Here are the biggest calls on Wall Street on Wednesday:
Morgan Stanley reiterates Amazon as overweight
Morgan Stanley said it’s bullish on the e-commerce giant’s earnings next week.
“We are ~13%/14% ahead of street 2Q/2023 EBIT and expect upward revisions to street EBIT numbers following the 2Q print driven by shipping and fulfillment cost per unit efficiencies as AMZN reaps the benefits of its regional fulfillment network which it rolled out in 1Q23.”
Deutsche Bank upgrades Spotify to buy from hold
Deutsche said in its upgrade of Spotify that the selloff is “overdone.”
“After the YTD rally, very crowded long positioning, and with the pricing catalyst now in the rearview mirror, we think investors are taking a ‘shoot first, ask questions later’ approach. However, we came away from the print modestly more constructive, as top-of-funnel metrics continue to outpace expectations, 3Q gross margin guide came in above consensus, and operating losses narrowed once again.”
Barclays reiterates Apple as equal weight
Barclays said it’s expecting an in-line quarter when Apple reports earnings next week.
“We see in-line June-Q as better Services and stable iPhones offset weaker non-iPhone hardware categories. Sep-Q looks to be at risk due to IP15 delay and some units shifting to Dec-Q.”
Raymond James downgrades Target to market perform from strong buy
Raymond James said in its downgrade of the stock that it’s “losing topline momentum.”
“Our change in opinion reflects our belief that QTD sales & traffic trends have remained soft after taking a step down early in the quarter and suggest Target is losing topline momentum.”
Bank of America names NXP Semiconductors as a top pick
Bank of America said the semiconductor company has the chops to navigate a tough environment.
“While macro remains in flux, we believe NXPI’s 1) portfolio diversity, 2) ability to pass along rising input costs, and 3) secular autos content growth is helping them navigate the current environment.”
Morgan Stanley downgrades RTX to equal weight from overweight
Morgan Stanley said in its downgrade of the stock that risk/reward seems “balanced” right now.
“We downgrade RTX to Equal-weight from Overweight as we see balanced risk reward.”
Morgan Stanley upgrades WW International to overweight from equal weight
Morgan Stanley said shares of the company formerly known as Weight Watchers are underappreciated.
“We see an undervalued turnaround story with thematic exposure given the combination of a reaccelerating core business in addition to faster than anticipated traction in WW’s new GLP-1 telehealth brand Sequence.”
Needham reiterates Netflix as hold
Needham said its checks show investors are feeling more “bearish” after the company’s earnings report last week.
“Since reporting earnings last week, our incoming call volume regarding NFLX has shifted decidedly more bearish.”
Citi reiterates Eli Lilly as buy
Citi raised its price target on the stock to $525 per share from $360 and says it has a “continued commitment” to the stock.
“While our standard DCF-derived valuation does not imply significant upside to LLY, we recognize that the stock is driven by near-term earnings momentum.”
Deutsche Bank adds a catalyst call buy on Goodyear Tire
Deutsche said the company’s agreement with Elliot Management to add to Goodyear’s board will unlock shareholder value.
“We are adding Goodyear to our short-term Catalyst Call Buy List, as we believe the agreement announced yesterday to add to its Board of Directors, as suggested by Elliott Management, and even more so, the constitution of a Strategic and Operational Review Committee to explore strategic options for the company, could potentially help unlock considerable shareholder value.”
Citi opens a positive catalyst watch on Restaurant Brands
Citi opened a positive catalyst watch on shares of the owner of brands like Burger King and says it sees a rally in shares heading into earnings on August 8.
“QSR has lagged the market over the past 3 months as shares have digested some of the initial excitement around management changes and the Reclaim The Flame program.”
Bank of America reiterates Microsoft as buy
Bank of America said it’s standing by its buy rating after the company’s robust earnings report on Tuesday.
“Microsoft reported overall resilient Q4 results with revenue upside of $800mn across the broader lines of businesses.”
Morgan Stanley reiterates Disney as overweight
Morgan Stanley lowered its price target on the stock to $105 per share from $110 and says the Hollywood strike is weighing on the industry.
“Linear TV pressures and a maturing streaming market lead us to lower our DIS/WBD/FOXA/PARA estimates. Hollywood’s labor strikes are a highly visible manifestation of the stress in the ecosystem and add additional uncertainty.”
Citi reiterates Meta as a top pick
Citi said Meta is a top pick heading into earnings on Wednesday afternoon.
“As revenue reaccelerates, we look for margins to expand as we monitor Meta’s capex (though we expect capex guidance for ’23 to be unchanged). Meta is our top pick across the Internet sector and we reiterate our Buy rating and $360 TP.”
TD Cowen initiates Microstrategy as outperform
TD said in its initiation of the business intelligence company that it’s “an attractive vehicle for investors looking to gain Bitcoin exposure.”
“This is not a short-term trading strategy but rather reflects a belief that ultimately, bitcoin will prove a superior store of value relative to metals and fiat currencies. We see MSTR as an attractive vehicle for investors looking to gain Bitcoin exposure.”
JPMorgan reiterates Alphabet as overweight
JPMorgan said it’s standing by its overweight rating on the stock after Tuesday’s earnings report.
“GOOGL posted solid 2Q results w/upside across the board. Yes, expectations were somewhat muted going in, but these were clean results and GOOGL struck the right notes as it emphasized AI leadership, advertising stabilization & innovation, & progress on the cost structure.”
JPMorgan adds United Airline to the focus list
JPMorgan said the airline has “greater potential upside.”
“We are adding UAL to the AFL (analyst focus list) (Value Strategy) as international travel tailwinds coupled with a multi-year pilot and aircraft shortage continue to add to our conviction that the Big 3 (DAL, UAL, AAL) can continue their outperformance against domestic-centric carriers for some time.”
Morgan Stanley reiterates General Motors as overweight
Morgan Stanley said the stock’s weak reaction to Tuesday’s GM earnings report is a “headscratcher.”
“The market was ready to ‘sell the news’ given concerns of over-earning into UAW negotiations.”
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