Sprout Farmers Market downgrade and Bluebird Bio coverage initiation also among notable calls
Check out today's top analyst calls from around Wall Street, compiled by The Fly.
ATTRACTIVE VALUATION: Oppenheimer analyst Bo Pei initiated coverage of Pinduoduo (PDD) with an Outperform rating and $100 price target. The analyst noted that Pinduoduo is the third-largest e-commerce platform in China and has recorded 2019 gross merchandise volume approximately one-sixth of Alibaba's (BABA) and half of JD.com's (JD). Despite having 683M active buyers, average spending on Pinduoduo is only one-fifth Alibaba's and a third of JD's, Pei pointed out. The analyst expects Pinduoduo will narrow this gap by leveraging its "large and active" buyer base, and finds the stock's current valuation as attractive.
'SEVERAL' CATALYSTS AHEAD: Piper Sandler analyst Brent Bracelin upgraded Workday (WDAY) to Overweight from Neutral with a price target of $275, up from $248. "Several" catalysts could drive a reacceleration in the company's subscription growth next year after bottoming in the second half of this year in the mid-teens, Bracelin told investors in a research note. These include remote work tailwinds within the core human capital management and ack-office automation that could open up an entirely new business-to-business payment revenue opportunity similar to Coupa Pay, the analyst added. He recommends buying Workday "ahead of a promising 2021 recovery."
MOVING TO THE SIDELINES: Gordon Haskett analyst Chuck Grom downgraded Sprouts Farmers Market (SFM) to Hold from Buy with a price target of $24, down from $32. He also cut his 2021/2022 earnings per share estimates given his concerns about how the company will retain and cultivate both new and existing shoppers with much of the company's year-to-date comp strength supported by its Instacart partnership and with no formal loyalty card program in place. When backing out the benefits from digital growth, Sprouts' in-store comp trends were likely closer to the 3%-4% range, estimates Grom, who noted this is meaningfully below peers and likely suggests the company acquired fewer new customers relative to others during its time as a "COVID-winner."
GENE THERAPY PLATFORM UNDERVALUED: Mizuho analyst Difei Yang initiated coverage of Bluebird Bio (BLUE) with a Buy rating and $123 price target. The analyst believes the current share price does not appropriately reflect the value in the company's gene therapy platform and potential to drive significant revenue over time in both severe genetic diseases and oncology. Yang believes the company has generated "transformative data in a number of clinical programs" and sees "significant potential" in LentiGlobin for the treatment of sickle cell disease.
BUY DAVE & BUSTER'S: BMO Capital analyst Andrew Strelzik upgraded Dave & Buster's (PLAY) to Outperform from Market Perform with a price target of $26, up from $17, which implies upside of 50%. Monday's private senior notes offering bolsters the company's liquidity and extends its covenant relief, removing the primary concern and a key overhang, Strelzik told investors in a research note. The analyst is now "more comfortable" looking to Dave & Buster's EBITDA potential, which he says should at least approach, if not return to, pre-pandemic levels. This creates a risk/reward that "skews meaningfully to the upside," Strelzik contended.
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