Monday's Noteworthy Analyst Calls: Meta, Arm, Domino's, Netflix, Disney, Apple, Tesla, and More
Here are the key analyst calls that made waves on Wall Street this Monday:
Wells Fargo Reiterates Meta as Overweight
Wells Fargo maintained its overweight rating on Meta (formerly Facebook) but lowered its price target to $372 per share. The decision was based on improved cost discipline and capital allocation, leading to a modest premium in valuation.
JPMorgan Initiates Arm Holdings as Overweight
JPMorgan initiated coverage on chipmaker Arm Holdings, highlighting its leadership in semiconductor compute architectures and strong semiconductor IP portfolio. The firm expressed optimism about the company's growth prospects.
Bank of America Reiterates Buy Rating on Domino's
Bank of America reaffirmed its buy rating on Domino's despite lowering its price target. The firm believes that Domino's growth rate will surprise to the upside, driven by unit growth and share gains in the carryout sector.
Goldman Sachs Reiterates Neutral Rating on Netflix
Goldman Sachs maintained its neutral rating on Netflix ahead of the company's earnings report. The firm expects Netflix to outperform in terms of subscriber performance due to its content breadth, execution of password crackdown, and varying price points.
Barclays Reiterates Equal Weight on Disney
Barclays expressed caution on Disney ahead of its earnings in early November. The firm cited a lack of visibility beyond the near term but acknowledged that focus could shift towards a longer-term outlook with the company's upcoming financial disclosures.
JPMorgan Reiterates Overweight on Apple
JPMorgan reiterated its overweight rating on Apple, noting that product delivery times are moderating based on its Product Availability Tracker. The firm expects this trend to continue, albeit with varying degrees across different models.
Baird Upgrades On Holdings to Outperform
Baird upgraded shoe manufacturer On Holdings to outperform, citing its increasing appeal. The firm believes that strong consumer demand and positive orders for spring 2024 support upside potential for the company.
Wells Fargo Reiterates Equal Weight on Tesla
Wells Fargo expressed caution on Tesla ahead of its earnings, citing concerns about margin erosion. The firm expects a decline in auto gross margin excluding EV credits for the third quarter.
Bank of America Initiates Buy Rating on Motorola Solutions
Bank of America initiated coverage on Motorola Solutions, highlighting the company's well-positioned position in the public safety and enterprise security sectors. The firm believes that multiple tailwinds and a healthy funding environment support its growth prospects.
Bank of America Downgrades Datadog to Neutral
Bank of America downgraded software company Datadog to neutral due to concerns about slowing demand. The firm lowered its price target based on demand checks and scenario analysis suggesting downside revenue risk.
Jefferies Upgrades Aramark to Buy
Jefferies upgraded food service and uniform company Aramark to buy, citing the positive impact of its multi-year turnaround efforts and increased outsourcing penetration rate post-Covid. The firm expects strong organic growth in the coming years.
Redburn Atlantic Equities Downgrades Spotify to Neutral
Redburn Atlantic Equities downgraded Spotify to neutral, citing margin risks. While positive about Spotify's operating cost cuts and expected positive EBIT in Q4 2023, the firm sees limited value due to potential risks to margins.
Evercore ISI Upgrades Oracle to Overweight
Evercore ISI upgraded Oracle to overweight, citing a compelling entry point for the business. The firm believes that Oracle is well-positioned to deliver consistent revenue and earnings growth, primarily driven by its cloud solutions.
Goldman Sachs Upgrades Lennox to Buy
Goldman Sachs upgraded HVAC company Lennox to buy, anticipating improved margins. The firm expects positive trends in residential HVAC volumes and continued commercial margin improvement.
Citi Upgrades Patterson-UTI Energy to Buy
Citi upgraded drilling company Patterson-UTI Energy to buy, considering it a top-tier business. The firm believes that the upcoming recovery in U.S. drilling, although modest compared to historical standards, will drive outperformance for Patterson-UTI Energy.
Baird Names Capital One a Fresh Pick
Baird identified credit card company Capital One as a fresh pick, emphasizing its compelling attributes. The firm highlighted Capital One's significant credit card reserves, solid delinquency rates, and its potential to navigate economic conditions effectively.
Piper Sandler Reiterates Overweight on Amazon
Piper Sandler maintained its overweight rating on Amazon, citing its positive outlook on margins. Despite rising oil prices, the firm sees structural efficiencies as more impactful and forecasts strong operating income for the third quarter.
Barclays Upgrades Zscaler to Overweight
Barclays upgraded cloud security company Zscaler to overweight, considering it a market leader. The firm's upgrade was driven by the potential for secular growth in the secure access service edge (SASE) market and the desire to reposition for exposure to this market.
In conclusion, Monday's analyst calls highlighted various shifts in ratings and price targets for prominent companies across different sectors. These calls provide insights into market expectations and investor sentiment, influencing investment decisions and potentially impacting the stock performance of these companies.
Monday's Analyst Calls: Potential Impacts on New Business Formations
The recent analyst calls on Wall Street have been making waves, with potential implications for new businesses.
Meta's Overweight Rating and Domino's Growth Potential
Wells Fargo's decision to maintain an overweight rating on Meta, despite a lowered price target, signifies the tech giant's improved cost discipline and capital allocation. This could serve as a model for new businesses in the tech sector. Similarly, Bank of America's reaffirmation of a buy rating on Domino's, despite a lower price target, suggests that new businesses in the food industry could benefit from focusing on unit growth and share gains in carryout.
Netflix's Content Strategy and Apple's Product Delivery
Goldman Sachs' neutral rating on Netflix, based on its content breadth and password crackdown strategy, provides a valuable lesson for new businesses in the entertainment sector: content is king. Meanwhile, JPMorgan's overweight rating on Apple, due to moderating product delivery times, underscores the importance of efficient supply chains for new businesses in the tech industry.
On Holdings' Consumer Appeal and Tesla's Margin Erosion
Baird's upgrade of On Holdings to outperform, based on strong consumer demand and positive orders, highlights the importance of consumer appeal for new businesses in the retail sector. Conversely, Wells Fargo's caution on Tesla due to concerns about margin erosion serves as a warning for new businesses about the importance of maintaining healthy profit margins.
Motorola's Growth Prospects and Spotify's Margin Risks
Bank of America's initiation of a buy rating on Motorola Solutions, citing multiple growth-supporting tailwinds, could inspire new businesses in the tech sector to seek similar growth opportunities. On the other hand, Redburn Atlantic Equities' downgrade of Spotify to neutral due to margin risks underlines the need for new businesses to carefully manage costs.
In essence, these analyst calls provide valuable insights for new businesses, offering lessons on growth strategies, cost management, content creation, and supply chain efficiency. These insights could significantly influence the strategies of new business formations across various sectors.