Here are Wednesday’s biggest calls on Wall Street: Deutsche Bank downgrades McDonald’s to hold from buy Deutsche downgraded the fast-food giant after its earnings report Tuesday, noting it sees limited upside potential. “Company owned restaurant margins in the U.S. were below consensus, while IOM (intl. operated markets) segment margins were slightly above; however, on the call management indicated that the current inflationary environment would likely keep this metric under some pressure in both segments for the balance of this calendar year.” Read more about this call here. Loop downgrades Logitech to hold from buy Loop said in its downgrade of the computer peripherals company that a recession is starting to set in. “Moving to Hold from Buy as recession has made its mark at LOGI, impacting the consumer centric segments and compelling LOGI to lower its FY2023 (March) guidance after FQ1 (June Q).’ Raymond James upgrades Carvana to market perform from underperform Raymond James said things appears to be normalizing for Carvana. “We believe 4Q22 is the most likely start to the accelerated normalization period — shifting the used car landscape towards how things were pre-COVID.” Morgan Stanley reiterates General Electric as overweight Morgan Stanley says it’s getting more positive on GE. “Our estimates are under review, but ultimately we expect little change to 2023 consensus and the 12-18 month narrative for GE. The story remains driven by a multi-year upcycle in Aviation aftermarket and a medium term improvement in Healthcare growth and profitability as supply chains improve.” Bank of America downgrades PulteGroup to neutral from buy Bank of America said it sees less upside potential after the homebuilder’s earnings report. “We see less upside to PHM shares going forward given: (1) weaker home demand, which we believe could persist through 2H22, (2) relative underperformance of built-to-order homes (70% of PHM inventory) vs. spec as buyers shift preference to quick move-in homes.” Credit Suisse reiterates Peloton as neutral Credit Suisse said it’s seeing signs of a Peloton turnaround but that investors need to be patient. “Management changes and CEO commentary signal a desire to explore new avenues for growth and focus on customer lifetime value (LTV). Growing digital-only users and leasing equipment are strategies being evaluated though each one presents challenges if scaled. While these new models are tested and restructuring efforts continue, we still expect the core business to drive results. F24 appears to be the earliest return to growth, in our view.” Cowen reiterates Uber as outperform Cowen said it sees “gross bookings growth led by mobility” when the company reports earnings in early August. “We expect Uber’s 2Q22 Gross Bookings slightly ahead of guidance driven by the ongoing recovery in Mobility.” Cowen reiterates Lyft as outperform Cowen said it sees solid revenue growth when Lyft reports earnings in early August. “We expect 2Q22 top line to be driven by significant y/y user growth while reflecting seq bike / scooter improvement (weather) and ongoing return of use cases.” Benchmark upgrades Schlumberger to buy from hold Benchmark said it sees an attractive risk/reward outlook for the oilfield services company. “The upgrade is driven by: (1) a positive inflection point in international producer spending and activity; (2) expectation for SLB to hit its 25% EBITDA margin target one quarter early in 3Q23; and (3) reward-risk that we see skewed nearly 3:1 to the upside.” Barclays reiterates Alphabet as overweight Barclays said Alphabet stock still offers the ” best long term risk/reward in tech, in our view.” “Stepping back from the print, we think the next few quarters could be tough for all of digital advertising, but coming out of this print consensus numbers likely land close to the right neighborhood, and at 11x 2023E EV/EBITDA, GOOGL still offers one of the best long term risk/reward in tech, in our view.” Read more about this call here. UBS reiterates Chipotle as buy UBS said after the company’s solid earnings report that it has confidence in Chipotle’s resilience. ” CMG results & commentary highlighted better than expected 3Q guidance for both sss (same-store sales) and restaurant margins (RLM), confidence in pricing power, and anticipated brand resilience & strong value positioning.” Morgan Stanley reiterates Microsoft as overweight Morgan Stanley said Microsoft has “strong value proposition and solid secular positioning” after the company’s earnings report on Tuesday. “While macro impacts were certainly evident in Q4, the 35% YoY cc growth in Commercial bookings highlights Microsoft’s strong value proposition and solid secular positioning, while sustained guidance for double-digit operating income growth illustrates a steady hand at the helm.”
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