Check out today's top analyst calls from around Wall Street, compiled by The Fly.
SELL AMERICAN: Goldman Sachs analyst Catherine O'Brien downgraded American Airlines (AAL) to Sell from Neutral with a price target of $18, down from $19, and cut JetBlue (JBLU) to Neutral from Buy with a price target of $17, down from $20. The analyst remains positive on the path to profitability recovery for the airlines over the medium-term, but reduced December quarter and 2022 outlooks as she mark-to-markets for fuel and a worse short-term revenue environment than previously expected.
O'Brien expects American shares to underperform saying the company's "relatively higher" operating leverage will weigh on its profitability recovery in a weaker industry pricing environment over the medium-term. Meanwhile, the analyst expects JetBlue's costs to continue its codeshare partnership with American will outstrip revenue driven by the alliance over the medium-term, especially given the pricing pressure she expects to see across the industry due to elevated capacity and corporate/international demand "that will likely still be in recovery."
BUY MCDONALD'S: Loop Capital analyst Alton Stump initiated coverage of McDonald's (MCD) with a Buy rating and $306 price target. McDonald's gained market share over the last 18 months "via an aggressive and unique marketing platform," Stump told investors in a research note. The analyst believes the company's predominantly drive-thru model should continue to benefit from an expected shift in consumer behavior coming out of the pandemic.
BREAKFAST PLATFORM LAUNCH: Loop Capital analyst Alton Stump initiated coverage of Wendy's (WEN) with a Buy rating and $31 price target. The company's nationwide launch of its breakfast platform was the key driver in Wendy's outperforming most of its peers over the last 12-18 months, the analyst told investors in a research note. While the timing of launching breakfast just before the pandemic was "most unfortunate," the offering ended up coming close to hitting targeted sales goals for full-year 2020 despite the lack of marketing funding over the last nine months of the year, Stump added.
The analyst also started coverage of
MOVING TO THE SIDELINES: Morgan Stanley analyst Katy Huberty downgraded Seagate (STX) to Equal Weight from Overweight with a price target of $88, down from $118, as part of her downgrade of her IT Hardware industry view to Cautious. The firm's U.S. Equity Strategy Team believes the market is in the later innings of a mid-cycle transition and Hardware has been the worst performing Tech group and underperformed the S&P by 11% over the past four months, Huberty noted. She now points to emerging cautious data points - including a decelerating CIO Hardware spending growth outlook in 2022, rising channel inventory, and recent overconsumption of PC and peripheral products - as a signal of an "impending" shift to late cycle, which should bring underperformance for the IT Hardware group. While still bullish long-term on Seagate, Huberty cited rising HDD channel inventory as a near-term risk.
MODEST GROSS MARGIN EXPANSION: Stifel analyst Scott Devitt lowered the firm's price target on Peloton (PTON) to $120 from $140, while keeping a Buy rating on the shares as he now assumes more modest gross margin expansion in fiscal year 2023 and out years given the company's pricing cuts and his estimates for product mix. While recent pricing changes, near-term margin headwinds, and concerns of elevated subscriber churn have weighed on investor sentiment and share performance, the analyst continues to see multiple drivers for near-term growth and views international expansion and new hardware opportunities as drivers of sustainable long-term growth.
American Airlines
-0.935 (-4.36%)
JetBlue
-0.73 (-4.53%)
McDonald's
-0.69 (-0.28%)
Wendy's
+0.08 (+0.36%)
Dave & Buster's
+0.22 (+0.54%)
Papa John's
-1.33 (-1.06%)
Domino's Pizza
-1.12 (-0.24%)
Texas Roadhouse
-1.06 (-1.12%)
Chipotle
-8.1 (-0.44%)
Wingstop
-2.78 (-1.67%)
Restaurant Brands
-0.955 (-1.55%)
Yum! Brands
-1.54 (-1.25%)
Shake Shack
-0.93 (-1.19%)
Seagate
-4 (-4.70%)
Peloton
-0.11 (-0.13%)
Cracker Barrel
-1.91 (-1.34%)