Here are Monday’s biggest calls on Wall Street: Jefferies buys Netflix again as Jefferies says a recent survey probe suggests Netflix may be able to retain users despite password-sharing crackdown Needed “We believe NFLX is positioned as the ‘must have’ streaming service and a contender for the #1 spot in video content distribution.” Wells Fargo Upgrades Spotify to Overweight from Equal Weight Wells said the stock is coming out of “margin probation.” “When we upgraded SPOT to equal weight it was based on management showing progress against margin targets. Opex is demonstrating leverage as OI losses improve, and we think SPOT will reach break-even in 1Q24. Will happen.” Morgan Stanley reiterates Disney as overweight Morgan Stanley said it is staring at the entertainment giant’s earnings growth Wednesday. “We remain optimistic that Disney’s parks segment, which represents the majority of its earnings, can deliver healthy growth in FY23 and beyond.” Bernstein upgrades Diageo to outperform Bernstein said the spirits company’s shares are bullish at current levels. “Diageo: Upgrade for Better Performance – Over a Year of Multiple Compression => Attractive Entry Point for Quality Compounder.” Read more about this call here. Morgan Stanley reiterates Amazon as overweight Morgan Stanley said Amazon is gaining share but Walmart and Costco are in the best position to compete. “AMZN’s share gains grew at their fastest pace since ’20 in Q4. Meanwhile share gains for our retailers are waning. A clear negative for the rest of retail, especially 3P AMZN’s gains One positive: the big guys are coming back big; WMT/COST may be in the best shape.” Wells Fargo reiterates top picks of Dollar General and Ollie Wells said Dollar General has “unparalleled resilience.” The firm also said that there is an attractive risk/reward in Oli’s Bargain Outlet. “Expectations have fallen, each of these issues looks manageable in our view, and we see unparalleled flexibility for the company to raise/upset initial guidance. ….we also see OLI’s ‘Goldilocks’ approach to the customer (Like) the picture of solid jobs, low inflation, but still price conscious.” Wells Fargo reiterates Tesla as equal weight Wells said the industry dynamic around EV pricing remains “challenging.” After [Inflation Reduction Act] Revising the SUV definition, TSLA has marginally increased the prices of the Model Y. We estimate a weighted average price increase of $690. The modest price adjustment does not materially change the challenging EV pricing dynamics in our view. February 8, and we expect in-line bookings and revenue, and EBITDA to be above $626mn versus the Street $619. But it’s at odds with shares of the tech giant. “Sales down in all regions; but margins down most in Europe/US.” –Long-term, with the stock up 29% since the 3Q22 report on December 8, shares look fairly valued at ~20x 2023 consensus EPS, which is well above the three-year average of 19.2x and the five-year average of 17.3x Upgrades Rogers Communications to Buy from Neutral UBS said it sees an attractive risk/reward for the Canadian telecommunications giant.” We are upgrading shares of Rogers to Buy from Neutral and 8x 2024E pro forma Based on this, we are raising our price target to $75. EBITDA in line with the Canadian telco’s historical average.” Gordon Haskett downgrades Lyft to hold buy Gordon Haskett said it sees topline growth concerns for Lyft. “Downgrading to hold; Expect Lack of 4Q Active Riders to Push Topline Growth Concerns.” Raymond James Downgrades PayPal from Outperform to Market Underperform Raymond James said in his downgrade of PayPal that market share losses are mounting. “Simply put, while most investors expect early 2023 revenue growth guidance to underperform the Street, we believe the 2023 top line outlook will indicate flat to negative growth for Branded Checkout, That would result in the share loss narrative getting even higher.” MoffettNathanson downgraded T-Mobile from Outperform to Market Perform. Moffett said it’s worried about slowing growth. “Here’s the problem: We only own T-Mobile. We see a growing mismatch between industry growth rates and company expectations, not just for Dow, but for all of the Big Three.” Credit Suisse upgrades Dow from Underperform to Outperform sees a better risk/reward for Is. “While we are concerned that demand may surprise to a decline in 2023 (we are below consensus), we believe the risk/reward of higher demand for many of the Dow’s commodities is skewed favorably in 2024+. Our $68 target price equates to ~10x our 2023E EBITDA.” Baird Names Under Armor a Fresh Pick Baird said sentiment is improving for Under Armor shares. “Group sentiment has turned meaningfully more positive since last decline, as prospects for a soft landing and Fed pivot raise hopes for a strong 2023 earnings.” Cowen hails Dick’s as an outperformer Cowen said its survey investigation shows that Dick’s continues to gain market share. “In our Consumer Tracker survey, when respondents were asked ‘What’s my first choice when I’m shopping for sporting goods?’, an average of 31% of 2022 respondents indicated that their sport of choice was a retailer of goods. The Loop Downgraded Rent-a-Center from Buy to Hold The Loop Downgraded Rent-a-Center primarily on valuation. “While our downgrade is primarily based on valuation, we also have some fundamental concerns going forward about the dramatic pandemic-driven demand in furniture and consumer electronics.”
Wall Street analysts bullish on AAPL and DIS
