchises in the US banking industry.”
Evercore ISI downgrades JetBlue to underperform from in line
Evercore downgraded the airline on valuation and concerns about some recent negative catalysts.
“Downgrading JBLU to Underweight. JBLU up 37% in one month following an obviously negative fundamental outcome (lost Northeast Alliance ruling). While there will be twists and turns along the way, we believe the Spirit acquisition ultimately gets done while the premium JBLU is paying for Spirit continues to expand (as SAVE fundamentals continue to moderate).”
KeyBanc reiterates Apple as overweight
Key raised its price target on the stock to $200 per share from $180 and said it’s standing by its overweight rating but has some near-term concerns.
“Our concern is twofold: 1) Key First Look Data shows Indexed Spending for June was +23% m/m vs. the three-year average of +2% m/m, and while our June data was better than the historical avg. for F3Q, our KFLD shows -15% q/q, worse than the three-year historical avg. of -9% q/q; and 2) we believe AAPL indirect channel (U.S. Carriers) will be soft, with U.S. upgrade rates moving to historical lows.”
Goldman Sachs reiterates T-Mobile as a top pick
Goldman said that T-Mobile is the firm’s “overall top pick across large cap telecom and cable.”
“Key catalysts that we see in 2023 include: 1) durable postpaid phone net adds (2.9mn vs. 3.1mn in 2022), even as sector growth slows, owing to continued share gains in underpenetrated segments (rural, business), 2) sustained growth in core adjusted EBITDA as merger synergies approach run-rate.”
TD Cowen reiterates Target as outperform
The firm lowered its price target on Target to $166 per share from $200 but said it’s standing by its outperform rating.
“We are most concerned with sustained shifts away from goods to services and student loan headwinds which may drive incremental downside near term; meanwhile, stiff price competition, negative margin mix, shrink trends, and tougher food comparisons amidst disinflation are additional factors to monitor.”
Truist upgrades Scotts Miracle-Gro to buy from hold
Truist said in its upgrade of Scotts that the pandemic hangover is finished.
“First, we believe the post pandemic reversion of the US Consumer segment has finally ended. We expect results to be more forecastable/ manageable going forward.”
Bank of America reiterates American Express as a top pick
Bank of America said it’s bullish on the credit card company heading into earnings later this month.
“AXP is our top pick in the sector due to its super-prime and high income cardmember base, which is better protected from inflation pressure.”
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