Check out today's top analyst calls from around Wall Street, compiled by The Fly.
BUY ALPHABET, SNAP: Wedbush analyst Ygal Arounian assumed coverage of Alphabet (GOOGL; GOOG) with an Outperform rating with a price target of $2,953, up from $2,470. The analyst also added the stock to the Wedbush Best Ideas List as he sees a large market opportunity that he expects to have accelerated coming out of the pandemic. Alphabet is well positioned in a number of key areas across its businesses that Arounian thinks can sustain overall growth in its core ad business, drive long-term sustainable top-line growth in its burgeoning Cloud business, and also lead to improving margins in Cloud, which can materially improve Alphabet's overall EBITDA and margins, well ahead of Street estimates in the coming years.
The analyst also downgraded Facebook (FB) to Neutral from Outperform with a price target of $340, down from $375, as he assumed coverage of the stock. While bullish on the social commerce initiatives the Facebook is building into its platform, Arounian is of the view that Facebook is the "most exposed to privacy risks" among the mega-cap tech stocks the analyst covers. Facebook has been the strongest digital ad platform at effectively tracking and targeting users across the web, but that gives it "the most to lose" if Apple's (AAPL) App Tracking Transparency efforts limit its tracking capabilities, he added.
After assuming coverage of the name, Arounian also upgraded Snap (SNAP) to Outperform from Neutral with a price target of $75, up from $52. Arounian views Snap as "uniquely positioned" as a video-centric platform with a younger, digitally native audience. The company has gained traction with advertisers and has improving momentum coming out of the pandemic, he added.
Additionally, Arounian assumed coverage of Twitter (TWTR) with a Neutral rating with a price target of $75, up from $65.50. The analyst likes Twitter's efforts to improve development velocity, and opportunity from new product services, but believes upside on user growth and revenue product is now priced into shares.
MARGIN MOMENTUM: Atlantic Equities analyst Sam Hudson upgraded Lowe's (LOW) to Overweight from Neutral with a $240 price target. With the market now starting to look beyond tough fiscal 2021 compares, the hardline retail sector's position as a "structural COVID-19 winner is beginning to be appreciated," Hudson told investors in a research note. With the housing market "also remaining supportive," Lowe's is well positioned to continue its transformation, the analyst added. Hudson sees the company reaching its 12% margin target in fiscal 2021 and expects "momentum to continue." Further, the analyst views the current valuation as attractive with 20% potential upside.
POSITIVE ON BRAND DIVERSITY: Argus analyst John Staszak upgraded Yum! Brands (YUM) to Buy from Hold with a $135 price target. The analyst is positive on the company's diverse brands, prospects for higher same-store sales, global operations, and asset-light business model. Staszak added that with 98% of the company's restaurants being franchised, he expects Yum! Brands' capital expenditures to decline and free cash flow to improve, boosting his fiscal year 2021 earnings per share view by 5c to $4.10 and his fiscal year 2022 view by 4c to $4.59.
POSITIVE RISK/REWARD: JPMorgan analyst Jamie Baker double upgraded JetBlue (JBLU) and Spirit Airlines (SAVE) to Overweight from Underweight with price targets of $25 and $54, up from $15 and $31, respectively. The analyst believes COVID-19 will have no permanent, negative margin impact on U.S. airlines. The crisis may provide a "profit stimulus to the industry in the event that corporate demand rebounds to within 80% of estimated 2019 levels but that's a pretty material caveat," Baker tells investors in a research note. For JetBlue, the analyst continues to believe that the company's cost control will continue to be in focus following the impact of COVID-19. He sees a positive risk/reward profile relative to current valuation levels. For Spirit, while COVID-19 has materially impacted the company's profitability, he sees "material upside" relative to his price target.
Baker also upgraded Southwest Airlines (LUV) to Neutral from Underweight with a price target of $66, up from $44. The analyst sees a balanced risk/reward at current share levels and believes Southwest has "ample liquidity to endure the COVID-19 crisis." Southwest has the industry's "deepest track record of profitability, the highest quality balance sheet, and a fiercely loyal customer base," Baker told investors in a research note.
TOP SMID CAP PICK: Bank of America analyst Robert Ohmes initiated coverage of Harley-Davidson (HOG) with a Buy rating and $55 price target. Improved used motorcycle pricing in 2020, pent-up-demand for new models and the implementation of a Certified Pre-owned program is bringing Harley customers into "a cleaner new and used market" that should support pricing, sales of motorcycle parts, and better margins for the dealers, said Ohmes, who called the stock a top SMID cap pick. His analysis of web traffic, YouTube Views, and Google search volume points to "significant brand momentum."