Here are Friday’s biggest calls on Wall Street:
Citi initiates McKesson as buy
Citi said McKesson has “transformed itself into an agile healthcare services company.”
“And while we expect MCK to maintain its dominance in U.S. distribution, our Buy rating is predicated on the margin accretion MCK will realize as it grows its oncology and biopharma services franchises.”
Atlantic Equities reiterates Netflix as overweight
Atlantic Equities said it’s bullish on Netflix’s paid sharing platform.
“We now see a 9% uplift in subs over time from the initiative as disgruntled disconnecting subs are more than offset by dislocated sharers obtaining their own subscriptions, while we see an overall ARPU uplift of about 3%, for a combined effect of 13%.”
Piper Sandler reiterates Alphabet as overweight
Piper said AI is a “real risk” to Alphabet’s search revenues.
“Google’s market share is undeniable and even more impressive is its control over distribution in our view. That said, AI is a real risk to Google Search revenues, and we estimate ~$15BN ‘at risk’ by 2025E, or ~7% of total.
Barclays reiterated FedEx as overweight
Barclays said it’s standing by its buy rating on the stock but that investors want more from management.
“FedEx management cost reduction targets appear plausible at a high level, but digging deeper, we suspect investors will seek specific capacity reduction and be quick to discount management platitudes, which have been the hallmark of past plans laid to waste.”
UBS reiterates Wells Fargo and Bank of America as buy
UBS said it sees a re-rating for bank stocks such as Wells and Bank of America.
“As such, we flag two stocks where re-rating could continue beyond 1Q earnings: BAC, where relative valuation vs. JPM appears too wide, and WFC, whose valuation close to TBV (tangible book value) suggests recessionary levels.”
Bernstein reiterates Tesla as underperform
Bernstein said it’s standing by its underperform rating on the stock as competition remains fierce.
“We believe the main driver of Tesla’s share losses has been intense competition.”
Loop initiates Jack in the Box as buy
Loop called the fast food company an “improving growth profile at an attractive price.”
“For the company’s Jack in the Box brand, we are modeling system-wide same-store sales growth of 6.2% in 2Q23, 5.0% in FY23 and 3.1% in FY24.”
Morgan Stanley names Mercadolibre a top pick
Morgan Stanley said it sees multiple growth drivers for the LatAm e-commerce company.
“Multiple Sources of Earnings Upside With new EBIT-level builds for eight MELI business lines, we see a durable base of profitable growth drivers
Loop downgrades JD.com to hold from buy
Loop said it sees the company’s valuation staying depressed in the near term.
“We are downgrading JD from Buy to Hold and lowering our PT to $49 per share (from $82 previous). We continue to believe the company is undervalued and see potential for meaningful upside over the long-term, but no longer see conditions for valuation unlock in the near-term.”
Deutsche Bank reiterates Charles Schwab as buy
Deutsche said it’s standing by its buy rating on shares of Charles Schwab.
“While we see Charles Schwab as being more challenged than the trust banks from this dynamic, we maintain the view that SCHW has a much stronger EPS growth profile over the next 2-3 years than the trust banks, even if the 2023 outlook is now much more subdued.”
Cowen upgrades Restaurants Brands to outperform from market perform
Cowen said it’s bullish on a U.S. turnaround for QSR, parent company of Burger King.
“We are bullish on BK U.S. SSS upside under a new chairman & new CEO as a capable brand president is granted autonomy to turn around the brand.”
Bernstein reiterates Boeing as outperform
Bernstein said it thinks Boeing is “turning the corner.”
“We continue to rate Airbus and Boeing Outperform, based on their long-term trajectories and the likelihood that they may be turning the corner on the supply chain.”
Bank of America downgrades Generac to underperform from neutral
Bank of America said in its downgrade of the battery backup company it’s concerned about a lack of recovery.
“After GNRC’s precipitous fall from grace as the second worst performing stock in S&P in 2022, we argued shares had largely flushed out into 2023. However, GNRC’s ambitious FY23 guidance seems increasingly out of reach to us, as pressures mount in the residential segment.”
UBS reiterates Disney as buy
UBS said it thinks Disney will take a 100% ownership stake in Hulu and integrate it with Disney+.
“Our base case is Disney is put Comcast’s stake and takes 100% ownership.”
Morgan Stanley reiterates elf Beauty as overweight
Morgan Stanley said it sees a long-term growth opportunity for the beauty company.
“We are reiterating our OW on ELF as our preferred SMID cap name, with increased confidence behind our call for large topline upside vs consensus, supported by accelerating Q1 US scanner data sales which confirms near-term upside and greater LT growth opportunity than the market expects.”
