Here are Monday’s biggest analyst calls on Wall Street: Morgan Stanley names TSM a research tactical idea Morgan Stanley said it sees shares of Taiwan Semiconductor going higher heading into earnings later this week. “We believe the share price will rise in absolute terms over the next 15 days. We view the 2Q22 earnings call on July 14 an important stock catalyst. Most U.S. investors appear to believe that the results may be a nonevent, as the key is the 2023 outlook.” Goldman Sachs upgrades Mattel to buy from neutral Goldman said it likes the toy company’s product innovation. “Against the backdrop of increasing macroeconomic uncertainty, we believe that MAT stands out in benefiting from several company specific demand drivers in TV & film content releases, the returning Disney Princess toy license in 2023, and new product innovation.” Goldman Sachs downgrades Occidental Petroleum to neutral from buy Goldman said it sees better value elsewhere in the firm’s coverage. “While we continue to see positive debt reduction from OXY’s Upstream/Chemical operations, we believe this is largely reflected in the shares and note that larger-than-expected debt reduction can continue to serve as a positive catalyst for the stock.” Jefferies downgrades Lululemon to underperform from hold and Under Armour to neutral from buy Jefferies said in its downgrade of Lululemon that it sees rising competition. The firm also downgraded Under Armour and said fundamentals are “lagging.” “While the athletic apparel & footwear sector should continue to grow, Covid likely pulled forward demand with LULU one of the biggest beneficiaries. As a result, we see risks to cons. estimates ahead as competition rises and headwinds grow. At UAA, we are concerned with mgmt. volatility and lagging fundamentals. Thus, we are downgrading LULU (Underperform) and UAA (Hold).” Goldman Sachs downgrades Upstart Holdings to sell from neutral Goldman said it sees increasing competition for the consumer-lending company. “Although UPST’ s ~9% penetration of the U.S. personal loan market through 2021 has been impressive, we believe the recent slowdown in origination and revenue growth is evident of heightened competition and increasing funding costs for UPST partners, which reduces visibility into long-term growth and share gains beyond 2023 that historically have justified UPST’s premium valuation relative to peers.” SocGen upgrades Bank of America to buy from hold SocGen said Bank of America is a “quality bank at a cheaper price.” ” Bank of America is the highest quality U.S. universal bank in our view. It has the most defensive loan portfolio and high sensitivity to rising rates, which drove a premium P/TE valuation heading into 2022.” Read more about this call here. Cowen downgrades Qorvo to market perform from outperform Cowen said in its downgrade of the semiconductor company that it sees rising macro risks. “We downgrade shares of Qorvo (QRVO) to Market Perform and lower our PT to from $150 to $108 as low-/mid-tier Android weakness likely weighs further on revenue, margins and sentiment … pushing our medium-term estimates well below consensus.” Read more about this call here. Cowen reiterates Apple as outperform Cowen said that the stock remains a “defensive name” heading into earnings later this month. “We model AAPL to report (7/28) Jun Q results in line with consensus despite supply shortages. While our field work suggests near-term iPhone builds remain stable (46M/51M in Jun/ Sep Q), we lower our CY23 unit view on potential macro risks.” JPMorgan reiterates Amazon as overweight JPMorgan said it sees “solid demand” for Amazon’s Prime Day on Tuesday and Wednesday. “We project Prime Day will drive incremental revenue of ~$3.8B, up 7% Y/Y from the ~$3.6B of incremental revenue AMZN disclosed for last year’s Prime Day in 2Q21.” Needham downgrades Meta to underperform from hold Needham said it sees deteriorating short-term fundamentals for Facebook’s parent company. “With ad-driven stocks down sharply, the most common question we get is: What shares would we sell in order to fund stock ideas we prefer? At current price levels, we recommend investors use Meta as a source of funds.” Read more about this call here. Wells Fargo initiates Kontoor Brands as overweight Wells said in its initiation of the clothing company that it’s a “good place to hide.” “With structural top-line and margin drivers in place, attractive free cash flow and dividend yield, and M & A optionality, KTB is a good