The most talked about and market moving research calls around Wall Street are now in one place. Here are today's research calls that investors need to know, as compiled by The Fly.
Top 5 Upgrades:
- Jefferies upgraded UnitedHealth (UNH) to Buy from Hold with a price target of $647, up from $481. UnitedHealth found a way to beat EPS despite MLR pressure and while the near-term MLR outlook may not be crystal clear, it is "clear enough" in Q1 and Q2 to rotate focus to a 2025 growth outlook that is favorable and improving, the firm tells investors.
- Keefe Bruyette upgraded Progressive (PGR) to Outperform from Market Perform with a price target of $245, up from $210. The firm says normalizing expense ratios point to accelerating growth that should boost the shares in coming months.
- Bernstein upgraded Hess Corp. (HES) to Outperform from Market Perform with a price target of $172, up from $166. With the Chevron (CVX) merger math of Hess shareholders receiving 1.025 shares of Chevron, the firm notes a successful close yields 16% upside in Hess, while an inability to close the merger would not "doom" Hess shares.
- Mizuho upgraded Valero (VLO) to Outperform from Neutral with a price target of $175, up from $165. Among the large-cap names, Valero offers the best exposure to key themes for the sector, namely higher exposure to U.S. coastal markets, complexity to modify crude diet, low secondary product and higher gasoline yields, and historically high utilization rates that demonstrate strong operations, the firm tells investors in a research note.
- Craig-Hallum upgraded MaxLinear (MXL) to Buy from Hold with a price target of $38, up from $20, noting that while the rating change comes ahead of earnings due next Wednesday, the change is "not a call on the quarter."
Top 5 Downgrades:
- Barclays downgraded Five Below (FIVE) to Equal Weight from Overweight with a price target of $90, down from $176, following the CEO change and guidance cut. The company discussed macro pressures related to the low-income consumer again and it is unclear when this will change, the firm tells investors in a research note. Truist, Morgan Stanley, Citi, Mizuho and Evercore ISI also cut the stock to Neutral-equivalent ratings.
- HSBC downgraded Qualcomm (QCOM) to Hold from Buy with a price target of $200, up from $190. The company's fiscal Q3 report should be in line but its Q4 outlook could potentially miss due to lower handset revenue, the firm tells investors in a research note.
- Oppenheimer downgraded Morgan Stanley (MS) to Perform from Outperform. The capital markets rebound that the firm has been looking for seems to be materializing, but it still thinks there is a long way to go to full normalization. With that said, Oppenheimer has normalization by Q4 built into its models and thus only made relatively minor increases in its 2025 estimate.
- TD Cowen downgraded American Airlines (AAL) to Hold from Buy with a price target of $10, down from $16. The firm is concerned by American's "aggressive discounting" this summer and believes there is downside risk to earnings estimates in the second half of 2024. TD also downgraded Spirit Airlines (SAVE) to Sell from Hold.
- TD Cowen downgraded Charles Schwab (SCHW) to Hold from Buy with a price target of $71, down from $88. The firm cites ongoing mixed execution, including "yet another set of unfavorable EPS guides," as well as the surprising introduction of potential balance sheet shrinkage, which it calls both "ill timed" and with no clear path to the mechanics.
Top 5 Initiations:
- BofA initiated coverage of Axon (AXON) with a Buy rating and $380 price target, calling it the "premier safety technology ecosystem provider." The firm believes Axon is in a "commanding lead" to capture growing global spending on public safety, noting how the company has evolved and is investing significantly in R&D to continuously improve its product and "digitize policing." Jefferies also started coverage of Axon with a Buy rating and $385 price target.
- BTIG initiated coverage of Rezolute (RZLT) with a Buy rating and $13 price target. The firm sees an "attractive disconnect" between the company's three shots on goal and where the shares currently trade.
- Wedbush initiated coverage of Rumble (RUM) with a Neutral rating and $8 price target. The firm thinks there is significant upside potential as Rumble works to improve monetization on the platform and ARPU trends closer to more mature peers.
- UBS initiated coverage of Sweetgreen (SG) with a Buy rating and $31 price target. UBS believes Sweetgreen can generate 15%-plus revenue growth over the next three years, consisting of 4% average same-store sales and a 15%-unit compound annual growth rate, and reach over 6% EBITDA margins by 2026.
- Barrington initiated coverage of Proficient Auto Logistics (PAL) with an Outperform rating and $22 price target. The firm says the stock's discount to peers will dissipate as Proficient executes its growth strategy and its margins expand as expected.
