Check out today's top analyst calls from around Wall Street, compiled by The Fly.
ZENDESK DOWNGRADED AFTER DEAL: Jefferies analyst Samad Samana downgraded Zendesk (ZEN) to Hold from Buy with a price target of $120, down from $175. The company reported "solid" Q3 results and provided an "encouraging" outlook for Q4, suggesting the momentum from Q3 has carried forward, Samana tells investors in a research note. However, Zendesk's "sizable, all-stock acquisition of Momentive (MNTV) is thesis-changing," says the analyst. As a result, Samana moves to the sidelines to re-evaluate his long-term view. The analyst notes that Momentive is growing at a slower rate than Zendesk, which he says suggests the two companies will have to drive meaningful synergies to reach the $3.5B target for 2024.
Oppenheimer analyst Brian Schwartz also downgraded Zendesk to Perform from Outperform without a price target. The analyst sees a "slow path to recovery to the investor sentiment" and Momentive deal closure risk since it is an all-stock transaction with Zendesk at a 52-week-low.
Piper Sandler analyst Brent Bracelin downgraded Zendesk to Neutral from Overweight with a price target of $122, down from $175, and sees near-term integration risks and potential shareholder dilution with Momentive shareholders poised to take a 22% ownership stake in the combined Zendesk business post the deal close.
Zendesk was also downgraded to Neutral from Buy at BofA.
GROWTH DECELERATION: Citi analyst Wendy Nicholson downgraded Hershey (HSY) to Neutral from Buy with a price target of $190, down from $202, post the Q3 results. The stock may be near peak levels as the company's sales and earnings growth will likely decelerate in 2022, Nicholson tells investors in a research note. The analyst slightly reduced her price-driven sales growth forecast and expects "a bit more" gross margin pressure and capital expenditures.
LENDINGCLUB RAISED TO BUY: Yesterday, Compass Point analyst Giuliano Bologna upgraded LendingClub (LC) to Buy from Neutral with a price target of $55, up from $14, after the company reported Q3 net income of $27.2M that was "well above" consensus and beats the pace needed to hit the company's previous FY21 net income guidance. LendingClub also increased FY21 originations, revenue and net income guidance, noted Bologna, who rolled out a new model and valuation framework and argued that "the market still misunderstands" the company's return profile, growth and earnings upside potential.
ALTRIA DOWNGRADED AT MORGAN STANLEY: Morgan Stanley analyst Pamela Kaufman downgraded Altria Group (MO) to Equal Weight from Overweight with a price target of $47, down from $52, following the Q3 earnings miss. The analyst sees "several growing headwinds" in 2022 and a lack of near-term catalysts for the shares. Cigarette industry volumes will decline at a normalized, mid-single-digit rate in 2022 as smokers face greater macro pressures from rising gas prices and inflation, Kaufman tells investors in a research note. The analyst believes Altria's premium cigarette portfolio is "vulnerable to down-trading" given the recent widening price gaps versus discount brands.
LEADING PSYCHEDELIC RESURGENCE: Oppenheimer analyst Francois Brisebois initiated coverage of Compass Pathways (CMPS) with an Outperform rating and $50 price target. Compass is "leading the psychedelic resurgence" as a biotech company focused on treating mental health disorders, Brisebois tells investors in a research note. With a third of the 330M major depressive disorder patients worldwide suffering from treatment-resistant depression, "it doesn't take much market penetration to enter blockbuster territory," says the analyst. Brisebois believes Compass Pathways' "lengthy" psilocybin administration session could be challenging, but is encouraged by its investment in digital technology for optimal accessibility. The analyst is "optimistic" ahead of the Phase 2b data for COMP360 this quarter.
Zendesk
-3.64 (-2.97%)
Momentive
+0.365 (+1.49%)
Hershey
-0.08 (-0.04%)
Altria Group
-2.92 (-6.15%)
LendingClub
+10.485 (+33.24%)
Compass Pathways
+0.78 (+1.99%)