Here are Wednesday’s biggest calls on Wall Street: Citi reiterates Apple as buy Citi said it sees several reasons that Apple stock is likely to trade higher. “More recently shares have been underperforming as concerns on production shortages during a very important holiday season as well as macro consumer woes (inflation, recession) could depress demand.” Jefferies names McDonald’s a top 2023 pick Jefferies said the fast food giant is a top defensive idea for 2023. “We view MCD as the best defensive/offensive play in restaurants given a looming recession but also oppty to take share. 4Q likely to see continued strong US demand trends and reset margin expectations (after 3Q) achievable, in our view.” Jefferies downgrades Starbucks to hold from buy Jefferies said it sees a more “balanced” risk/reward outlook for the stock. “With SBUX stock up +40% since the YTD low in May (S & P -2.8%), we move to the sidelines, with our Buy rating going to Hold, as the risk/reward now appears balanced following investments into the biz and growth concerns earlier this year.” Read more about this call here. Evercore ISI reiterates Alphabet as outperform Evercore lowered its estimates on the stock but said it’s still “highly attractive” for long-term investors. “Consistent with our recently published ’23 Outlook report, we are lowering our estimates and Price Target on GOOGL in the wake of several proprietary data points that suggest ongoing softness in Online Advertising and Cloud Computing demand.” Evercore ISI initiates BJ’s as in line Evercore said it’s waiting for a better entry point for shares of BJ’s. “Our new survey findings, multichannel analysis, and club growth potential look good for BJs into 2024 and beyond. But flattening 2023 EPS is likely to fade the 18.5x multiple back closer to KR’s 11x than Walmart’s 22x.” Citi reiterates Block as buy Citi said the company formerly known as Square presents a “compelling buying opportunity.” “Key to 2023 will be efficiency gains, tighter discretionary spend, and slower hiring, which has already resulted in 20%-25% expense reduction in the last two quarters.” Deutsche Bank reiterates Signature Bank as buy Deutsche said the company’s reduction in crypto concentration will be better for the company over time. “On this last point, given the continued negative sentiment around crypto and near term uncertainty, SBNY has decided to reduce its overall concentration in its crypto related deposit portfolio. This will lead to a reduction in earnings in the near term, but over time will likely to be viewed positively as crypto related funding won’t be such an outsized concentration.” UBS reiterates Nike as buy UBS said Nike’s earnings growth potential is “underestimated” after the company’s earnings report on Tuesday. “Nike’s investments in product innovation, supply chain speed, and digital are unlocking what is likely a multi-year period of above average growth.” Read more about this call here. Wolfe downgrades Palantir to underperform from peer perform Wolfe downgraded the stock due to a lack of confidence and visibility. “We have watched PLTR decelerate its top line by 30 points while operating margins have contracted from the mid-30% range to the midteens over the past few years with FCF on the same trajectory.” Read more about this call here. Wolfe downgrades Roblox to underperform from peer perform Wolfe said in his downgrade of Roblox that it has a lack of visibility right now. “On the back of disappointing November metrics that potentially provide concern in company execution and visibility, we downgrade to Underperform from Peer Perform prior.” Truist downgrades Carvana to keep from buying Truist said in its downgrade of Carvana that there’s too much long- and near-term risk. “Our move to a Hold reflects the risk to equity holders from a potential debt restructuring, which could happen if mgmt. looks to bring high debt servicing costs under control as the business continues to face headwinds from a tough macro.” Truist names Amazon a top 2023 pick Truist said Amazon is well positioned for 2023. “All that said, not all Internet companies are created equal, making 2023 a year particularly suited for stock picking, in our view.” Deutsche Bank reiterates Tesla as buy Deutsche cut its price target on Tesla to $270 per share from $355, but said the stock is still best positioned going forward. “Beyond the quarter, we continue to expect challenging headlines around demand softening and associated price cuts, but think the company remains best positioned to weather the current macroeconomic conditions, leveraging price to support volume growth and various cost levers in place to protect margins.” KeyBanc reiterates Disney as overweight KeyBanc said it thinks the entertainment giant has strong fundamentals. “We believe DIS has the best fundamentals with superior growth, unique assets, and a platform in Streaming.” KeyBanc reiterates Netflix as sector weight KeyBanc said it’s staying “cautious” on Netflix shares right now. “We continue to see signs that churn is stabilizing (eg, price sensitivity reverting to norms), but are incrementally cautious on gross adds.” Stifel reiterates Target and Walmart as hold Stifel said its recent survey checks show holiday spending intentions are worsening. “We anticipate this to further impact already challenged general merchandise sales for many retailers, and we reduce F2023 EPS estimates for shares of Walmart and Target accordingly.” Wedbush downgrades Shake Shack to neutral from outperform Wedbush said it sees a slower-than-expected recovery for the restaurant chain. “Fast casual may start to feel a top line squeeze more than it has thus far, rendering it difficult to meet both comp and margin expectations. SHAK’s urban recovery continues, but at a much slower pace than we originally expected.” Wedbush downgrades Papa John’s to neutral from outperform Wedbush downgraded the stock mainly on valuation. “PZZA’s 2023 consensus EPS estimate seems overly optimistic to us, and the stock is currently trading in line with our price target. Therefore, we downgrade PZZA to neutral from outperform.” Citi reiterates Micron as buy Citi said the stock’s bottom “is here” heading into earnings on Wednesday. “Micron is currently trading at 1.2X F23 book value, close to trough valuation of 1X book.” Goldman Sachs reiterated FedEx as buy Goldman said it’s standing by shares of FedEx after the company reported earnings that weren’t as bad as feared. “Results beat due to stronger Ground and Express margin and EBIT, while Express’ adjusted operating income came in somewhat light versus our forecast it beat Street consensus by 60% – which could be a factor behind shares performing well in after hours trading.” Baird reiterates Meta as outperform Baird named the stock as a top pick for 2023 and said it should gain some “mojo” back. “We think Meta will gain back some momentum in 2023 on the back of improvements in user engagement (eg, Reels), along with more automation (eg, Advantage+), and further growth in shopping and click-to-message ads.” UBS names Hershey, Pepsi and Coca Cola as top 2023 picks UBS named several consumer staple stocks as top idea for 2023 and said it sees positive earnings revisions. “As a result, we think investors should remain selective across the Staples landscape as outperformance from here will likely be driven by positive earnings revisions and not just defensive characteristics. Against this backdrop, our top large cap picks for next year are HSY, CAG, CL, PEP, KO, and STZ.”
