Here are Monday’s biggest calls on Wall Street: Jefferies reiterates Netflix as buy Jefferies said its recent survey checks show that Netflix should be able to retain users despite a password sharing crackdown. “We believe NFLX is positioned as the ‘must-have’ streaming service and is 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 off of “margin probation.” “When we upgraded SPOT to Equal Weight it was predicated on management showing progress against margin targets. Opex is demonstrating leverage as OI losses improve, and we think SPOT will be break-even in 1Q24.” Morgan Stanley reiterates Disney as overweight Morgan Stanley said it’s bullish heading into the entertainment giant’s earnings 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 from market perform Bernstein said shares of the spirits company are compelling at current levels. “Diageo: Upgrading to outperform – over a year of multiple compression = > attractive entry point to a Quality Compounder.” Read more about this call here. Morgan Stanley reiterates Amazon as overweight Morgan Stanley said Amazon is gaining share but that Walmart and Costco are best positioned to compete. “AMZN’s share gains accelerated in Q4 to its fastest pace since ’20. Meanwhile share gains for our retailers are decelerating. A clear negative for the rest of Retail, especially as 3P is driving AMZN’s gains. One positive: the big are back to getting bigger; WMT/COST may be best positioned.” Wells Fargo reiterates Dollar General and Ollie’s top picks Wells said Dollar General has “unique flexibility.” The firm also said that Ollie’s Bargain Outlet has an attractive risk/reward. “Expectations have fallen, each of these issues look manageable in our view, and we see unique flexibility for the company to make/beat initial guidance. … .We also like the ‘Goldilocks’ outlook for OLLI’s customer (solid jobs picture, less inflation, but still value conscious.” Wells Fargo reiterates Tesla as equal weight Wells said the industry dynamic surrounding EV pricing remains “challenged.” “Following the IRA [Inflation Reduction Act] SUV definition revision, TSLA modestly raises prices of the Model Y. We estimate the weighted average price increase is $690. The slight price adjustment does not materially change the challenged EV pricing dynamics, in our view.” Bank of America reiterates Uber as buy Bank of America said it’s standing by the stock heading into earnings later this week. ” Uber reports on Wed. Feb. 8, and we expect in-line bookings and revenues, and EBITDA above at $626mn vs Street at $619.” Deutsche Bank reiterates Apple as buy Deutsche said in its analysis of Apple’s 10-Q quarterly filing that it sees margin weakness, but that it’s standing by shares of the tech giant. “Sales down across all regions; but margins down most in Europe/Americas.” KeyBanc upgrades Splunk to overweight from sector weight KeyBanc said shares of the software company are defensive. “Splunk’s pervasive enterprise presence and security and data/analytics incumbency advantage in a tough spending market.” Telsey downgrades RH to market perform from outperform Telsey said in its downgrade of RH that it sees a more balanced risk/reward. “Although we continue to view RH as a strong brand with meaningful potential for growth to re-accelerate in the medium-to -long term, with the stock up 29% since the 3Q22 report on December 8, the shares seem fairly valued at ~20x 2023 consensus EPS, above the three-year average of 19.2x and five-year average of 17.3x.” UBS 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 increasing our price target to $75, based on 8x 2024E pro forma EBITDA, in line with the historical average for Canadian Telco.” Gordon Haskett downgrades Lyft to hold from buy Gordon Haskett said it sees topline growth concerns for Lyft. “Downgrading to Hold; Expecting a 4Q Active Rider Shortfall to Further Fuel Topline Growth Concerns.” Raymond James downgrades PayPal to market perform from outperform Raymond James said in its downgrade of PayPal that market share losses are growing. “Simply put, while most investors expect initial 2023 revenue growth guidance to come in below the Street, we believe the 2023 top line outlook will imply flat to negative growth for branded checkout which will likely result in the share loss narrative growing even louder.” MoffettNathanson downgrades T-Mobile to market perform from outperform Moffett said it’s concerned about slowing growth. “Here’s the problem: we see a growing mismatch between industry growth rates and company expectations, not just for T-Mobile, but for all of the Big Three.” Credit Suisse upgrades Dow to outperform from underperform Credit Suisse said it sees an improving risk/reward for the chemical company. “While we remain concerned that demand may surprise to the downside in 2023 (we remain below consensus), we believe the risk/reward of higher demand for several of 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 shares of Under Armour. “Group sentiment has inflected meaningfully more positively since last fall, as prospects for a soft landing and Fed pivot have spurred hope of a strong 2023 earnings recovery.” Cowen initiates Dick’s as outperform Cowen said its survey checks show that Dick’s continues to gain market share. “In our Consumer Tracker survey, when respondents were asked ‘When I am shopping for sporting goods, my first choice to go to is?’, an average of 31% of 2022 respondents indicated Dick’s was their sporting goods retailer of choice.” Loop downgrades Rent-A-Center to hold from buy Loop downgraded Rent-A-Center mainly on valuation. “While our downgrade is primarily based on valuation, we also have some fundamental concerns given the dramatic pandemic-driven demand pull forwards in furniture and consumer electronics.”
