Here are Wednesday’s biggest calls on Wall Street:
Oppenheimer initiates Pure Storage as outperform
Oppenheimer said the data storage company is best positioned for share gains.
“Our bullish stance is predicated upon our view that Pure Storage is: (1) a beneficiary of rising creation and storage of unstructured data that is used to build and deliver AI applications; (2) a long-term share gainer in the all-flash array (AFA) market, where it has a technological advantage.”
Evercore ISI downgrades Caterpillar to in line from outperform
The firm said it sees earnings per share risk for Caterpillar.
“Better secular trends in power gen/data centers and government infrastructure/re-shoring/energy transition act as partial offset to that much more challenging starting point for CAT, but clearly big operating leverage on volumes bouncing off of somewhat depressed level is not the set up today.”
UBS upgrades 3M to buy from neutral
After a change in analyst coverage, the firm upgraded 3M and said it’s a “big idiosyncratic opportunity with plenty to fix.”
“We believe the company’s new outsider CEO, William M. Brown, is hitting all the right notes, including (1) reallocating R&D spending towards reinvigorating growth (currently less than 20% of R&D spend goes to new product development and annual new product introductions are down 85% vs. a decade ago); (2) improving order fill rates.”
BTIG upgrades On Holding to buy from neutral
The firm said it sees a slew of tailwinds ahead for the shoe company.
“We view Q3 as a representation of On Holding AG’s true top-line momentum and go-forward earnings power, vs. Q2 when the business was heavily constrained, esp. at DTC [direct to consumer].”
Barclays reiterates Instacart as overweight
The firm said it’s sticking with its overweight rating following earnings.
“ Instacart, Inc. (Maplebear Inc.) shares are finally starting to reflect the solid fundamental story, yet its 11x EBITDA still trails the peer group by a whopping 50%.”
Redburn Atlantic Equities downgrades Starbucks to sell from neutral
The firm downgraded the stock citing a lack of near-term growth prospects.
“However, as has been the case at Starbucks of late, the recovery will come at a cost not adequately reflected in consensus, in our view. In addition, with shares trading at an elevated forward P/E multiple, there is little room for error. We downgrade to Sell with an $77 PT.”
Telsey reiterates Target as outperform
Telsey says it’s sticking with its outperform on Target ahead of earnings next week.
“We expect the positive comp trend to continue in 3Q24 and ahead.”
Bank of America reiterates Salesforce as buy
The firm raised its price target to $390 per share from $325 and said Salesforce.com is a top pick.
“A round of calls with partners suggests largely in-line deal activity, consistent with Q2. Key takeaways: 1) steady growth in Sales/Marketing Clouds & Service Cloud, 2) health care/life sciences, financial services & government verticals continued to outperform.”
Morgan Stanley reiterates Spotify as overweight
The firm said Spotify remains a top pick following earnings.
“ Spotify Technology S.A. continues to make ’24 a showcase for a) product leadership, b) pricing power, and c) operating leverage. This results in a ramp in FCF from roughly zero in ‘22 to $2.3bn in ‘24 on its way to $3.6bn by ’26E.”
Jefferies reiterates Netflix as buy
The firm said the latest report of monthly active users for Netflix weakens the bear case.
“ Netflix’s disclosures of 70M MAUs [monthly active users] (vs. +75% growth from 40M in May) and 50% of new subs joining through the ad tier were better than expected and weaken the bear narrative that NFLX’s ad tier lacks scale.”
Piper Sandler reiterates Micron as overweight
The firm said it’s getting more bullish on the stock after a series of meetings with Micron Technology management.
“We feel the company continues to be well-positioned with its HBM [high bandwidth memory] product offering and roadmap. Incremental growth drivers in the near-term continue to be outsized orders from the data center end market while longer-term, automotive as well as a return to growth from handsets and PCs could provide tailwinds in our view.”
Evercore ISI reiterates Apple as outperform
Evercore said the stock is a top pick heading into 2025.
“Beyond AI, we continue to expect solid growth out of Services (low teens) and Wearables (HSD) in FY25 along with continued strength in margins. This growth coupled with steadily accelerating iPhone y/y growth should enable Apple stock to work higher as we go through 2025.”
Wedbush reiterates Tesla as outperform
The firm said it expects Tesla Motors shares to accelerate, especially after President-elect Donald Trump named Elon Musk to a Department of Government Efficiency.
“This is another indicator that Musk will have a major seat at the table in the White House and ultimately this is a positive for Tesla as Trump will fast track the autonomous and AI initiatives in our view over the next 12 to 18 months that will be a gamechanger to the Tesla story.”
TD Cowen reiterates Cava as buy
The firm said CAVA Group Inc. had a “flawless” third quarter.
“We are pleased with the sales-driven 3Q beat and 2024 guidance raise from tangible sales drivers in addition to improvements in brand awareness & customer satisfaction.”
