Here are Monday’s biggest calls on Wall Street: Jefferies reiterates Netflix as Jefferies said its recent investigative checks show Netflix should be able to retain users despite a crackdown on password sharing. “We believe NFLX is positioning itself as the ‘go-to’ streaming service and a contender for the top spot in video content distribution.” Wells Fargo upgrades Spotify to overweight from Equal Weight “When we upgraded SPOT to Equal Weight, it was based on management progress against margin targets. Opex demonstrates leverage as OI losses improve, and we expect SPOT to break even in 1Q24.” Morgan Stanley Reiterates Disney While Overweight Morgan Stanley said it was bullish on the entertainment giant’s approach to earnings on Wednesday. “We remain optimistic that the Disney Parks segment, which accounts for the majority of its revenue, can deliver healthy growth in FY23 and beyond.” Bernstein Upgrades Diageo to Outperform Market Bernstein said the spirits company’s stock is compelling at current levels. “Diageo: Upgrade 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 Is Overweight Morgan Stanley said Amazon was gaining market share but Walmart and Costco were in the best position to compete. “AMZN’s share gains accelerated in the fourth quarter to their fastest pace in 20 years. Meanwhile, our retailers’ share gains are slowing. A net negative for the rest of retail, from especially since 3P is driving AMZN’s earnings. One positive: the big guys are back to get bigger; WMT/COST may be best placed.” Wells Fargo reiterates Dollar General’s top picks and Ollie Wells said Dollar General has “unique flexibility.” The company also said that Ollie’s Bargain Outlet has an attractive risk/reward ratio. “Expectations have fallen, each of these issues looks manageable in our view, and we see unique flexibility for the business to make/beat initial expectations. ….We also like the ‘Goldilocks’ outlook for the customer d ‘OLLI (strong jobs picture, less inflation, but still value conscious.” Wells Fargo reiterates Tesla as equal weight Wells said the industry dynamics surrounding electric vehicle pricing remain “challenged.” [Inflation Reduction Act] Revised SUV definition, TSLA slightly increases Model Y prices. We estimate the weighted average price increase to be $690. The slight price adjustment does not materially alter the contested EV price dynamics, in our view. Feb. 8, and we expect online bookings and revenue, and EBITDA above $626 million against Street at $619.” but that it sticks to shares of the tech giant.” decreased in all regions; but margins fall most in Europe/Americas.” KeyBanc moves Splunk to overweight relative to sector weighting KeyBanc said the software company’s stock is defensive. Telsey downgrades RH to market performance from outperformance Telsey said in its HR demotion that it sees a more balanced risk/reward ratio.” While we continue to view RH as a strong brand with significant growth potential to re-accelerate in the long-term, with the stock up 29% since the Dec. 8 3Q22 report, the stock looks fairly priced at ~20x consensus 2023 EPS, above the three-year average of 19.2x and the five-year average of 17.3x.” UBS UBS upgrades Rogers Communications to buy from neutral UBS said that he saw an attractive risk/reward ratio for the Canadian telecommunications giant. EBITDA, in line with the historical average for Canadian telecommunications.” Gordon Haskett downgrades Lyft to keep purchase Gordon Haskett said he sees growth issues for Lyft. “Downgrade to hold; expect lack of active passengers in Q4 to further fuel mainline growth concerns.” Raymond James downgrades PayPal to market performance from outperformance Raymond James said in his downgrade of PayPal that market share losses were mounting. “Simply put, while most investors expect the initial revenue growth forecast for 2023 to be below street level, we believe the revenue outlook for 2023 will imply flat to negative growth. for branded checkouts, which will likely lead to even stronger growth in the share loss narrative.” MoffettNathanson downgrades T-Mobile to market performance from outperformance Moffett said he was concerned about slowing growth. “Here’s the problem: We’re seeing a growing mismatch between industry growth rates and business expectations, not just for T-Mobile, but for all of the Big Three.” Credit Suisse upgrades Dow to outperform after underperforming Credit Suisse said it saw an improvement in the risk-reward ratio for the chemicals company. “While we remain concerned that demand could surprise on the downside in 2023 (we remain below consensus), we believe the risk/reward of higher demand for several of DOW’s commodities is favorably biased in 2024+. Our target price of $68 equates to approximately 10x our 2023e EBITDA.” Baird names Under Armor a new pick Baird said sentiment is improving for Under Armor stocks. “Group sentiment has turned significantly more positive since last fall as prospects for a soft landing and a Fed pivot raised hopes for a strong earnings recovery in 2023.” Cowen launches Dick’s as it outperforms Cowen said its investigative audits show Dick’s continues to gain market share. “In our Consumer Tracker survey, when respondents were asked ‘When I shop for sporting goods, is my first choice?’, an average of 31% of 2,022 respondents listed Dick’s as their sports retailer. choice sporting goods.” Loop downgrades Rent-A-Center to keep its long Loop downgraded Rent-A-Center mainly on valuation. “While our downgrade is primarily based on valuation, we also have fundamental concerns given the pandemic-induced surge in demand in furniture and consumer electronics.”
