Check out today's top analyst calls from around Wall Street, compiled by The Fly.
MOVING TO THE SIDELINES ON VALUATION: Wells Fargo analyst Timothy Willi downgraded Square (SQ) to Equal Weight from Overweight, citing valuation. However, the analyst raised his price target on the shares to $255 from $200 following the company's earnings report on Tuesday. While he appreciates the strength of both the Seller and Cash franchises, and the potential for significant long-term growth for each, Willi sees much of this optimism already priced in and believes "gains going forward are likely to be more modest."
POSTAL SERVICE CONTRACT LOSS: Oppenheimer analyst Colin Rusch downgraded Workhorse Group (WKHS) to Perform from Outperform after the U.S. Postal Service announced it was awarding Oshkosh Defense (OSK) a contract to manufacture its next generation of postal delivery vehicles. As one of the three finalists and the only U.S.-made battery electric vehicle offering, Rusch expected Workhorse to get at least a portion of the contract. He noted, however, that Workhorse continues to have 8,000 vehicles in backlog representing $600M-plus in revenue along with the potential royalty stream from Lordstown Motors (RIDE). Rusch pointed out that with Workhorse missing the U.S. Postal Service contract entirely and facing a "choppy supply chain situation" due to COVID-19-related headwinds, he prefers to step to the sidelines. Estimates need to move lower with USPS trucks coming out of estimates and availability of battery packs remaining challenging, the analyst added. He also believes the company's convertible debt "could prove cumbersome," even with its maturity in 2024.
BUY TRIP.COM: Bernstein analyst Cherry Leung initiated coverage of Trip.com (TCOM) with an Outperform rating and $51 price target. The analyst expects the company to start recovering in the next two-to-three quarters, but notes that fiscal 2021 revenue will only be at 65% of 2019. Trip.com should return to a "growth state" in 2022, with revenue increasing 8% from 2019, and non-GAAP operating income up by 7%, 11% above consensus, Leung told investors in a research note. The analyst likes the company's "strong presence in the affluent segment."
'STRONG LEADERSHIP POSITION': Bank of America analyst Daniel Bartus initiated coverage of Qualtrics (XM) with a Neutral rating and $50 price target. The analyst is positive on the company's "large and growing" total addressable market, its "strong leadership position" as highlighted by his conversations in the industry, and its "compelling" land-and-expand opportunity with customers more focused on experience management programs. Bartus warned, however, that Qualtrics is trading at a premium valuation of 24-times enterprise value to expected 2022 sales.
AERIE TO DOUBLE OVER NEXT THREE YEARS: Cowen analyst Oliver Chen upgraded American Eagle (AEO) to Outperform from Market Perform with a price target of $31, up from $25. The analyst believes that the company's Aerie business will double to $2B over the next 3 years, while the American Eagle brand performance will stabilize "on merchandise and methodical store rationalization." Chen added that American Eagle's "solid" capitalization and relevant brand concepts to younger customers should generate more consistent growth and market share gains.
Block
-19.77 (-7.71%)
Workhorse Group
-1.84 (-11.19%)
Oshkosh
+10.33 (+9.42%)
Lordstown Motors
+0.3 (+1.52%)
Trip.com
-0.36 (-0.88%)
Qualtrics
+0.22 (+0.51%)
American Eagle
+0.86 (+3.36%)