Boeing upgrade, Sally Beauty downgrade and Warner Bros. Discovery reinstatement 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 Charles Armitage upgraded Boeing (BA) to Buy from Neutral with a price target of $209, down from $219. If the 737 MAX, 777X, and the 787 programs achieve Citi's forecast levels of production and profitability, the stock's fair value is $209, implying 70% upside, Armitage told investors in a research note.
Morgan Stanley analyst Simeon Gutman upgraded Dollar General (DG) to Overweight from Equal Weight with a price target of $250, up from $225. The analyst says the company fits his theme of "favoring quality, defensive retailers with offensive characteristics."
Morgan Stanley analyst Simeon Gutman upgraded AutoZone (AZO) to Overweight from Equal Weight with a price target of $2,420, up from $2,125. The stock offers 20% upside "with an attractive ~3:1 bull/bear skew," says the analyst, who has more conviction in the durability of the company's sales and earnings growth than for much of his retail coverage.
RBC Capital analyst Mark Dwelle upgraded Arthur J. Gallagher (AJG) to Outperform from Sector Perform with a price target of $185, up from $182. The stock's current valuation is a good entry point to own a high-quality, growing insurance broker with strong cash flows and "excellent" earnings visibility, Dwelle told investors in a research note.
Jefferies analyst Chris Howerton upgraded Acadia Pharmaceuticals (ACAD) to Buy from Hold with a price target of $25, up from $22. He views the pimavanserin in Alzheimer's Disease-Psychosis, or ADP, briefing documents released on Wednesday by the FDA as a net positive as "key concerns have been quelled."
Top 5 Downgrades:
Morgan Stanley analyst Simeon Gutman downgraded Sally Beauty (SBH) to Underweight from Equal Weight with a price target of $12, down from $19. The company has struggled to hold market share as the category favors omni-channel offerings, and its core low income customer is facing strain from inflation, Gutman told investors in a research note.
Morgan Stanley analyst Joshua Pokrzywinski downgraded Watsco (WSO) to Underweight from Equal Weight with a price target of $207, down from $228. The analyst sees "unique margin risks in this unusual environment" that are further compounded by "what could be a bigger demand hangover" than residential HVAC markets are typically accustomed to.
Jefferies analyst Laurence Alexander downgraded Celanese (CE), DuPont (DD), Diversey (DSEY), IFF (IFF) and Eastman Chemical (EMN) to Hold from Buy, saying the group's risk profile no longer looks attractive in the face of higher interest rates.
B. Riley analyst Alex Rygiel downgraded Taylor Morrison (TMHC), Green Brick (GRBK) and TRI Pointe (TPH) to Neutral from Buy with price targets of $28, $23 and $20, respectively. Despite "some fairly positive" macro tailwinds for the homebuilding industry, interest rates matter more to investors in valuing the stocks, Rygiel argued.
Morgan Stanley analyst Simeon Gutman downgraded AirSculpt Technologies (AIRS) to Equal Weight from Overweight with a price target of $8.50, down from $17. The analyst believes it may take several years of execution on AirSculpt's new center strategy in mid-tier markets for its multiple to sustainably expand.
Top 5 Coverage Initiations:
JPMorgan analyst Philip Cusick reinstated coverage of Warner Bros. Discovery (WBD) with a Neutral rating and $22 price target. The analyst believes the company will overachieve on its synergy guidance, but his 2023 estimates are below guidance given the recent reduction at legacy Warner Media, "newly forming economic headwinds" that could impact advertising, and less comfort around the path of the pivot to direct-to-consumer.
Noble Capital analyst Joe Gomes initiated coverage of Vera Bradley (VRA) with an Outperform rating and $8 price target. Shares are selling at all-time lows amid the recent market selloff and he sees an attractive risk/reward situation given the company's significant organic and inorganic growth opportunities.
Bank of America analyst Greg Harrison initiated coverage of Intellia Therapeutics (NTLA) with a Buy rating and $70 price target. The analyst cited the company having become the first to edit the human genome in vivo, which represents a "watershed medical breakthrough" as well as an "attractive commercial opportunity."
Wells Fargo analyst Vik Chopra initiated coverage of Enovis (ENOV) with an Equal Weight rating and $61 price target. The analyst sees Enovis as a "show-me" story for now, as management establishes a track record with investors, and he would like to see a few quarters of solid execution and visibility around the predictability of MSD/HSD growth.
HSBC analyst Shuo Han Tan initiated coverage of PropertyGuru Group (PGRU) with a Buy rating and $8.40 price target. The stock trades below nine-times price to sales versus peers at 14-times, which he attributes to PropertyGuru's short trading history and ow liquidity, but says strong execution on profit improvement will help to alleviate investor concerns.