Here are Tuesday’s biggest calls on Wall Street:
Morgan Stanley reiterates Apple as overweight
Morgan Stanley said it’s standing by its overweight rating on Apple and noted it sees an app store “growth inflection.”
“App Store net revenue growth inflected to +1% Y/Y in the month of December, a continued improvement after 5 consecutive months of Y/Y declines.”
Barclays downgrades Capital One and Ally to equal weight from overweight
Barclays said in its downgrade of Capital One and Ally that it’s concerned about inflation and rising interest rates.
“As such, we are becoming less constructive on those with outsized asset sensitivity and areas we believe loan losses will adjust the fastest – namely, lower-end consumer (most impacted by much reduced stimulus, elevated inflation, and higher interest rates) and commercial real estate (uncertainties in office, retail, health care segments). We are lowering our relative ratings on ALLY,COF and MTB from Overweight to Equal Weight and ZION from Equal Weight to Underweight.”
Goldman Sachs reiterates Tesla as buy
Goldman said Tesla’s delivery numbers reported over the weekend were an “incremental negative” but that it’s standing by its buy rating.
“We consider the 4Q22 delivery report to be an incremental negative, although we continue to seeTeslaas well positioned for long-term growth given its position as a cost and full solution leader in clean mobility/EVs and we maintain our Buy rating on the stock.”
RBC downgrades Traeger to sector perform from outperform
RBC said in its downgrade of the grilling company that it sees a delayed recovery.
“We continue to believe inTraeger’slong term opportunity within the broader outdoor cooking space and believe the brand is well positioned to leverage its technology, innovation, and strong engagement to continue growing household penetration in the long term.”
Truist upgrades PayPal to buy from hold
Truist said in its upgrade of PayPal that estimates now look reasonable.
“We upgrade to Buy, from Hold, and raise our PT to $95 (15.6x C24E EPS), fr $75. Our more bullish view reflects: 1) confidence that Street rev ests are now reasonable.”
Baird upgrades Block to outperform from neutral
Baird said in its upgrade of the stock that it’s poised for a comeback.
“SQ is a premier large-cap growth franchise with both profitability and net cash, while benefiting from macro trends such as rising rates (on big cash/subscriber funds) and inflation.”
Baird names Yum and Chipotle top 2023 picks
Baird said it likes restaurant stocks that can work in a time of weakening demand.
“Top picks for 2023 include YUM and CMG; we also like the risk/reward equations on WING, MCD, DPZ, PTLO.. ... We generally are favoring shares of franchisors (i.e., the most durable earnings and cash flow models; includes YUM, WING, MCD, DPZ), as well as those that have idiosyncratic drivers and/or brand profiles that can support positive business momentum even in a scenario in which industry demand weakens.”
Loop names Amazon a top 2023 idea
Loop said Amazon is “well positioned to outperform” in 2023.
“The COVID demand surge has left the company’s fulfillment network significantly overbuilt. Poor utilization combined with inflationary pressures have torpedoed profitability in AMZN’s first party and fulfillment services businesses.”
Piper Sandler upgrades Coty to overweight from equal weight
Piper said in its upgrade of the beauty company that it sees “recovery tailwinds” for shares of Coty.
“We believe increasing exposure to China and Travel Retail will allow for recovery tailwinds.”
Evercore ISI downgrades CVS to in line from outperform
Evercore downgraded the stock mainly on valuation.
“We see valuation as relatively range bound in 2023 until we see greater certainty regarding ultimate portfolio composition ofCVSas well as see a greater portion of the long-term double digit EPS growth coming from operating income.”
Stephens names Wendy’s a top 2023 pick
Stephens said it likes the fast food chain’s “efficient sales and unit growth.”
“We believe Wendy’slow ticket, high frequency occasion profile and highly franchised ownership structure position the brand for efficient sales and unit growth.”
Bank of America reiterates Starbucks a buy
Bank of America said the buying opportunity forStarbucksshares if very attractive.
“SBUX’s transitory China challenges and US margin pressure create a particularly attractive buying opportunity, in our view. Vs. the S&P, SBUX’s valuation is above its 5-year avg but in-line with its avg over 10-years, more relevant given the return to the higher growth algo of the earlier part of that period.”
Bank of America reiterates Citi as buy
Bank of America said Citi shares have an “interesting” risk/reward.
“While the near-term EPS outlook remains uncertain due to the macro backdrop and ongoing business exits (mgmt.’s 2023 guidance should help on this front), we believe that the combination of potential idiosyncratic catalysts and a discounted valuation creates an interesting risk/reward for investors looking to add exposure to a restructuring story.”
Bank of America downgrades XPO to neutral from buy
Bank of America said in its downgrade of the shipping company that it’s concerned about decelerating demand.
“We lower XPO to Neutral from Buy, and our PO to $35 from $60 (pre RXO split), following the spin of RXO, its truck brokerage segment, as well as a deteriorating LTL (less than truckload) environment (60% of revenues) and its inability to sell its European Truck ops.”
Wells Fargo upgrades Wynn to overweight from equal weight
Wells said in its upgrade of the casino company that it sees a significant reopening opportunity for the stock.
“WYNN’s smaller scale and premium mass offering should allow for a speedy recovery.”
Jefferies names Delta a top 2023 pick
Jefferies said the airline is its favorite idea for 2023 and that the setup for airlines is positive.
“We are modestly positive on Airlines heading into 2023, as the revenue setup will continue to offset cost pressures.”
Wells Fargo initiates Mondelez as overweight
Wells said the food products company has “superior” fundamentals.
“We think MDLZ can hit its growth algorithm, even once pricing tailwinds ease.”
RBC downgrades Gilead to sector weight from overweight
RBC said in its downgrade of the stock that the thesis will take time to “play out.”
“GILD’smgmt has done an admirable job de-risking the medium term HIV revenue stream, revitalizing the cell therapy franchise, and laying solid groundwork for LT diversification into new areas of oncology.”
KBW names KKR a top 2023 pick
KBW named KKR a top idea in 2023 and says the private equity investment company has “fundamental strength.”
“Our preference is for companies with unique fundamental strengths at undemanding valuations.”
Wolfe downgrades T-Mobile to peer perform from outperform
Wolfe said it’s concerned about slowing industry growth.
“While T-Mobile remains a great story, we are concerned about slowing industry subscriber growth, fading Sprint churn benefits, long-term capital needs for home Internet, a “fair but full” consensus, and downside risk in the multiple.”
Wells Fargo downgrades Molson Coors to equal weight from overweight
Wells said in its downgrade of the stock that it sees downside to estimates.
“We downgrade TAP to Underweight from Equal Weight as we see significant downside to Street estimates in 2023, and potential valuation reverts to the low-end of historical ranges.”
Guggenheim names Dollar General a top idea
Guggenheim said the company is well positioned for a downturn.
“We are designatingDGas our new Best Idea, replacing PFGC, on the belief that a leading value-oriented and exceptionally well-run consumables retailer will outperform in the initial stages of an economic downturn.”
Baird names Wells Fargo a top 2023 pick
Baird said it likes the risk/reward for the banking giant in 2023.
“We generally prefer more inexpensive names where expectations are the lowest and believe the most negativity and hence opportunity exists in the consumer finance space (COF and AXP), and believe CMA, FITB, and WFC represent the better bank risk/reward trade-offs at current prices.”
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