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Analyst Calls: Apple, Tesla, Microsoft, Rivian, Amazon, Skechers, Block, and More in Tuesday's Highlights

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Wall Street Analyst Calls: Upgrades, Downgrades, and Reiterations

UBS Upgrades Rivian to Buy

UBS has upgraded Rivian from neutral to buy, citing an attractive risk/reward profile. The EV maker's improved setup has led to the upgrade, although UBS has adjusted its 12-month price target to $24 from $26.

Bank of America Reiterates Apple as Neutral

Bank of America has reiterated its neutral rating on Apple, acknowledging the growth potential of Apple Services as the "next leg of growth." The bank sees the risk-reward balance as balanced for the tech giant.

Wells Fargo Reiterates Amazon as Overweight

Wells Fargo maintains its overweight rating on Amazon, anticipating strong earnings power ahead of the company's upcoming quarterly report. Positive inflection in North America retail operating income margins and AWS revenue growth contribute to the bullish outlook.

Wells Fargo Reiterates Alphabet as Equal Weight

Wells Fargo stands by its equal weight rating on Alphabet, highlighting the significance of the upcoming earnings release. Despite higher estimates for 2024, the bank sees 2024 as a pivotal year for Google shares, with key factors such as the DOJ search trial decision and the investment race for AI supremacy influencing the stock's performance.

Jefferies Reiterates Tesla as Hold

Jefferies has lowered its price target on Tesla and maintains a hold rating due to concerns about deteriorating fundamentals. The recent months have shown margin erosion in Q3 and uncertain growth in 2024, raising questions about the sustainability of Tesla's earlier profit edge.

Citi Downgrades Skyworks and Qorvo to Sell

Citi has downgraded smartphone specialty semiconductors Skyworks and Qorvo to sell from neutral. The downgrade is driven by concerns that several chipmakers may be replaced in certain phones in China, particularly following the recent Huawei Mate 60 phone launch.

UBS Reiterates Skechers as Buy

UBS maintains its buy rating on Skechers, emphasizing the resonance of the company's brand and products with global consumers. The bank sees potential in Skechers' ability to continue capturing market share.

JPMorgan Reiterates Disney as Overweight

JPMorgan has lowered its price target on Disney but maintains an overweight rating. While clarity on Disney's strategic direction may take time, including factors such as Hulu, ESPN investment, and potential linear sale, the bank remains optimistic due to the company's favorable asset mix compared to its peers in the media industry.

Bank of America Upgrades Electronic Arts to Buy

Bank of America upgrades Electronic Arts from neutral to buy, citing a more balanced risk/reward for the video game maker. The bank sees favorable prospects for Electronic Arts in the gaming industry.

Bank of America Reinstates Northern Trust as Buy

Bank of America resumes coverage of Northern Trust and reinstates it as a buy. The regional bank is seen as well-positioned to navigate the economic cycle, offering exposure to a hard-to-replicate wealth management franchise catering to high-net and ultra-high-net-worth clientele.

Daiwa Initiates Arm Holdings as Buy

Daiwa initiates coverage on semiconductor conductor company Arm Holdings with a buy rating. The firm believes that Arm's widely used architecture, aiding customer time to market and lowering costs, positions it well for future upside.

JPMorgan Downgrades Juniper Networks to Neutral

JPMorgan downgrades networking company Juniper Networks to neutral from overweight, citing better value opportunities elsewhere. The bank looks for the best positioning within its coverage given the current macroeconomic backdrop, favoring recovering spend from enterprise customers and accelerating spend from cloud companies toward AI infrastructure.

JPMorgan Downgrades Corning to Neutral

JPMorgan downgrades glassware company Corning to neutral from overweight, expecting a more muted earnings upside in the near-to-medium term. The bank believes that the anticipated recovery investors had been hoping for may take longer than previously anticipated.

TD Cowen Initiates O'Reilly as Outperform

TD Cowen initiates coverage on auto parts company O'Reilly with an outperform rating. The firm views O'Reilly as best-in-class, citing its execution and supply chain management that positions the company to capture market share and support growth.

Bank of America Reiterates Block as Buy

Bank of America maintains its buy rating on Block, formerly known as Square, encouraging investors to buy the dip in the company's shares. The bank is bullish on Block's dual-sided ecosystem, consisting of Square and Cash App, and believes the stock has shown resilience and operational discipline.

Morgan Stanley Reiterates Microsoft as Overweight

Morgan Stanley reaffirms its overweight rating on Microsoft, highlighting the company's favorable alignment with key secular AI themes. The firm sees scope for monetizing Generative AI across Microsoft's broad portfolio and leverages consumption pricing through its Azure Cloud business. These analyst calls provide insights into the market outlook for various companies, offering guidance to investors and potential implications for new business formations.

Implications of Wall Street Analyst Calls on New Business Formations

Impact of Upgrades and Downgrades

The recent Wall Street analyst calls, featuring upgrades, downgrades, and reiterations, present a mixed bag of opportunities and challenges for new business formations. The upgrade of Rivian by UBS, for instance, signals a positive outlook for the EV market. This could inspire new business formations in the EV and related sectors, such as EV charging infrastructure.

Reiterations and the Tech Sector

Bank of America's reiteration of Apple as neutral, Wells Fargo's reiteration of Amazon as overweight, and Morgan Stanley's reiteration of Microsoft as overweight indicate a strong growth potential in the tech sector. This could encourage new business formations in tech, particularly in areas like cloud services, AI, and digital platforms.
Downgrades and the Semiconductor Industry
On the other hand, Citi's downgrade of Skyworks and Qorvo to sell, based on concerns about chipmakers being replaced in certain phones in China, could deter new business formations in the semiconductor industry. This could particularly affect businesses looking to establish themselves in markets where Chinese phone manufacturers have a strong presence.

Impact on Specific Industries

The reiteration of Skechers as a buy by UBS indicates a positive outlook for the footwear industry, potentially encouraging new business formations in this sector. Meanwhile, JPMorgan's downgrade of Corning to neutral, expecting a more muted earnings upside, could signal caution for new businesses looking to enter the glassware industry.

Outlook for Financial Services and Auto Parts

Bank of America's reinstatement of Northern Trust as a buy suggests a positive outlook for the wealth management sector, potentially encouraging new business formations in this area. Similarly, TD Cowen's initiation of O'Reilly as outperform could inspire new businesses in the auto parts industry.

Overall Market Outlook

Overall, these analyst calls provide valuable insights into the market outlook for various sectors, offering guidance to investors and potential implications for new business formations. The calls highlight areas of growth, as well as sectors where caution may be warranted, providing a roadmap for entrepreneurs looking to establish new businesses in these industries.
Story First Published at: https://www.cnbc.com/2023/10/10/wall-street-analysts-favorite-stocks-on-tuesday.html
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