Netflix upgrade, Adobe downgrades and Zillow 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:
Oppenheimer analyst Jason Helfstein upgraded Netflix (NFLX) to Outperform from Perform with a $325 price target after assuming coverage of the name. The company's advertising tier launch should accelerate subscriber growth, drive average revenue per user, and slow churn, Helfstein told investors in a research note.
Piper Sandler analyst Kashy Harrison upgraded Array Technologies (ARRY) to Overweight from Neutral with a price target of $28, up from $20. The company's "strong order book" creates the potential for an attractive 2023 revenue and EBITDA outlook, Harrison argued.
KeyBanc analyst Kenneth Zener upgraded D.R. Horton (DHI), Lennar (LEN), Meritage Homes (MTH), PulteGroup (PHM) and TopBuild (BLD) to Overweight from Sector Weight, and Toll Brothers (TOL) and KB Home (KBH) to Sector Weight from Underweight. On balance, Zener sees fundamental and rate pressures persisting, but positive relative performance.
Compass Point analyst Merrill Ross upgraded Innovative Industrial Properties (IIPR) to Buy from Neutral with a price target of $175, up from $100, citing the company’s increased quarterly dividend and the conditional, confidential settlement with its California tenant that has been in default of its lease terms since July.
Jefferies analyst Sheila Kahyaoglu upgraded Heico (HEI) to Buy from Hold with a price target of $180, up from $160. Kahyaoglu estimates full year 2022 sales will rise 18% year-over-year in total, and be up 11% organically, while rising her fiscal 2023 EPS estimate by 9%, with sales forecast to be up 23%.
Top 5 Downgrades:
Wells Fargo analyst Michael Turrin downgraded Adobe (ADBE) to Equal Weight from Overweight with a price target of $310, down from $425. The analyst expects investor questions around slowing growth/increasing competition on the digital media side of the business to only intensify, especially given third quarter results and fourth quarter guidance suggest price increases aren't providing as much of an offset as anticipated. Edward Jones analyst Logan Purk also downgraded Adobe to Hold from Buy.
Susquehanna analyst Mehdi Hosseini downgraded NetApp (NTAP) to Neutral from Positive with a price target of $75, down from $100, as he lowered his rating on the Enterprise Hardware sector given his view that they will continue to underperform in 2023 due to lack of confidence and a lack of a catalyst for a recovery. The analyst also downgraded Super Micro Computer (SMCI) to Neutral from Positive with a price target of $55, down from $88.
Argus analyst Jasper Hellweg downgraded Labcorp (LH) to Hold from Buy. The separation of the company's Clinical Development business creates additional uncertainty for Labcorp, which is also seeing sharply lower revenue as the pandemic recedes and COVID testing volume decreases, the analyst told investors in a research note.
BMO Capital analyst John McNulty downgraded Venator Materials (VNTR) to Underperform from Market Perform with a price target of 60c, down from $2. Given its "significant" European exposure, the company faces a reduction in demand as well as spiking energy costs and likely increased Chinese imports, which should "significantly compress" its profitability, McNulty told investors in a research note. The analyst also downgraded Tronox (TROX) to Market Perform from Outperform with a price target of $16, down from $21.
RBC Capital analyst Arun Viswanathan downgraded Huntsman (HUN) to Sector Perform from Outperform with a price target of $30, down from $43. The analyst cited the company's latest cut in the third quarter EBITDA guidance amid weaker than expected demand as well as expectations that higher energy costs in Europe will persist into 2023.
Top 5 Initiations:
Compass Point analyst Jason Weaver initiated coverage of Zillow Group (ZG; Z) with a Buy rating and $50 price target. While customer demand is generally correlated to overall real estate market conditions that are expected to remain under pressure through mid-2023, the "challenge and opportunity" for Zillow to actively capture share holds potential growth implications that may far offset near-term market headwinds, the analyst said.
BofA analyst Joshua Shanker reinstated coverage of Aon plc (AON) with a Neutral rating and $294 price target. The analyst remains "broadly bearish" on the insurance broker segment, but likes Aon's "strong cash generative" business model and "more reasonable" valuation.
Citi analyst Patrick Donnelly initiated coverage of QuidelOrtho (QDEL) with a Neutral rating and $90 price target. After a period of being a significant beneficiary of the COVID testing market, QuidelOrtho is set to transition and look to take share in the in vitro diagnostics market primarily driven by its recent acquisition of Ortho Clinical Diagnostics, Donnelly told investors in a research note.
RBC Capital analyst Brad Heffern initiated coverage of Gaming and Leisure Properties (GLPI) with an Outperform rating and $54 price target. The company's regional gaming cash flows is being highly durable, while its above-average acquisition accretion has generated a total return profile that is near the top of the net lease group over time, the analyst told investors in a research note.
UBS analyst Chris Snyder initiated coverage of Symbotic (SYM) with a Buy rating and $17 price target. The company offers an "attractive combination" of upside potential with a leading technology aiming to disrupt a $250B market but also downside protection with a $11B backlog, which provides years of visibility, insulating the outlook from macro uncertainty, Snyder told investors in a research note.