Domino's Pizza upgrade, Starbucks downgrade and Chipotle initiation among today's top calls on Wall Street
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Research analysts at Wall Street's largest banks issue recommendations on whether a stock should be bought, held, or sold. The Fly's team of financial market experts scours hundreds of research notes daily to uncover the best trading ideas. Check out today's top analyst calls from around Wall Street, compiled by The Fly.
Top 5 Upgrades:
Citi analyst Jon Tower upgraded Domino's Pizza (DPZ) to Buy from Neutral with a price target of $487, up from $480, after assuming coverage of the name. The analyst's analysis of delivery availability and estimated times suggests labor dynamics are improving.
Goldman Sachs analyst Brian Essex upgraded Crowdstrike (CRWD) to Buy from Neutral with a price target of $285, up from $241. The stock has rerated lower over the past seven months along with the rest of the high-growth software universe, but Crowdstrike's fundamentals have "continued to improve with strong execution against a backdrop of unprecedented demand," Essex told investors in a research note.
Vertical Group upgraded Fox Corp. (FOXA) to Buy from Neutral as the firm sees an improving ad market in linear TV and stronger than expected demand for its live streaming inventory.
Morgan Stanley analyst Ricky Goldwasser upgraded Cardinal Health (CAH) to Overweight from Equal Weight with a price target of $74, up from $54, as she adjusted ratings among her drug distributor stock coverage. At Cardinal, she sees long-term value creation opportunities that could help drive earnings acceleration and a multiple re-rating over the next 12 to 24 months and argues that the Street is underestimating the positive impact biosimilars will have on Cardinal's earnings growth.
Compass Point analyst Chris Allen upgraded Charles Schwab (SCHW) to Buy from Neutral with a $98 price target. The analyst sees a positive risk/reward as the upside potential in a higher rate environment more than offsets a more challenging market outlook.
Top 5 Downgrades:
Citi analyst Jon Tower downgraded Starbucks (SBUX) to Neutral from Buy with a price target of $91, down from $120, after assuming coverage of the name. In additional to broader inflation risks, management changes and unionization pushes could be tied to additional partner investments, and new ESG initiatives "present additional unknowns for forward looking estimates," Tower told investors in a research note. The analyst also downgraded Restaurant Brands (QSR) and Krispy Kreme (DNUT) to Neutral from Buy with price targets of $64 and $16, respectively, after assuming coverage of the name.
Morgan Stanley analyst Meta Marshall downgraded HP Enterprise (HPE) to Underweight from Equal Weight with a price target of $15, down from $17. While the current valuation of HP Enterprise is "not challenging," she expects the stock to underperform over the next 12 months given a combination of weak CIO data, value-added reseller commentary, 60% of revenue coming from servers/storage and the company's European concentration. The analyst also downgraded NetApp (NTAP) to Equal Weight from Overweight with a price target of $91, down from $102.
Citi analyst Jim Suva downgraded Cisco Systems (CSCO) to Sell from Neutral with a price target of $45, down from $65. While supply chain constraints are well known, the analyst did not foresee two events occurring, namely the large increase in first responder technology advancements and security with funding needs being met by state and local governments, and the recent war in Ukraine spurring a large increase in defense spending around the globe.
Morgan Stanley analyst Ricky Goldwasser downgraded AmerisourceBergen (ABC) to Equal Weight from Overweight with a price target of $178, up from $142, as she adjusted ratings among her drug distributor stock coverage. The analyst believes AmerisourceBergen's growing European exposure following the Alliance acquisition in 2021 adds risk and complexity to the story and the shares have re-rated from a trough multiple in 2020.
Wolfe Research analyst Scott Group downgraded JetBlue (JBLU) to Underperform from Peer Perform as he updated his Airline earnings per share estimates and targets ahead of first quarter earnings season.
Top 5 Coverage Initiations:
Citi analyst Jon Tower initiated coverage of Chipotle Mexican Grill (CMG) with a Buy rating and $1,900 price target. Chipotle is a best-in-class growth leader that is slowly moving beyond its reinvestment phase and into a store-level and EBIT margin expansion period, Tower tells investors in a research note. The analyst argued that this should translate into above consensus EBITDA and earnings growth in 2022 and 2023. Tower also started coverage of Yum! Brands (YUM), Wingstop (WING), Cheesecake Factory (CAKE), Texas Roadhouse (TXRH) and Darden (DRI) with Buy ratings, and Jack in the Box (JACK), Wendy's (WEN), Denny's (DENN), Bloomin' Brands (BLMN), BJ's Restaurants (NJRI) and Brinker (EAT) with Neutral ratings
FBN Securities analyst Shebly Seyrafi initiated coverage of Upstart (UPST) with an Outperform rating and $150 price target. The provider of a proprietary AI-based platform that helps bank partners originate credit with higher approval rates and lower loss rates is still primarily driven by the personal loan market, but it entered the auto loan market in 2020 and Seyrafi expects autos to grow to 3% of fee revenue in fiscal 2022 and to 6% in fiscal 2023.
DA Davidson analyst Rudy Kessinger initiated coverage of Ping Identity (PING) with a Buy rating and $38 price target. The analyst is positive on the company's large and growing opportunity in the enterprise segment of the Identity & Access Management market, its accelerating cloud adoption and SaaS growth, as well as its "underappreciated" annualized recurring revenue growth of over 20% with multiple acceleration drivers.
Deutsche Bank analyst Emmanuel Rosner initiated coverage of QuantumScape (QS) with a Hold rating and $20 price target. The analyst believes QuantumScape still needs to demonstrate it can scale up its technology and solve large technical challenges ahead, and even if all goes according to plan, the company is still several years away from mass manufacturing and even further from monetizing.
Benchmark analyst Douglas Becker initiated coverage of Helmerich & Payne (HP) with a Buy rating and $53 price target. As the largest land driller in the U.S., Helmerich & Payne will be one of the primary beneficiaries of forecasted U.S. rig count and dayrate increases, Becker told investors.