place to hide in this choppy market, as we view KTB as more of a consumer staple than an apparel company.” Barclays naming Linde a top pick Barclays named the chemical company a top pick and said it sees further margin expansion. “We’ve been bullish on LIN since late 2020 on our favorable industrial gases industry thesis (trends toward decarbonization/efficiency, multiyear pricing cycle, greater industry capital discipline), our view of further margin expansion at LIN, and our preference for the company’s balanced capital deployment strategy.” Evercore ISI adds CVS to the tactical outperform list Evercore added CVS to its tactical outperform list and says it sees upside to consensus. “Upside to Retail Performance in 2Q, combined with a benign utilization environment should see upside to 2Q consensus.” Citi downgrades Becton Dickinson to sell from neutral Citi said in its downgrade of Becton Dickinson that medical technology is facing too many headwinds. “Thus MedTech has underperformed YTD, declining 24.6% in the 1H22 versus the S & P 500’s 18.2% decline, yet fundamentally these companies continue to innovate products to improve health care outcomes. Baird downgrades Dutch Bros to neutral from outperform Baird said it sees rising macro risks for the coffee chain company. “We are lowering our rating on BROS to Neutral (from Outperform) due to the recent bounce in the shares, combined with rising risk of a downturn in broader discretionary spending, a dynamic that theoretically could place pressure on near-term sales in the company’s afternoon daypart and lead to less positive sentiment on the shares.” Bank of America upgrades Honeywell to buy from neutral Bank of America said it likes the company’s recent execution. “We upgrade Honeywell to Buy from Neutral. HON’s end market mix includes aerospace (33% of revenue) and oil & gas (12%), along with longer-cycle nonresidential construction and recent execution has been strong.” Bank of America downgrades Stryker to neutral from buy Bank of America said in its downgrade of the medtech company that some recession risk is already priced in. ” SYK’s valuation has come in already (6% premium to medtech vs. 20% premium earlier this year) suggesting some recession risk is already being priced in, but we do not see this overhang going away near term and we see the potential for further multiple compression if the macro deteriorates.” Wedbush upgrades Zillow to outperform from neutral Wedbush said the online housing company is in an “interesting position.” “We are assuming coverage of Zillow and upgrading the shares to OUTPERFORM from NEUTRAL. Our PT moves to $41 from $37. The close out of the Homes division leaves Zillow in an interesting position with a net cash balance sheet and opportunities galore.” Evercore ISI upgrades Marriott to outperform from in line Evercore said in its upgrade of Marriott that the company is “efficient” and “asset light.” “Asset-light, capital-efficient Brands Hilton and Marriott move to Outperform from In line (Hilton top pick); Hyatt assumed In line.” Credit Suisse downgrades KB Home to neutral from outperform Credit Suisse said in its downgrade of KB Home that it sees “friction” due to higher mortgage rates. “While we continue to expect housing to remain healthy based on the tight supply conditions, the spike in mortgage rates and impact on buyers has led to friction at the start of summer. We believe that homebuilders who recognize this impact on buyers and work with them will fare better than those that are less flexible.” Morgan Stanley downgrades New Relic to equal weight from overweight Morgan Stanley said in its downgrade of the cloud-based software company that it sees a “tougher spend” environment for New Relic. “After transitioning its business model to consumption in FY22, the focus for FY23 was to drive more usage to accelerate revenue growth. However, with a tougher spend environment on the horizon, sales execution in a consumption model likely becomes a challenge – DG to EW.” Morgan Stanley downgrades Fastly to underweight from equal weight Morgan Stanley said in its downgrade of the cloud company that there’s too much uncertainty for Fastly. “We see a less favorable risk/reward heading into 2H given poorer visibility reflecting a more challenging spend environment, a pending change in CEO and a consumption model that is poised to express changes in demand sooner than more traditional SaaS models.”
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