SolarEdge and SunRun downgrades also among notable calls
Check out today's top analyst calls from around Wall Street, compiled by The Fly.
BUY FOOT LOCKER: Berenberg analyst Brian McNamara initiated coverage of Foot Locker (FL) with a Buy rating and $52 price target. He believes the market is too bearish on Foot Locker and significantly underestimates its importance to Nike (NKE) and other athletic original equipment makers. While direct-to-consumer businesses should unquestionably grow faster at footwear and apparel maker, McNamara thinks Foot Locker will "grab a larger piece of a shrinking wholesale pie."
The analyst also initiated coverage of
Canada Goose (GOOS) with a Buy rating and $43 price target. Given its historically low valuations, the market seems to believe Goose's growth is structurally lower than it once was, but McNamara thinks the slowdown in sales growth throughout 2020 was "neither structural nor inherent to the business," but driven by political turmoil in Hong Kong and the COVID-19 pandemic.
Burlington Stores (BURL) with a Buy rating and $255 price target. He thinks new CEO Michael O'Sullivan can transform the business and believes the market underappreciates new management's off-price expertise.
Skechers (SKX) with a Buy rating and $52 price target. The shares trade at a large, and "unjustified," discount given Skechers' substantial growth prospects, he contended.
Carter's (CRI) with a Buy rating and $115 price target. Carter's should trade much more like a consumer staple and less like an average retailer given its competitive position as the "undisputed leader in the babywear and children's apparel market" and its "recession-resistant" demand profile, McNamara argued.
BROADER GROWTH OPPORTUNITIES: Baird analyst William Power initiated coverage of DocuSign (DOCU) with an Outperform rating and $280 price target. The company has established itself as the global eSignature leader, which should drive broader growth opportunities over time, Power contended. The analyst believes the benefits and drivers of digital transformation "are here to stay well past the pandemic." Growth rates are higher than peers in the SaaS group and DocuSign also has a "significant competitive moat and growing profitability," he added.
SELL SUNRUN, SOLAREDGE: UBS analyst Jon Windham told investors in a research note that current share levels in the alternative energy space offer "good exit points on a 12-month basis." Further, the analyst argued that current valuations in the sector offer an unattractive risk/reward opportunity given election uncertainty and the likelihood "that even a Blue Wave election would result in less-than-priced-in policy support over the next year." Windham prefers "cautious positioning" ahead of the November election in the U.S.
The analyst downgraded
Sunrun (RUN) to Sell from Neutral with a price target of $43, up from $25;
SolarEdge (SEDG) to Sell from Neutral with a price target of $210, up from $160;
SunPower (SPWR) to Sell from Neutral with a price target of $11, up from $10;
JinkoSolar (JKS) to Sell from Neutral with a price target of $55, up from $30.
MORE FAVORABLE RISK/REWARD: Citi analyst Peter Christiansen upgraded ADT Inc. (ADT) to Buy from Neutral with a price target of $10, down from $13.50. The analyst believes that following the recent selloff, the shares offer a more favorable risk/reward. The stock is likely to benefit from momentum in the housing market and ongoing updates on ADT's partnership with Google, he contended. Christiansen added that while the private equity ownership overhang will likely cap multiple upside potential for a period of time, the stock at current levels is a "compelling Buy."
MATERIAL TAILWIND: Craig-Hallum analyst Chad Bennett upgraded Varonis (VRNS) to Buy from Hold with a price target of $150, up from $110. After being a headwind in the first quarter, COVID-19 and the resulting remote work environment has become a meaningful tailwind for Varonis, leading to outstanding Subscription revenue and ARR results, and a fourth quarter guide that is well ahead of previous Street estimates, the analyst contended. Also notable, the company blew out profitability estimates in its first profitable quarter since embarking on the model transition, Bennett added. The analyst argued that "it is now blatantly apparent" to him that Varonis is gaining mind and wallet share in the CSO budget. The combination of cloud app acceleration and remote work should provide a material tailwind for the foreseeable future, he said.