Tuesday’s top Wall Street analyst calls include Apple & Tesla

Here are Tuesday’s biggest calls on Wall Street: Bank of America names Alphabet a top 2023 pick Bank of America named the stock a top pick in 2023 and said it likes companies with “defensive positioning.” “We have only one Buy in the group, Alphabet, which we see as a more defensive value-focused stock.” Morgan Stanley downgrades Chipotle to equal weight from overweight Morgan Stanley said it’s concerned about “traffic headwinds.” “Downgrading CMG to EW, where traffic is the key debate; we’ve taken a modestly more cautious view of this vs. prior with a mixed read from our survey work. CMG’s status as a marquee long-term growth asset stands, in our minds, but traffic headwinds and fewer sales catalysts may make performance harder this year.” Morgan Stanley upgrades Domino’s to overweight from equal weight Morgan Stanley said Domino’s is best positioned to handle a downturn. “Upgrading DPZ to OW, a heavily debated stock where ’22 has brought challenges (and stock underperformance); we take the view that DPZ is better positioned to handle a downturn than in the past and with an attractive multiyear opportunity to continue to consolidate the carryout market.” Bernstein reiterates Tesla as underperform Bernstein said it remains torn about Tesla shares. On one hand, the stock is now trading at close to our 2050 DCF investor sentiment is poor and if consensus numbers get appropriately reset, there could be limited downside risk to estimates. That said, it is unclear if consensus numbers will get reset sufficiently and whether Tesla could still struggle with demand issues over the course of the year. Goldman Sachs reiterates Teslas as buy Goldman is sticking with its buy rating on Tesla even after the automaker said last week it was lowering prices. “Although the reduced prices for Tesla vehicles will likely result in lower earnings, we expect this to help stronger drive volumes all else equal.” JPMorgan reiterates Amazon as a best idea. JPM said it’s staying bullish heading into earnings later this quarter. “Still, AMZN remains our Best Idea & we remain confident the company can re-accelerate revenue growth & expand operating margins in 2023, driven primarily by retail improvement.” Evercore ISI adds a tactical outperform on Apple Evercore said investors should look past iPhone headwinds when Apple reports earnings on Feb. 2. “While reported earnings might be below current Street expectations ($123B/$1.98) due to the iPhone production shutdowns, we are expecting a Mar-qtr guide that is ~5% above consensus driven by the recovery of iPhone sales lost in the Dec-qtr.” Wells Fargo downgrades Pfizer to equal weight from overweight Wells said Pfizer’s stock needs a “reset” before it can work again. “Meanwhile, uncertainty around COVID business could make investors nervous. COVID reset could occur when guidance is provided on 4Q’22 call.” Read more about this call here. Morgan Stanley upgrades Church & Dwight to overweight from equal weight Morgan Stanley said he sees “fundamental inflection ahead.” “We are upgrading CHD to OW following substantial stock underperformance in 2022, which presents a compelling entry point ahead of a pronounced and above consensus expected top-line acceleration and gross margin recovery, and with 2023 consensus EPS now at reasonable levels.” Read more about this call here. Deutsche Bank downgrades Wendy’s to hold from buy Deutsche downgraded Wendy’s after the company released its preliminary results last week. The bank noted it sees better value elsewhere in the sector. “Given that the stock closed on Friday at ~$23, with this note, we are moving our rating to Hold, based on valuation.” William Blair initiates Adobe as performer William Blair said the company has a “sizable competitive moat.” “Over time, we believe that Adobe has developed a sizable competitive moat for its platform as the company has been well positioned to capitalize on strong digital transformation tail winds, the increasing need for creative content, and shifting consumer preferences toward digital interactions.” Morgan Stanley downgrades AutoNation to underweight from equal weight Morgan Stanley said he sees too many headwinds for shares of AutoNation right now. “While we remain constructive on Mike Manley’s prudent management, we see the company as still exposed to the same headwinds as the rest of the franchise auto dealers, given broadly similar business mix/growth/margins.” Raymond James downgrades Texas Roadhouse to outperform from strong buy Raymond James downgrades the restaurant company due to beef concerns. “We are downgrading TXRH to Outperform from Strong