AutoZone downgrade and Etsy coverage initiation also among notable calls
Check out today's top analyst calls from around Wall Street, compiled by The Fly.
FAVORABLE TRAVEL TRENDS, VALUATION: Piper Sandler analyst Christopher Donat upgraded Visa (V) to Overweight from Neutral with a price target of $260, up from $234. The analyst cited "favorable" U.S. travel trends and the stock's valuation discount to MasterCard (MA) for the upgrade. Donat expects Visa to benefit more from a "vaccine-driven U.S. recovery" than Mastercard. Visa generated 45% of its pre-pandemic revenue from the United States, compared to only 32% for Mastercard, he added. The analyst believes higher vaccine rates in the United States are already driving higher domestic activity and that faster growth in cross-border revenue should help Visa close its "6 turn valuation discount" to MasterCard.
SHORT-LIVED RECALL IMPACT: Loop Capital analyst Daniel Adam initiated coverage of Peloton Interactive (PTON) with a Buy rating and $140 price target. The shares are down 40% from the January highs, in large part due to the company's voluntary recalls of the Tread and Tread+ and negative press around the safety of those products, Adam noted. The analyst believes, however, that the impact of the recalls will be short-lived and that management's guidance "likely bakes in an excessive amount of conservatism." Peloton "could easily" raise subscription prices and its pricing power potential is underappreciated by investors, the analyst argued. He expects Peloton's subscription revenue growth to continue outpacing growth in its Connected Fitness products and estimates subscription revenues lifting 67% annually over the next two years versus 20% average annual growth in Connect Fitness products.
MOVING TO THE SIDELINES: Argus analyst John Eade downgraded AutoZone (AZO) to Hold from Buy. The stock has surpassed his prior price target and appears to be "fairly valued" at current levels, the analyst told investors in a research note. Eade further stated that while AutoZone's earnings have recovered from the impact of the pandemic and topped consensus estimates for the past four quarters, slower growth is likely as the broader economy recovers from the recession and sales of new cars increase.
STRONG CONSUMER TRENDS: Atlantic Equities analyst Daniela Nedialkova initiated coverage of Etsy (ETSY) with an Overweight rating and $200 price target, representing 22% upside from current levels. The analyst sees Etsy as a "unique" digital retail growth story, benefitting from a number of "strong" consumer trends, including the growth of digital commerce, and consumers' growing desire for more meaningful consumption. Etsy is "highly differentiated" from other digital pure-plays via its "strong" brand and community-building, Nedialkova contended. The analyst expects revenue growth in excess of 20% for the next several years, along with ongoing EBITDA growth.
'LESS THAN COMPELLING' VALUATION: Baird analyst David George downgraded Capital One (COF) to Neutral from Outperform with an unchanged price target of $145. The analyst sees a "less than compelling valuation" with the shares up 68% year-to-date. Capital One is one of the best risk-adjusted credit providers in the group, but this is now fully reflected in the stock, George told investors in a research note. The analyst further argued that the company is now trading at a "peak multiple on peak earnings."
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