Here are Wednesday’s biggest calls on Wall Street: Morgan Stanley reiterates Apple as overweight Morgan Stanley said it’s staying bullish heading into earnings next week. “While we don’t believe F3Q earnings will put to rest investor concerns about a hardware downturn, we expect Apple to beat Sept Q expectations & guide constructively to the Dec Q.” JPMorgan upgrades Netflix to overweight from neutral JPMorgan said it has “increased conviction” in the stock after its earnings report on Tuesday. “Coming out of 3Q earnings, we have increased conviction in NFLX’s ability to accelerate revenue growth with the help of advertising and monetization of account sharing, expand operating margins, and increase FCF.” Read more about this call here. Citi downgrades Polaris to neutral from buy Citi said in its downgrade of the manufacturer of snowmobiles and motorcycles that it is concerned about negative earnings revisions for Polaris as the macro environment worsens. “Our checks suggest a retail environment substantially worse than previously anticipated, and while the near-term earnings impact is likely muted, this condenses (if not altogether eliminates) the inventory replenishment opportunity for ’23.” Jefferies upgrades Exxon to buy from hold After a change in analyst coverage, Jefferies upgraded the oil and gas giant, noting it sees an attractive risk/reward outlook. “XOM invested through the cycle, while the industry restricted capital. Coupled with higher commodity prices, this allowed XOM not only to de-lever, but position for visible Upstream (Guyana & Permian) and Downstream (esp chemicals) growth.” Read more about this call here. JPMorgan reiterates Robinhood as underweight JPMorgan said profitability still looks elusive for Robinhood. “While the impact of higher rates will flow through earnings at a rate slightly better than previously forecast, we note that the outlook for profitability still seems elusive.” Cowen initiates Home Depot as outperform Cowen said in its initiation Home Depot that it’s “best-in-class.” “As HD’s Pro ecosystem comes together, we are constructive on the opportunity to grow share, increase sales productivity, accelerate the flywheel & expand EBIT margin. HD is a best-in-class operator with leading Pro share, which positions the retailer to better withstand a slowing backdrop in the NT, and accelerate on the other side.” Evercore ISI downgrades Best Buy to in line from outperform Evercore said in its downgrade of the big box retailer that it is concerned about negative comps. “We are downgrading Best Buy to In Line, as we believe that comps could continue to run negative into 2023 as deflation sets in. Evercore ISI downgrade Petco to in line from outperform Evercore said in its downgrade of the pet store that it sees too many headwinds. “Petco will have plenty of opportunities to take its margins past 10% over the next few years, but we believe the current headwinds are not completely factored into the street’s 2023 numbers.” Evercore ISI downgrades Lowe’s to in line from outperform Evercore said in its downgrade of Lowe’s that it sees slowing home improvement demand. “Our downgrade is based on the view that slower HI (home improvement) demand and disinflation could push comps lower in 2023, making margin gains muted.” Evercore ISI downgrades Boston Beer to in line from outperform Evercore said in its downgrade of Boston Beer that estimates are too high. “First, and as detailed in this report, we believe that estimates for FY23 are too high and that the st ock may need some time for investors to regain confidence.” Deutsche Bank reiterates Tesla as buy Deutsche Bank said Tesla’s stock narrative could be “challenging” in the near-term, but that it’s sticking with the stock heading into earnings Wednesday. “Lastly, we continue to favor TSLA and believe that if the company eventually starts seeing softer demand due to pressure on consumers, it is best positioned to make price adjustments as necessary.” Bank of America reiterates Alphabet as buy Bank of America’s aid Alphabet is a “defensive stock with valuation support.” “While more revenue estimate cuts for advertising & eCommerce stocks are likely, we think Alphabet has more relative earnings stability given breadth of advertisers, more expense flexibility than most peers, healthy margins that will minimize cash flow concerns, and opportunity to support stock with buybacks .” Goldman Sachs reiterates Microsoft as buy Goldman said its survey checks show Microsoft’s business activity remains “healthy” heading into earnings next week. “Checks suggest healthy demand across commercial offerings; PC, FX headwinds to continue to be overhangs.” Citi adds a positive catalyst watch on Snap Citi said it’s bullish on the stock heading into earnings Thursday. “We believe revenue and EBITDA are likely to be better than ours and consensus expectations given our view that the online advertising environment improved throughout the quarter and we will be focused on Snap’s 2023 outlook which per internal memos calls for 20% revenue growth and EBITDA of $1.5 trillion.” Baird upgrades Lockheed Martin to outperform from neutral Baird upgraded the stock after its earnings report on Tuesday and says that the company’s valuation provides “value plus visibility.” “We are upgrading LMT to Outperform reflecting our view that headline risks have been reduced tied to the multi-year FCF outlook and 2023 guidance met Street expectations, leaving little for bears to point along with LMT’s valuation providing value plus visibility vs. other mega- cap industrials.” Baird summarizes Palo Alto Networks and Splunk as outperform After a change in analyst coverage, Baird said it likes Palo Alto’s valuation. The firm also resumed coverage of Splunk and said the company’s new CEO “strengthens the investment case.” “We believe PANW could be a consensus buy as investors take refuge in stocks that can yield both growth and free cash flow margins at an attractive valuation. … We acknowledge the difficulties Splunk has endured over the past few years, but we observe a significant disparity between the potential upside from Splunk’s operating strategy and its current valuation.” Credit Suisse initiates Charles Schwab as outperform Credit Suisse said it likes the financial services company’s “capital optionality.” “Within the Group, we favor SCHW as we see a significant EPS ramp through ’24E, given current short- and long-end rates, which should generate significant excess capital optionality.” Deutsche Bank upgrades Netflix to buy from hold Deutsche upgraded Netflix after its earnings report on Tuesday and says it sees “subscriber growth acceleration.” “We believe we now have visibility into a subscriber growth inflection point next year given that Netflix management has confirmed both the early 2023 introduction of its new measures designed to better monetize account sharing, and the early November timing of its AVOD tier launch in 12 top markets.” Read more about this call here. Jefferies initiates Plug Power as buy Jefferies says the hydrogen fuel cell company has a first mover advantage and is a leader. ” PLUG’s broad strategy covers the entire hydrogen value chain aiming to help build up the nascent green H2 economy.” Loop reiterates Amazon as buy Loop said it’s staying bullish ahead of earnings next week. “We think 3Q may be the quarter where Amazon finally shows progress in passing through inflationary pressure.”
