Bank of America and Kroger downgrades also among notable calls
Check out today's top analyst calls from around Wall Street, compiled by The Fly.
LESS COMPANY-SPECIFIC RISK: Bernstein analyst Douglas Harned upgraded Boeing (BA) to Market Perform from Underperform with a price target of $229, up from $196. The analyst sees less company-specific risk now that Boeing controls 787 deliveries, 777X expectations have been reset, and free cash flow estimates have been brought down. However, Harned still views the recovery for commercial aircraft manufacturers as a "long process," given a "mixed" global recovery path, amount of excess capacity in the market, and performance challenges facing many airlines. International traffic remains very low and vaccine rollouts stay highly uneven by country, the analyst added.
MOVING TO THE SIDELINES: KeyBanc analyst Bradley Thomas downgraded Dollar General (DG) to Sector Weight from Overweight without a price target. The analyst cited valuation as well as difficult comparisons as the economy returns to normal for the downgrade. While Thomas continues to view Dollar General as a "best-in-class retailer" with a positive long-term outlook, he has several near-term concerns and believes the recent uptick in the stock "has baked in enthusiasm for stimulus."
OUTLOOK FULLY REFLECTED IN VALUATION: Baird analyst David George downgraded Bank of America (BAC) to Neutral from Outperform with a $42 price target. The analyst said the company remains well positioned but the outlook is fully reflected in its valuation. He noted the valuation is now near previous peaks and well above historical medians on both an absolute and relative basis. George remains comfortable owning Bank of America shares but feels the risk/reward is more balanced at current levels.
SELL KROGER: Goldman Sachs analyst Kate McShane downgraded Kroger (KR) to Sell from Neutral with a price target of $31, down from $37. As economies reopen and customer demand likely shifts incrementally toward food away from home, the promotional environment could become more competitive in grocery throughout the coming year, McShane contended. That, coupled with potentially rising costs from inflation, results in "multiple headwinds that could pressure margins" for grocers, the analyst added. McShane believes Kroger has limited ability to insulate margins.
The analyst also downgraded Albertsons (ACI) to Neutral from Buy with a price target of $20, down from $23.
BUY QUEST DIAGNOSTICS: UBS analyst Kevin Caliendo upgraded Quest Diagnostics (DGX) to Buy from Neutral with a price target of $158, up from $135. The company is emerging from the pandemic in a position of strength and its revenue is poised to accelerate to mid-single-digits from the 1.5% average in the past five years, the analyst told investors in a research note. Caliendo added that the underlying industry fundamentals are as "healthy as they have been in 15 years" amid a stable outpatient reimbursement backdrop.
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