Here are Tuesday’s biggest calls on Wall Street:
BMO names Adobe a top pick
BMO said the stock is set to have a “meaningful” benefit from AI.
“For ADBE, we believe that generative AI can be a meaningful tailwind to net new ARR [annual recurring revenue], starting mostly in FY24.”
Bank of America reiterates Tesla as neutral
Bank of America said the most recent Tesla delivery numbers in China indicate demand is being pulled forward.
“We’ll continue to monitor the data, but the magnitude of the drop potentially indicates that the price cuts TSLA implemented in late 2022 may have pulled forward demand rather than driving incremental volumes.
Truist upgrades DraftKings to buy from hold
Truist said DraftKings is the “best top-line story in gaming today.”
“Following a Q2 inflection to profitability, we think DKNG’s training wheels are off. Management has deftly navigated around numerous early threats, and we think the path to significant and sustainable profitability has become clearer.”
Bank of America reiterates Ralph Lauren as buy
Bank of America said it sees an attractive risk/reward for Ralph Lauren shares.
“We reiterate our Buy and think the risk/reward is skewed to the upside as we expect the company’s geographically diverse and DTC [direct to consumer] weighted business model will prove resilient.”
Morgan Stanley reiterates Walmart as overweight
Morgan Stanley said it’s still bullish heading into Walmart earnings on August 17.
“Risk/reward skews positive in our view, though less so than earlier this year given the stock is up ~14% in the past 6 months.
Morgan Stanley reiterates Fisker as underweight
Morgan Stanley reiterated an underweight rating on the electric vehicle company after its earnings report and said Fisker still needs additional capital.
“While 2Q results featured a gross margin positive operation, we still see additional need for capital in the future given the company’s opex/capex spend. This view, coupled with ramping production into the face of an uncertain EV environment, leaves us UW.”
Deutsche Bank reiterates Estee Lauder as buy
Deutsche said it sees a “difficult” quarter when Estee Lauder reports earnings next week.
“However, we also suspect investors are approaching the quarter and guide cautiously — awaiting credible signs that this is truly ‘the bottom’, and more tangible reasons to believe into FY2Q24 and CY24.”
Citi opens a negative catalyst watch on Spirit Airlines
Citi opened a negative catalyst watch on the discount airline and said it sees a “bumpy ride” to gain regulatory approval for the merger with JetBlue.
“Although Citi still sees a 50/50 chance of JetBlue acquiring Spirit, Neutral-rated Spirit’s ops could have a bumpy ride over the coming months. As such, Citi opens a negative, 90-day Catalyst Watch on the shares.”
JPMorgan names Boston Scientific a top idea
JPMorgan added a positive catalyst watch on the stock and said it sees several “high-growth opportunities.”
“We remain bullish on the longer-term outlook for Boston and believe its underlying growth profile warrants a premium multiple relative to peers.”
JPMorgan reiterates Palo Alto Networks as overweight
JPMorgan added a negative catalyst watch on the stock heading into earnings on Friday, but stood by its long-term overweight rating.
“We are adding PANW to our Negative Catalyst Watch as we anticipate any negative data could pressure the stock further after the company’s Friday afternoon earnings event.”
Deutsche Bank reiterates Disney as buy
The German bank lowered its price target on Disney to $120 per share from $131 but said it’s sticking with the stock heading into earnings on Wednesday.
“We’re lowering our PT to $120, driven by our now lower estimates; primarily driven by lower advertising revenue and underperformance at the box office, and to a lesser extent driven by lighter parks attendance in Orlando.”
UBS reiterates Apple as neutral
UBS said recent data from Apple’s App store shows that growth was little changed between June and July.
“Our analysis of Sensor Tower data indicates July App Store revenue was up ~8% YoY, a 50 bps acceleration from June. However, FX in July is a slightly smaller headwind relative to June. Therefore, on a constant currency basis, we estimate App Store growth in July is similar to June.”
Telsey downgrades Home Depot & Lowe’s to market perform from outperform
Telsey said in its downgrade of Home Depot and Lowe’s that the stocks’ run is likely over for now.
“While the stock likely reflects much of the negative news and challenging operating environment, including a bottoming housing market, we don’t expect it to outperform the market in the near term, given the run it has had since May 2023 and the current valuation — trading at an NTM [next twelve months] P/E multiple of ~21.2x vs. the 1- year average of ~18.5x and the 3-year average of ~20.8x.”
Citi reiterates TJX Companies as buy
Citi said it’s bullish heading into earnings next week.
“Based on our crowding analysis, TJX is one of the most crowded longs in our group and the favorite off-pricer among investors. While we believe expectations are relatively high, we expect 2Q to be a positive data point.”
JPMorgan downgrades Freshpet to neutral from overweight
JPMorgan said it downgraded Freshpet mainly on valuation.
“Downgrading to Neutral as Fundamentals Remain Strong But Stock Nears Our Price Target.”
JPMorgan upgrades U.S. Cellular to overweight from neutral
JPMorgan said in its upgrade of the wireless company that “strategic alternative (s) exploration could unlock value.”
“We are upgrading USM and TDS to Overweight with YE24 price targets of $52 for USM and $38 for TDS. TDS and US Cellular Friday announced that the companies are exploring strategic alternatives for US Cellular.”
