Check out today's top analyst calls from around Wall Street, compiled by The Fly.
ATTRACTIVE MOMENTUM: Jefferies analyst Brent Thill upgraded Zillow (ZG) to Buy from Hold with a price target of $175, up from $120. The analyst sees a strong housing market in 2021 contributing to attractive top-line and bottom-line momentum for the company's legacy internet, media, and technology business, which he believes "puts a floor on downside risk and is a dynamic not well understood by the market." Thill also thinks the Zillow Offers "iBuying" business allows Zillow to expand its addressable market.
The analyst also downgraded Yelp (YELP) to Hold from Buy with an unchanged price target of $32. While investors are focused on the impact of COVID-19 on small-to-midsized business ad spending and the recovery trajectory, Yelp's valuation now "looks full" while visibility is lowered by the uncertainty around the timing and shape of the recovery for small local businesses, he contended. Thill also said Facebook (FB) and Google (GOOGL) "seem to be gaining ground" with small local businesses.
BUY WALGREENS: Baird analyst Eric Coldwell upgraded Walgreens Boots Alliance (WBA) to Outperform from Neutral with a price target of $55, up from $41. The analyst said he waited for the first quarter results and the second quarter talk down and has now increased confidence in his upgrade.
TESLA TARGETS UPPED: Bank of America analyst John Murphy raised the firm's price target on Tesla (TSLA) to $900 from $500, while keeping a Neutral rating on the shares. The stock is "driven by growth afforded by valuation," said Murphy, who has tried to estimate what the current stock price affords to Tesla in terms of incremental plants and units and what those incremental units translate into in incremental revenue and profits. Building automotive industry capacity is expensive and often generates low returns, but "the higher the upward spiral of Tesla's stock goes, the cheaper capital becomes to fund growth, which is then rewarded by investors with a higher stock price," Murphy argued.
Credit Suisse analyst Dan Levy also raised the firm's price target on Tesla to $800 from $400, keeping a Neutral rating on the shares. With expansion in Shanghai, and new facilities in Texas and Berlin, the analyst estimates Tesla will exit 2021 with installed capacity of 1.44M units versus 840k currently. The added capacity underscores his forecast for 2021 deliveries of 853k versus consensus 791k. Further, Levy pointed out that given capital raised and solid margins, Tesla now only needs to execute on capacity expansion to unlock growth.
'SEARCHING FOR NEW NARRATIVE': Evercore ISI analyst David Palmer downgraded Wendy's (WEN) to In Line from Outperform with a price target of $24, down from $26. Wendy's will have to lap a successful breakfast launch in 2021 while dealing with increased competition in chicken and breakfast, noted Palmer, who is "searching for a new narrative to help us get as excited as we were last year."
The analyst also downgraded Texas Roadhouse (TXRH) to In Line from Outperform with a price target of $83, up from $76. Palmer noted that shares outperformed in 2020 and his "valuation downgrade" better reflects his preference list heading into 2021. His base case earnings estimates anticipate higher beef costs and labor inflation to limit restaurant margin upside.
LONG-TERM VALUE CREATION: Tigress Financial initiated coverage of Airbnb (ABNB) with a Buy rating. The firm said the company's status as a category maker and its ability to leverage its category-leading position to continue to penetrate a large and growing market enable it to drive long-term shareholder value creation.