Here are Tuesday’s biggest calls on Wall Street. Goldman Sachs downgrades Keurig Dr Pepper to neutral from buy Goldman said it sees increased risk to Keurig ‘s margins amid higher coffee prices. “We now see a more balanced risk/reward and therefore downgrade the stock to a Neutral rating from a Buy given our expectation that brewer household penetration starts to normalize, pod attach rates moderate and KDP’s packaged-beverage business growth & market share gains begin to slow in this environment. Furthermore, we see increased risk to KDP’s margins as commodity inflation, especially related to coffee, remains elevated for KDP vs. its peers based on our updated commodity tracker.” Cantor Fitzgerald initiates Lucid Group with an overweight rating The Wall Street firm said Lucid ‘s luxury and premium electric vehicles are more attractive than its peers. “We believe LCID’s luxury and premium vehicles provide greater efficiency, longer range, faster charging and more space relative to its peers. Lucid vehicles are designed to contain a luxurious interior and a compact, efficient exterior that results in more space for the passengers, thus termed the “Space Concept” by LCID. Lucid will compete in the global luxury car market, and the company’s initial product, the Lucid Air, began deliveries to customers in 10/2021.” UBS downgrades Norfolk Southern, CSX to neutral from buy UBS said Norfolk Southern and CSX will find it hard to maintain growth in the challenging macro environment. “With the macro backdrop deteriorating, Consensus 2023 EPS estimates appear too high for the U.S. rails and we expect downward revisions to industrial-related and intermodal volume assumptions in the near term. While a significant decline in freight demand would likely alleviate existing capacity constraints and lead to the improved service levels needed for the rails to regain share from truck, we believe it will be difficult for the U.S. rails to achieve the ~2.5% volume growth currently reflected in Consensus.” Morgan Stanley cuts FedEx price target to $125 from $250 Morgan Stanley lowered FedEx ‘s projections after the shipping giant’s profit warning. “With the dust settling from FDX’s big profit warning, we believe expectations and the stock have been reset. However, the next leg from here will need to prove that $11-12 is not the normalized EPS though bears may see a path below $9 … the stock today is at the same level it was in January 2020 prior to the pandemic and our PT returns to nearly the same level that is was back then as well.” Citi puts McDonald’s on a 90-day negative catalyst watch The Wall Street firm put McDonald’s shares on a 90-day negative catalyst watch in the face of foreign exchange headwinds and overall macroeconomic challenges. “We see increasingly less favorable risk-reward in MCD shares, with FX & macro challenges in Europe looming over EPS estimates heading into 3Q/the winter months, and a valuation (EV/EBITDA near all-time highs vs the market) leaving little room for shares to absorb negative estimate revisions. Specifically, over $0.25/2.5% of incremental FX headwinds since 2Q results, and a Street outlook that shows IOM SSS momentum continuing to push higher. While we don’t question the strength/macro resiliency of the U.S. business, U.S. SSS would need to beat (already strong) expectations by a MSD percentage to offset marking to market for FX and even a LSD decline in the Europe SSS outlook.” — CNBC’s Michael Bloom contributed reporting.
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