Here are Tuesday’s biggest calls on Wall Street: Morgan Stanley reiterates Walmart as overweight Morgan Stanley said that Walmart+ could be worth $45 billion. “Per AlphaWise, Walmart+ membership at a record ~18.5m after increasing ~2m in September.” KeyBanc reiterates Apple as overweight KeyBanc said its survey checks show ongoing iPhone strength for Apple. “We believe F4Q22 benefited from an additional week of iPhone sales, and a mix shift towards higher priced devices (Pro/Pro Max) and iPhone 14 Plus ($899) replacing the iPhone 13 Mini ($699) in the lineup.” Wells Fargo initiates Datadog as overweight Wells said the cloud computing company is a “unicorn in software.” “Finally, Datadog is one of the few vendors generating revenue growth above 50%, has an operating margin above 15%, and is generating positive Free Cash Flow, which we believe warrants a premium valuation and puts Datadog in the ‘unicorn’ status. ” Wells Fargo initiates Splunk as overweight Wells said the software company has long-term durability and profitability. “We believe Splunk has the best overall observability platform in the market (supported by feedback from resellers), and is deeply entrenched with many large enterprise customers, which should enable long-term sustainable growth and profitability.” Atlantic Equities downgrades Meta to neutral from overweight Atlantic Equities said the company’s growth outlook seems challenging. “We now believe Meta’s growth outlook is increasingly challenged given strengthening macro headwinds, rising competition for advertising dollars and our analysis suggesting that secular tailwinds in digital advertising are set to ease.” Read more about this call here. Bank of America reiterates Netflix as underperform Bank of America said it’s standing by its underperform rating on Netflix heading into earnings next week. “We think Netflix’s pivot to AVOD (ad video on demand) is continuing to come across as a bit rushed, with a few reports publicly circulating that it may come on line later this year.” Morgan Stanley upgrades Amgen to overweight from equal weight Morgan Stanley said the biopharma company is a defensive stock. “We believe Amgen is largely risky providing defensiveness in this market with upside optionality on growth.” Barclays initiates Roblox as underweight Barclays said Roblox is a “fading call option on the metaverse.” “RBLX has been one of the main beneficiaries of the pandemic, seeing users and bookings increase 2.5x since 1Q20 as users joined the platform as a means to socialize with their friends digitally through Roblox experiences.” Morgan Stanley reiterates Microsoft as overweight Morgan Stanley said Microsoft has an attractive valuation. “The combination of strong secular positioning and a reasonable valuation keep MSFT as one of our most preferred names in software.” Morgan Stanley downgrades Zoom to equal weight from overweight Morgan Stanley said there’s a lack of near-term catalysts for the stock. “Enterprise platform built by Zoom remains underappreciated. However, current valuation is more sensitive to direct business performance, where we do not expect improvement until next year. Downgrading to EW to be more opportunistic around catalysts.” Read more about this call here. Wedbush initiates Coca-Cola and Pepsi as outperform Wedbush said it’s very bullish on shares of Coca-Cola and Pepsi. “What is opportunistic about the current environment is that pricing and resulting revenue growth across a multitude of CPG sub-segments including carbonated soft drinks (CSDs), snacks, sports drinks, and single serve (SS) coffee provide competitive advantages to each of the market leaders.” Wedbush initiates Constellation Brands as outperform Wedbush said Constellation Brands is one of the firm’s top picks in the beverage space. “STZ’s historically consistent best in class beer business continues to fire on all cylinders and has been generating outsized levels of market share capture that are exceeding the gains seen pre-pandemic.” Morgan Stanley names Taiwan Semiconductor as a catalyst driven idea Morgan Stanley said it’s bullish heading into the semiconductor company’s analyst meeting on Thursday. “We believe the market has started to focus more on next year’s outlook. TSMC may not provide guidance for next year until the 4Q analyst meeting, but qualitative comments on potential tech recovery and secular growth trends should help investors understand how TSMC views its 2023 outlook .” Wolfe initiates Boeing as outperform Wolfe said in his initiation of Boeing that he sees positive movement towards free cash flow generation. “Both a dominant company–one of two in a global aircraft duopoly and a top-5 global defense company—and a company soul searching against a backdrop of setbacks.” UBS downgrades Blackrock to neutral from buy UBS said in its downgrade of Blackrock that it sees “environmental pressures.” “We are downgrading BLK to Neutral based on environmental pressure to earnings and risk from the firm’s ESG positioning.” Goldman Sachs initiates Warner Music as buy Goldman said it sees strong secular tailwinds for the music company in the years ahead. “As one of the largest music entertainment companies in the world, we believe that Warner Music Group is well-positioned to benefit from several secular tailwinds over the coming years, including growth in subscription & ad-supported streaming and new licensing opportunities created by emerging multi-media platforms.” Read more about this call here. Cowen initiates Analog Devices as buy Cowen says shares of the semiconductor manufacturing company are attractive. “We believe Analog Devices’ shares present attractive value, balancing both capital returns and secular growth, in an environment when TMT investors are seeking relative safety.” Piper Sandler upgrades Lululemon to overweight from neutral Piper said Lululemon’s products are “best in class.” “We continue to believe LULU has best-in-class product innovation which should drive demand, and we do not believe LULU will have to react as much as peers to the more intense promotional environment.” Wells Fargo upgrades Marvell to overweight from equal weight Wells said in its upgrade of Marvell that it’s a top secular growth story. “While MRVL won’t be able to completely avoid global macro pressures, we believe the company is heavily insulated from the consumer weakness that has been most pronounced in the current macro softness.” Wells Fargo downgrades Qorvo to equal weight from overweight Wells said the radio frequency solutions company needs to diversify its business away from Apple. “Our lower PT is based on lower peer group multiples as well as the assumption QRVO may trade at a discount to the broader chip sectors until the company can diversify the business away from Apple and away from the mobile phone market.” Wells Fargo downgrades Skyworks to equal weight from overweight Wells said in its downgrade of Skyworks that the chip cycle is getting closer to the bottom. “Our rating change is driven mostly by our desire to make sure we have the right ratings on the right stocks, once investors’ sentiment turns more positive and once we see signs the chip cycle is hitting a bottom.” Bernstein initiates Snowflake as market perform Bernstein initiated the cloud computing data company with a market perform rating mainly on valuation. “Today we launch coverage on Snowflake with a Market-Perform rating because we believe that the $10B in product (Cloud) revenue and 30% Y/Y growth rate exiting FY29 is doable, but that it is already baked into the stock’s current valuation .” Bernstein downgrades Bilibili to underperform from market perform Bernstein said in its downgrade of the China video streaming company that it sees balance sheet risk. “The street has (as have we) been negative on Bilibili’s prospects for some time, and we doubt this downgrade will shock many of our readers. In recent investor meetings we were asked what we felt a defendable “floor” valuation might look like for Bilibili’s shares.” JPMorgan upgrades ServiceNow to overweight from neutral JPMorgan resumed coverage of the cloud computing company and said it should emerge stronger after a slowdown. “While we have some near-term hesitation regarding the challenging demand environment, which should cause top-line deceleration in the coming quarters, we believe ServiceNow has a large growth runway and remains among the ‘best homes in a temporarily deteriorating neighborhood.’ Mizuho downgrades Hain Celestial to neutral from buy Mizuho said in its downgrade of the natural food products company that it sees a slowing recovery. “HAIN’s UK/Europe exposure has weighed on EBITDA and sentiment throughout the Russia/Ukraine conflict.”