Buy as intensifying beef inflation headwinds cloud the company’s ’23 (and potentially ’24) margin outlook, partially offsetting our very positive view of the company’s impressive market share gains during the pandemic.” Wells Fargo upgrades World Wrestling to equal weight from underweight Wells said in its upgrade of the stock that it’s optimistic the company can find a buyer. “We upgrade WWE to Equal Weight and think its strategic process has a reasonable probability of success.” Goldman Sachs reiterates Microsoft as buy Goldman said Microsoft has a “durable” earnings profile heading into its quarterly results next week. “With Microsoft lagging the NASDAQ since its most recent peak on Aug 15, and trading at 20x C24 P/E, we believe the stocks’ go-forward performance is predicated on earnings durability rather than revenue growth.” Morgan Stanley upgrades Kroger to equal weight from underweight Morgan Stanley said he sees more people eating at home. “We expect a stable ’23 backdrop for Food at Home, with moderated (albeit still positive) inflation and steady underlying demand, which should support positive IDs (~3%) for KR in line with industry growth.” Citi downgrades Cheesecake Factory to neutrality from buy Citi said it has less confidence in sustainable margins for Cheesecake Factory. “We still believe there are solid ways to generate alpha while on a restaurant diet in 2023, but we’re cutting dessert from the menu and downgrading shares of CAKE to Neutral from Buy.” UBS reiterates Disney as buy UBS said it’s bullish heading into Disney earnings in early February. “We expect F1Q to show continued Parks strength (incl. record EBIT) and slightly improved DTC dilution while DTC adds slow & linear is impacted by a mixed ad environment.” Evercore ISI reiterates Netflix as outperform Evercore said it’s staying bullish heading into Netflix earnings Thursday. “Based on intra-quarter data points, we view the Street’s Q4 Revenue and 4.5MM Net Adds estimates as reasonable.” JMP downgrades Snap to market perform from market perform JMP downgraded the stock due to rising competition concerns. We downgrade shares of Snap to Market Perform from Market Outperform as we reduce Snap estimates again given declining US time spent on Snap, which we believe is a direct consequence of increased competition from Reels (META, MO, $150 PT) and YouTube Shorts. ” Morgan Stanley upgrades Global Payments to overweight from equal weight Morgan Stanley said the fintech company is underappreciated. “We’re upgrading GPN to OW (from EW) with a $135 PT on a more favorable competitive backdrop, attractive valuation, better recession resilience than feared, and GPN’s focus and consistent execution on strategic M&A.” Read more about this call here. JMP initiates Churchill Downs as a market performer JMP said in its initiation of Churchill that it likes the horse racing company’s free cash flow. “The gambling and horse racing focused operator continues to demonstrate its ability to grow the portfolio, generating substantial levels of FCF.” Piper Sandler downgrades Bank of America to underweight from neutral and Wells Fargo to neutral from overweight Piper said in its downgrade of Bank of America and Wells Fargo that it’s concerned about a tougher outlook after the banking giants reported earnings last week. “It seems likely the 4Q represented a high-water mark here, and a tougher outlook (esp. thanks to deposit mix/migration) weighs on our expectations — the starting point for 2024 could be especially tough.” Truist downgrades Roku to hold from buy Truist said Roku’s valuation is full. Downgrade to Hold (from Buy), $50 year-end 2023 PT (from $90) on 20x/16x terminal EPS/EBITDA (leaving room for more cost actions). 2) Lowest visibility in group, given highest macro sensitivity and toughest disclosures /accounting, though we believe well known. Deutsche Bank names T-Mobile a top 2023 pick Deutsche said it likes the company’s free cash flow. “We believe T-Mobile has the best EBITDA and FCF growth outlook in the sector, with multiple growth drivers.” Guggenheim downgrades Microsoft to sell from neutral. Guggenheim downgraded Microsoft mainly on valuation. “We’re in a prolonged macro slowdown and no one is immune, not even security.” Deutsche Bank adds a catalyst call buy on Albemarle Deutsche says it sees several positive catalysts ahead for the lithium company. “We are initiating Albemarle as a Catalyst Call Buy. On Jan. 24, Albemarle will host a Corporate Strategy webcast during which the company will provide an update on corporate strategy including ’23 guidance and a 5-year outlook for the company.”

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