Check out today's top analyst calls from around Wall Street, compiled by The Fly.
BEST BUY A FY23 STORY: Raymond James analyst Bobby Griffin downgraded Best Buy (BBY) to Outperform from Strong Buy with a price target of $120, down from $150, following Best Buy's Q4 earnings report. Griffin still believes that Best Buy's best-in-class fulfillment capabilities, high mix of essential items, and well positioned peer services/GreatCall initiatives should propel it to gain further market share over both the near-term and long-term, but tells investors in a research note that the downgrade reflects current valuation that does not offer sizable multiple re-rating potential in the coming months and challenging comp sales comparisons. The analyst believes Best Buy is increasingly becoming a FY23 story.
L BRANDS UPGRADES: Citi analyst Paul Lejuez upgraded L Brands (LB) to Neutral from Sell with a price target of $58, up from $35. The analyst says he "wrongly under-estimated the magnitude and pace of the improvement" within the Victoria's Secret business, driven by cost improvement and better inventory management. With a spin of Victoria's Secret seeming the likely path to separate these businesses, a Sell rating is not warranted, Lejuez tells investors in a research note. Morgan Stanley analyst Kimberly Greenberger upgraded L Brands to Overweight from Equal Weight with a price target of $65, up from $45. The company's second half results fiscal first quarter guidance confirm that Victoria's Secret is hitting a profit inflection point and that Bath & Body Works could deliver higher profit than it has historically as it shows no signs of topline deceleration, Greenberger tells investors in a post-earnings research note. The company will be more profitable in 2021 "than it was for the last 5 years," argues Greenberger, who sees the improvement at the one brand and ongoing strength at the other offering "a clearer path to separation."
Evercore ISI analyst Omar Saad upgraded L Brands to Outperform from In Line with a price target of $75, up from $50. The company reported "surprisingly robust" margin expansion at Victoria's Secret, said Saad, who thinks "an important culture shift has begun at the company" that gives the brand "a much better chance to succeed." While Bath & Body Works has "evolved into an extremely attractive consumer discretionary business," according to Saad, "perhaps no brand has transformed its fundamental earnings power and outlook more over the course of the pandemic" than Victoria's Secret, the analyst argues.
ANALYSTS SPLIT ON FATE: BofA analyst Tazeen Ahmad initiated coverage of Fate Therapeutics (FATE) with a Buy rating and $115 price target. Fate uses the body's immune system to combat cancer with its platform of engineered induced pluripotent stem cells, or iPSCs, which are developed into natural killer, or NK, cells. The company's FT516 and FT596 have shown proof of concept in diffuse large B-cell lymphoma, or DLBCL, and follicular lymphoma, or FL, while FT538 is in clinical testing for multiple myeloma, or MM, and acute myeloid leukemia, or AML, noted Ahmad.
Meanwhile, Wedbush analyst David Nierengarten downgraded Fate Therapeutics to Neutral from Outperform with an $88 price target. While the analyst appreciates the breadth of Fate's technology, from current share price levels, and now that several proofs of concept have been made, de-risking its novel approaches, going forward, he sees higher downside risk and less reward as clinical programs advance and begin to be compared to standards of care, Nierengarten tells investors in a research note.
SHORT-TERM INVESTMENT IDEA: Deutsche Bank analyst Gabriella Carbone placed a "Catalyst Call: Buy Idea" on Urban Outfitters (URBN) as a short-term investment idea. With Q4 sales already reported, the focus on the upcoming earnings call will likely be on go forward trends, Carbone tells investors in a research note. Urban has already highlighted an improvement in February with comps positive at each brand through the first week of the month, the analyst points out.
CARVANA UPGRADED AT MORGAN STANLEY: Morgan Stanley analyst Adam Jonas upgraded Carvana (CVNA) to Overweight from Equal Weight with a price target of $420, up from $225. Jonas, who sees Carvana being uniquely positioned to serve an automotive and transportation market that goes far beyond the used car market, contends that "describing Carvana as just a 'used car dealer' is like describing Amazon nearly two decades ago as just an online book seller." The company's range of capabilities to be successful in the used car business have adjacent applications to a host of other automotive and fleet management related end markets, argues Jonas, though he notes that it may take several years before the company enters such markets at scale.
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