Gap upgrade, Azure Power downgrade and General Dynamics 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 Adrienne Yih upgraded Gap (GPS) to Equal Weight from Underweight with a price target of $9, up from $6. The "major risk factors to the story are now well known and there is neutral-to-positive headline risk," at least through the end of 2022 as Gap takes measures to turn the business around, Yih told investors in a research note.
B. Riley analyst Eric Wold upgraded American Outdoor Brands (AOUT) to Buy from Neutral with an $11 price target. The analyst thinks healthy retail inventory levels will drive normalized re-stocking patterns into the holiday season.
BofA analyst Sachin Salgaonkar upgraded MakeMyTrip (MMYT) to Buy from Neutral with a price target of $40, up from $33. The analyst sees the company as well placed to balance a revenue rebound with margin improvement, telling investors that he is seeing pent-up demand in travel pick up as the economy reopens.
Nomura analyst Jialong Shi upgraded Pinduoduo (PDD) to Buy from Neutral with a price target of $82, up from $48, following the company’s Q2 beat.
JPMorgan analyst Jeffrey Zekauskas upgraded Sealed Air (SEE) to Neutral from Underweight with a price target of $58, down from $62. The company's restructuring efforts are helping offset cost inflation, and the annualized effects of cost savings benefits are likely to mean that its operating cost structure for 2022 is "pointed in the right direction as price/cost turns positive," Zekauskas argued.
Top 5 Downgrades:
Credit Suisse analyst Maheep Mandloi double downgraded Azure Power (AZRE) to Underperform from Outperform with a price target of $5, down from $22. The analyst cited the CEO resignation two months after assumption of the role, a lack of visibility around its long-term business targets, limited clarity on financials and a weaker portfolio performance for the downgrade.
H.C. Wainwright analyst Raghuram Selvaraju downgraded ObsEva (OBSV) to Neutral from Buy without a price target. The FDA last month identified issues with linzagolix approvability for uterine fibroids, and Selvaraju believes that the agency may require additional pivotal studies to be conducted, which could preclude approval of the drug in the U.S. "for an extended period of time and may render it commercially non-viable.
Morgan Stanley analyst Michael Ulz downgraded Cabaletta Bio (CABA) to Equal Weight from Overweight with a price target of $3, down from $15. The company's updated DSG3-CAART data suggest efficacy "remains limited and unclear," Ulz argued.
Seaport Global analyst Mitch Kummetz downgraded Genesco (GCO) to Neutral from Buy without a price target. While the analyst remains positive on the company's business and longer-term strategies, he's "become more concerned" about its near-term setup, which compelled him to downgrade the shares in front of the second quarter print on September 1.
RBC Capital analyst Zoe Karamanoli downgraded Molecular Partners (MOLN) to Sector Perform from Outperform with a price target of CHF 10, down from CHF 40. Recent setbacks from partners reduce the stock's valuation and a lack of meaningful near-term catalysts warrants a move to the sidelines, Karamanoli told investors in a research note.
Top 5 Initiations:
RBC Capital analyst Ken Herbert initiated coverage of General Dynamics (GD) with an Outperform rating and $275 price target. The supplier of business jets is investing to substantially increase its Gulfstream jet production, which should be a source of both revenue and margin upside through 2024 as the company looks to further its competitive position, Herbert said. The analyst also started coverage of L3Harris Technologies (LHX) with an Outperform rating and $285 price target, and Lockheed Martin (LMT) with a Sector Perform rating and $460 price target.
Jefferies analyst Brian Tanquilut initiated coverage of Enhabit (EHAB) with a Buy rating and $20 price target. Low earnings expectations create an "achievable growth pathway" for Enhabit, Tanquilut told investors in a research note.
Piper Sandler analyst Korinne Wolfmeyer initiated coverage of European Wax Center (EWCZ) with a Neutral rating and $22 price target. European Wax Center's premium valuation, while warranted, limits potential upside from current share levels, Wolfmeyer argued.
JPMorgan analyst Kevin Heenan initiated coverage of Bowlero (BOWL) with an Overweight rating and $17 price target. The company has market leadership and scale in the "economically-attractive" bowling industry, Heenan told investors in a research note.
Berenberg analyst Caroline Palomeque assumed coverage of Ascendis Pharma (ASND) with a Buy rating and $166 price target, implying 75% upside. The analyst believes the once weekly dosing regimen of the company's human growth hormone for children with growth failure is preferable and is translating to greater market adoption, and sees a "buy opportunity" in front of the European launch of Skytrofa in mid-2023.