Poshmark upgrade, Southwest downgrade, and The Oncology Institute 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:
Barclays analyst Trevor Young upgraded Poshmark (POSH) to Overweight from Equal Weight with a price target of $17, up from $13, as he assumed coverage of the stock. Poshmark "isn't out of the woods yet" on navigating ad-targeting post IDFA and marketing continues to ramp as a percentage of revenue, but with a critical mass of active buyers that's still growing, high engagement from the social/gamification aspects of the platform, secular tailwinds and an opportunity to outperform as consumers trade-down in a softer macro he sees multiples "firming up," particularly once the company has a path back to positive EBITDA territory, Young tells investors.
BMO Capital analyst John McNulty upgraded Air Products (APD) to Outperform from Market Perform with a price target of $321, up from $283. The risk/reward profile has improved significantly in the past few months as Air Products has demonstrated improved execution with regard to energy inflation and cost management, contends McNulty.
BofA analyst Julien Dumoulin-Smith upgraded PPL Corp. (PPL) to Buy from Neutral with a price target of $33, up from $29. The pending Federal Inflation Reduction Act should accelerate the generation transformation opportunity and boost the company's below-average rate base growth profile, the analyst tells investors in a research note.
Kalinowski analyst Mark Kalinowski upgraded McDonald's (MCD) to Buy from Neutral with a $320 price target.
JPMorgan analyst Matthew Boss upgraded Dillard's (DDS) to Neutral from Underweight with a price target of $298, up from $210. Several department store bankruptcies and store liquidations have increased Dillard's customer reach, notably in more rural venues, said Boss, who also notes the company's positive structural changes and permanent operating efficiencies post-pandemic.
Top 5 Downgrades:
Argus analyst John Staszak downgraded Southwest (LUV) to Hold from Buy. The stock is at risk of being impacted by inflationary pressures and capacity constraints, the analyst tells investors in a research note, adding that while a revenue recovery is underway, shares are unlikely to move higher until there is greater visibility that costs have stabilized.
JPMorgan analyst Rajat Gupta downgraded Shift Technologies (SFT) to Underweight from Neutral with no price target as the analyst continues to see a challenging backdrop for the used car industry and prefers companies that have ample liquidity and/or diversity to navigate the current uncertain macro backdrop. The analyst also downgraded Vroom (VRM) to Underweight from Neutral.
Raymond James analyst Patrick O'Shaughnessy downgraded CME Group (CME) to Market Perform from Outperform without a price target. While CME's business model continues to boast a number of attractive elements such as an enviable operating margin, high barriers to entry, and a generous dividend policy, O'Shaughnessy is becoming incrementally less optimistic about the outlook for interest rate futures trading volume growth in 2023, and over the last decade the fortunes of CME's share price have been highly correlated to the fortunes of its rate futures franchise, the analyst tells investors in a research note.
Morgan Stanley analyst James Faucette downgraded TaskUs (TASK) to Equal Weight from Overweight with a price target of $19, down from $28. While Faucette is constructive on management's ability to drive improved growth in the medium-term, and while valuation at these levels remains undemanding, the analyst expects near-term growth challenges driven by client mix and delivery optimization, which will likely leave shares rangebound in the coming quarters, he tells investors in a research note.
BMO Capital analyst Kelly Bania downgraded Dollar General (DG) to Market Perform from Outperform with an unchanged price target of $265, citing a belief that valuation is close to peak levels on recessionary comps. Despite a belief that Dollar General's execution remains strong and an expectation for an acceleration in comps as the company benefits from a more price sensitive environment, Bania believes this strong outlook is accurately reflected in the shares at current levels.
Top 5 Initiations:
Jefferies analyst Brian Tanquilut initiated coverage of The Oncology Institute (TOI) with a Buy rating and $10 price target. The Oncology Institute will benefit from the continual shift from a fee-for-service system to one that incentivizes H/C providers to provide high quality care at a lower cost, Tanquilut tells investors in a research note.
Barclays analyst Trevor Young assumed coverage of Stitch Fix (SFIX) with an Equal Weight rating with a price target of $7, down from $8. The company has encountered challenges in effectively rolling out "Freestyle" for one-off items without detracting from core Fixes and revenue growth has slowed much faster than peers, Young tells investors.
Morgan Stanley analyst Simeon Gutman initiated Academy Sports (ASO) with an Equal Weight rating and $50 price target. Risk/reward skews wide and positive, and Gutman views elements of the Academy Sports investment case similarly to key retail growth stories in which there is material long-term upside, tempered by near-term path risk, the analyst tells investors in a research note.
BMO Capital analyst Katja Jancic initiated coverage of Worthington (WOR) with a Market Perform rating and $58 price target. Worthington's focus on expanding margins and growing EBITDA and free cash flow, while reducing earnings volatility, offers potential for further long-term multiple expansion, Jancic contends.
Stifel analyst Erik Rasmussen initiated coverage of Terran Orbital (LLAP) with a Buy rating and $8 price target. He views Terran's leadership in the design and manufacture of smallsats and its technical capabilities around its Earth Observation constellation as key differentiators and believes the company is on the cusp of a very large and growing opportunity in the smallsat market.