Morgan Stanley and Goldman Sachs coverage initiations also among notable calls
Check out today's top analyst calls from around Wall Street, compiled by The Fly.
GROWTH MOMENTUM: Vertical Group analyst Phil Leggiere upgraded Twitter (TWTR) to Very Positive from Mixed/Positive, stating that the flow of new brand campaign promotions and product releases "accelerated further" in April and May. The analyst sees this trend boosting Twitter's year-over-year growth momentum.
SPORTS BETTING OPPORTUNITY: Wells Fargo analyst Steven Cahall upgraded Fox Corp. (FOXA) to Overweight from Equal Weight with a price target of $47, up from $42. Investments in Credible Labs, Fox Bet and Flutter Entertainment (PDYPY) are evidence that Fox may be focused on a pivot toward sports betting, Cahall told investors in a research note. This indicates potential share price accretion of 17%-34% over the next couple of years, the analyst added. Cahall believes value realization from Fox Bet and a FanDuel option arbitration win could bring 17% accretion, while the "real opportunity" would be Fox and Flutter building a new company longer term by combining FanDuel U.S. and Fox's non-news network assets.
BUY MORGAN STANLEY, GOLDMAN SACHS: Jefferies analyst Daniel Fannon initiated coverage of Morgan Stanley (MS) with a Buy rating and $108 price target, calling it a "compelling compounder" with leading market shares in each of its three business segments. The E-Trade and Eaton Vance acquisitions should accelerate organic growth and increase the contribution from more durable revenue streams, Fannon contended.
The analyst also started coverage of Goldman Sachs (GS) with a Buy rating and $450 price target. He views the stock as "too cheap" relative to Goldman's return profile and thinks multiple expansion will occur as its return profile continues to improve given what he sees as rising contribution from more durable revenue streams and more efficient internal capital allocation. Goldman has been able to maintain its leading positions across its advisory and underwriting businesses, Fannon added, arguing that the bank's earnings power "looks solid."
FEE COMPRESSION COMING: Raymond James analyst Patrick O'Shaughnessy initiated coverage of Coinbase (COIN) with an Underperform rating. Though Coinbase currently enjoys "substantial momentum as the preeminent trading platform for cryptocurrencies in the U.S." and is an established leader in the space, the vast majority of its revenues come from trading commissions, O'Shaughnessy noted. The analyst doesn't see Coinbase having a structural barrier to entry and said that "over and over again history has shown that brokerage and exchanges see excess profits competed away unless there is a structural barrier to entry." He expects significant pricing degradation over time for Coinbase.
BUY FISKER, SELL LORDSTOWN: RBC Capital analyst Joseph Spak initiated coverage of Fisker (FSR) with an Outperform rating and $27 price target. Fisker's plans to bring battery electric vehicles to market utilizing third-party platforms and contract manufacturing is "differentiated," said Spak, who thinks saving capital on building out a platform and production facility should allow the company to spend resources to differentiate the customer experience. Because of this asset-light strategy, the analyst compares Fisker to Apple (AAPL) and sees it having less risk than other BEV startups on hitting it start-of-production target.
Spak also started coverage of Lordstown Motors (RIDE) with an Underperform rating and $5 price target. The fleet pickup market Lordstown is going after has "attractive characteristics" but is "ultimately small and fiercely competitive," Spak contended. The analyst sees risk from the company's hub motor tech choice and his forecasts are significantly lower than management targets and consensus estimates. Further, Spaks sees "significant capital raises as necessary" for Lordstown.
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