Check out today's top analyst calls from around Wall Street, compiled by The Fly.
'OBVIOUSLY DISAPPOINTING' Q2: JPMorgan analyst Robbie Marcus downgraded SmileDirectClub (SDC) to Underweight from Neutral with a price target of $6, down from $10. SmileDirectClub posted second quarter sales that were "well below" Street forecasts and aligner shipments that came in below his forecast due, according to management, to macroeconomic headwinds and a slower than expected international launch in a quarter that was "obviously disappointing," Marcus said. Given the impaired near-term revenue trajectory, and what he believes could be structurally higher costs, the analyst sees better opportunities elsewhere among the stocks he covers.
Meanwhile, Craig-Hallum analyst Alexander Nowak downgraded SmileDirectClub to Hold from Buy with a price target of $8, down from $14. The analyst argued that this quarter was a clear demonstration the company has not figured out the right mix/type of ad spend to support the growth. Growth went backwards U.S. and OUS, and the path to get back on a 20%-30% consistent track is not clear to Nowak. Until clarity around the spend-to-growth challenge is resolved, SmileDirectClub posts consistent quarters of growth and investor confidence returns, the stock will be range-bound despite its cheap EV/revenue valuation, he contended.
Stephens analyst Chris Cooley also downgraded SmileDirectClub to Equal Weight from Overweight with a price target of $11, down from $17, following the company's material second quarter revenue shortfall and reduction to full year 2021 guidance. Cooley is stepping aside due to continued concern related to risks related to revised full year 2021 guidance and the perceived increasing fluidity of focus in the business model most likely resulting in the shares remaining range bound until consistent execution of the business plan and corporate guidance is exhibited. The increasing fluidity of the model and recent miscues likely relegate the company to a "show me" story despite the long-term potential, the analyst added.
BUY COINBASE: Davidson analyst Christopher Brendler assumed coverage of Coinbase (COIN) with a Buy rating though with a lower price target of $400, down from $650. The analyst argued that blockchain technology is a "revolutionary innovation that will transform financial services," and while volatility remains high and use cases are still developing, he expects the recent events to ensure a "crypto future." Brendler added that Coinbase is very well positioned to capitalize on new opportunities including staking, lending, and DeFi.
SUCCESS STORY: Evercore ISI analyst Omar Saad initiated coverage of Victoria's Secret (VSCO) with an Outperform rating and $100 price target following its spinoff from L Brands. Victoria's Secret has been one of the most dramatic success stories from pre-COVID to today, with a much more modern, inclusive, and relevant brand message accompanied by a leaner business model, stronger pricing power, more disciplined inventory and promotions, and 1,000+ bps of margin expansion, Saad told investors in a research note.
RISK/REWARD MORE ATTRACTIVE: Deutsche Bank analyst Brian Mullan upgraded Dine Brands (DIN) to Buy from Hold with a price target of $93, down from $102, following the company's earnings report late last week. Amid a broader pullback in casual dining stocks, Dine is down about 27% from its high three months ago, making its risk/reward more attractive, Mullan told investors. He believes sustainable downside is "relatively limited from current levels" given his view that the business recovery is largely intact.
MOVING TO THE SIDELINES: Goldman Sachs analyst Salveen Richter downgraded Bluebird Bio (BLUE) to Neutral from Buy with a price target of $23, down from $63. Richter cited both the newly announced clinical hold for Lenti-D in cerebral adrenoleukodystrophy, or CALD, due to a Suspected Unexpected Serious Adverse Reaction of myelodysplastic syndrome in one patient, as well as the company's decision to wind down its operations in Europe and potentially license the rights outside the U.S. to its three lead gene therapy products in sickle cell disease, beta thalassemia and CALD, which "diminishes [Bluebird's] revenue opportunity given the major geography."
Wells Fargo analyst Yanan Zhu also downgraded Bluebird Bio to Equal Weight from Overweight with a price target of $25, down from $60, following the update across the company's Lenti-D, LentiGlobin, and ABECMA programs that came along with the company's earnings report. Zhu's "main concern" is around the MDS case reported from the study of Lenti-D in CALD, and "more importantly" its potential implications for the company's LentiGlobin program in sickle cell disease, or SCD. The MDS observation made with Lenti-D could have potential implication for LentiGlobin in terms of regulatory hurdles and/or physician/patient adoption, contended Zhu, who would take a "wait-and-see approach."