Starbucks and McDonald's coverage initiations also among notable calls
Check out today's top analyst calls from around Wall Street, compiled by The Fly.
POTENTIAL DIVIDEND CUT: Argus analyst Joseph Bonner downgraded AT&T (T) to Hold from Buy. The analyst cited his anticipation of a dividend cut by the company as it sheds assets acquired over the past few years. Bonner argued that after taking the DirecTV and WarnerMedia spinoffs into account, the math behind AT&T management's assertion that it will maintain a dividend in the "95th percentile" of companies doesn't work, even though remains positive on the performance of AT&T's wireless Mobility business.
VALUATION LESS STRETCHED: Berenberg analyst Adrian Yanoshik upgraded American Airlines (AAL) to Hold from Sell with a price target of $19, up from $16. The valuations of the U.S. airlines look less stretched following the recent share weakness, Yanoshik told investors in a research note. The analyst names Southwest Airlines (LUV) the most compelling sector pick and upgraded American to Hold given a higher earnings outlook and recent de-rating of the stock. Rising virus cases have yet to impact bookings and concerns over rising unit cost guidance seem overdone, Yanoshik added.
Susquehanna analyst Christopher Stathoulopoulos also upgraded American Airlines to Neutral from Negative with a price target of $20, up from $18. The analyst said his base case does not assume a meaningful disruption due to variants and against this backdrop he prefers the low and ultra-low cost carriers.
ON THE SIDELINES: Guggenheim analyst Gregory Francfort initiated coverage of Starbucks (SBUX) with a Neutral rating and $125 price target. The analyst is positive on the company's strong near- to medium-term growth rates but believes that the stock will be held back by a high valuation and high investor earnings expectations. Francfort further warned that investors should be cautious about underwriting a structurally higher margin over the long-term.
BUY MCDONALD'S: Guggenheim analyst Gregory Francfort initiated coverage of McDonald's (MCD) with a Buy rating and $270 price target. The analyst also named the stock his Best Idea in the group. Francfort believes that the company's international market recovery is being underappreciated by the stock price, and expects investors to rotate into McDonald's as the Street raises estimates and U.S. comps continue to perform well.
The analyst also initiated coverage of
Yum! Brand (YUM) with a Buy rating and $135 price target;
Restaurant Brands (QSR) with a Neutral rating and $67 price target;
Wendy's (WEN) with a Buy rating and $26 price target;
Jack in the Box (JACK) with a Buy rating and $135 price target;
Domino's Pizza (DPZ) with a Neutral rating and $535 price target;
Chipotle (CMG) with a Neutral rating and $1,750 price target.
VALUATION, COMP SALES COMPARISONS: Raymond James analyst Bobby Griffin downgraded AutoZone (AZO) to Outperform from Strong Buy with a price target of $1,750, up from $1,700. Griffin told investors in a research note that the downgrade reflects current valuation that does not offer sizable multiple re-rating potential in the coming months, as well as challenging comp sales comparisons.
Additionally, the analyst upgraded Advanced Auto Parts (AAP) to Strong Buy from Outperform with a price target of $250, up from $215, and downgraded O'Reilly Automotive (ORLY) to Market Perform from Outperform after the stock surpassed the firm's prior $585 price target.