Monday’s Biggest Calls on Wall Street

Wells Fargo: Reiterates Meta as Overweight

Wells Fargo maintained its overweight rating on Meta and lowered its price target to $372 per share from $389. The company believes Meta’s improved cost discipline and capital allocation warrant a modest premium. They are confident in the stock ahead of earnings later this month.

JPMorgan: Initiates Arm Holdings as Overweight

JPMorgan initiated coverage on Arm Holdings with an overweight rating. They consider the chipmaker to be a leader in semiconductor compute, with a strong semiconductor IP portfolio and developer ecosystem.

Bank of America: Reiterates Domino’s as Buy

Bank of America reiterated its buy rating on Domino’s, although they lowered the price target to $461 per share from $483. They expect the company’s growth rate to surprise on the upside due to reaccelerated unit growth and share gains in carryout, supporting comps within the category.

Goldman Sachs: Reiterates Netflix as Neutral

Goldman Sachs maintained its neutral rating on Netflix ahead of earnings next week. They anticipate Netflix to report above Street modeled subscriber performance, citing factors such as password crackdown execution, content breadth and depth, and varied price points stimulating demand.

Barclays: Reiterates Disney as Equal Weight

Barclays remains cautious on Disney heading into earnings in early November. While acknowledging a lack of visibility beyond the near term, they believe focus may gradually shift towards a longer-term outlook for Disney, particularly with the upcoming disclosure of financials in the new reporting structure breaking out ESPN.

JPMorgan: Reiterates Apple as Overweight

JPMorgan continues to endorse Apple as overweight, citing their Apple survey checks showing moderating product delivery times. This trend is observed in their Product Availability Tracker, indicating improving availability across various models.

Baird: Upgrades On Holdings to Outperform from Neutral

Baird upgraded On Holdings from neutral to outperform, highlighting the shoe manufacturer’s increasing appeal. They anticipate strong consumer demand and positive orders for spring 2024, supporting upside potential to estimates.

Wells Fargo: Reiterates Tesla as Equal Weight

Wells Fargo remains cautious on Tesla ahead of earnings next week, expressing concern about margin erosion. They expect auto gross margin, excluding EV credits, to decline from 18.1% in Q2 to 16.3% in Q3.

Bank of America: Initiates Motorola Solutions as Buy

Bank of America initiated coverage on Motorola Solutions with a buy rating, emphasizing the company’s well-positioned nature and multiple tailwinds supporting growth. They highlight Motorola’s focus on public safety and enterprise security, which contributes to solid pricing power and a healthy funding environment.

Bank of America: Downgrades Datadog to Neutral from Buy

Bank of America downgraded Datadog from buy to neutral, expressing concerns about slowing demand for the software company. Their demand checks and scenario analysis suggest downside revenue risk.

Jefferies: Upgrades Aramark to Buy from Hold

Jefferies upgraded Aramark from hold to buy, noting that the turnaround for the food service and uniform company is taking hold. They anticipate organic growth of approximately 6% in FY24 and FY25, driven by successful turnaround efforts and increased outsourcing penetration rate post-Covid.

Redburn Atlantic Equities: Downgrades Spotify to Neutral from Buy

Redburn downgraded Spotify from buy to neutral, citing margin risks. While positive about Spotify’s momentum in operating cost cuts and expected positive EBIT in Q4 2023, they see limited value from this point due to margin concerns.

Evercore ISI: Upgrades Oracle to Overweight from In Line

Evercore ISI upgraded Oracle from in line to overweight, noting a compelling entry point. They believe that the recent pullback provides an interesting opportunity for a business now positioned to deliver more consistent revenue and earnings growth, thanks to a higher percentage of revenue coming from cloud solutions.

Goldman Sachs: Upgrades Lennox to Buy from Sell

Goldman Sachs upgraded Lennox from sell to buy, expecting better margins for the HVAC company. They anticipate a bottoming of residential HVAC volumes and ongoing margin improvement in the commercial segment.

Citi: Upgrades Patterson-UTI Energy to Buy from Neutral

Citi upgraded Patterson-UTI Energy from neutral to buy, considering it a top-tier business. They acknowledge that the upcoming recovery in U.S. drilling may be modest, but they believe Patterson-UTI’s quality operations and deal synergies will drive outperformance.

Baird: Names Capital One a Fresh Pick

Baird named Capital One as a fresh pick, stating that shares of the credit card company are too compelling to ignore. They highlight the significant credit card reserves built by Capital One in response to potential economic challenges, positioning the company well with a relatively high card reserve and manageable delinquencies.

Piper Sandler: Reiterates Amazon as Overweight

Piper Sandler maintained its overweight rating on Amazon, emphasizing its positive outlook on the stock. They believe structural efficiencies outweigh the impact of rising oil prices, forecasting strong operating income for Q3 2023.

Barclays: Upgrades Zscaler to Overweight from Equal Weight

Barclays upgraded Zscaler from equal weight to overweight, recognizing the cloud security company as a market leader. They specifically reference their preference for secular growth in SASE (secure access service edge) and the potential size of this market in the future.

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