Li Auto, NIO and Xpeng coverage initiations also among notable calls
Check out today's top analyst calls from around Wall Street, compiled by The Fly.
BUY FACEBOOK: BMO Capital analyst Daniel Salmon upgraded Facebook (FB) to Outperform from Market Perform with a price target of $325, up from $270. The analyst sees Apple's (AAPL) rollout of the App Tracking Transparency prompt and subsequent limitations on identifier for advertiser marking as the peak for Facebook's "headwinds from targeting." Apple's move acts as a "clearing event" for the broader issue, Salmon told investors in a research note. From here, vertical integration for e-commerce and more server-to-server integrations for advertising should help drive a narrative about Facebook having "greater control over its revenue destiny," the analyst added. He believes that while antitrust and political risk "remain acute," this is better priced into Apple shares after the recent pullback.
'SIGNIFICANT' AD OPPORTUNITY: JPMorgan analyst Cory Carpenter initiated coverage of Roku (ROKU) with an Overweight rating and $475 price target. Roku is the leading TV streaming platform in the U.S. by hours streamed, with 51M active accounts and users streaming nearly 60B hours of content in 2020, Carpenter noted. The analyst believes Roku is well positioned as TV viewing increasingly shifts to streaming. Carpenter's "bull thesis" is largely driven by the belief that Roku has a "significant" advertising opportunity, with only an estimated 8%-9% of TV ad budgets currently allocated to streaming, which "significantly lags the shift in eyeballs."
LI AUTO, NIO INITIATIONS: Jefferies analyst Alexious Lee initiated coverage of Li Auto (LI) with a Buy rating and $44.50 price target. Li One's EREV powertrain has proven a great success, which should allow it to turn operating cash flow positive and profitable earlier than peers, Lee argued. The analyst projects Li's sales to grow 100% and 86% year-over-year in fiscal years 2021 and 2022, respectively, both of which are ahead of consensus.
Lee also started coverage of NIO Inc. (NIO) with a Hold rating and $60 price target. While calling NIO "China's icon for luxury BEVs," Lee argued that investors' expectations are high given the company's new model and better introduction during NIO day. The analyst also noted that the firm's fiscal years 2021 and 2022 revenue forecasts for NIO are 10% behind consensus.
Lastly, Lee initiated coverage of Xpeng (XPEV) with a Hold rating and $54.40 price target. While the company has "very strong exposure to tech-driven growth" from accelerating sales of P7 and its next Lidar equipped model, Lee's fiscal year 2021 forecast of 120% sales growth is lower than consensus. However, his fiscal year 2022 forecast of 129% is higher given expectations for slower market acceptance and higher competition in its price segment.
SELL PELOTON: UBS analyst Eric Sheridan downgraded Peloton Interactive (PTON) to Sell from Neutral with a price target of $124, up from $115. The stock is "emblematic of a market that values growth over any semblance of valuation that can be justified" on a multiple year view based on fundamentals, Sheridan told investors in a research note. The analyst thinks investors "need to be wary of the rising trend of bull market optimism" in a handful of businesses that have been either COVID-19 "beneficiaries" or have come to the public markets over the last 18 months. He sees a negative risk/reward skew for Peloton shares at current levels.
MARKET 'OVEROPTIMISTIC': Berenberg analyst Jack Cummins initiated coverage of DraftKings (DKNG) with a Sell rating and $41 price target. The analyst thinks the market is "overoptimistic" about DraftKings after looking at the competitive landscape in the U.S. sports-betting sector.