Here are Thursday’s biggest calls on Wall Street: Bank of America downgrades Charles Schwab to underperform from buy Bank of America said in its double downgrade of Schwab that the Fed will stop hiking this summer, “removing a powerful near-term profit driver.” “This change is driven by our view that client cash sorting will continue at an elevated pace in 1H23 (pressuring liquidity, interest earning assets & bank deposit account [BDA] levels).” Read more about this call here. JPMorgan reiterates Apple as overweight JPMorgan said it’s sticking with its buy rating despite a “tough setup” heading into earnings on Feb. 2. “We view the upcoming earnings print as a tough setup for Apple given the supply headwinds faced though the Dec-Q, which are now leading and extending into demand concerns for the Mar-Q and beyond.” Piper Sandler reiterates Tesla as outperform Piper said investors should be “proactively” buying shares of the electric car maker. “We are updating our model in preparation for earnings on January 25th. Tesla took longer than expected to cut prices, but now that pricing adjustments have been made, and now that the valuation has reset, we think investors should be proactively buying TSLA.” Jefferies upgrades Philip Morris to buy from hold Jefferies said Philip Morris stock is “recession resistant.” “While maybe not recession-proof, tobacco is certainly recession resistant, with better returns visibility amidst a deteriorating macro, and this was clearly evident post 2008—as laid out in the note—when tobacco outperformed both wider staples and the market.” Read more about this call here . KeyBanc upgrades Chegg to overweight from sector weight KeyBanc said growth trends are stabilizing for the in its upgrade of the education company. “We are making the tactical upgrade of Chegg on the premise that EBITDA margin upside will be the key driver of the stock over the next 12 months.” Wells Fargo names Meta, Amazon and Alphabet top 2023 picks Wells says Meta, Amazon and Alphabet have “solid fundamentals” and should outperform in 2023. “On a relative basis, among our megacap Internet coverage (AMZN, GOOGL, and META), AMZN and GOOGL trade at a premium to the remainder of the group, reflecting the traditional flight to quality in a softening macro environment.” Barclays names Meta a top 2023 pick Barclays said this is the year the narrative improves for Meta. “Growth slows in 1Q23, bottom circa 2Q23 & then slowly start to re-accelerate (off a low base) in 2H, fears of cookie deprecation increase.” Wells Fargo initiates Corteva as overweight Wells said the agriculture company has “strong near- and long-term ag fundamentals.” “We are constructive on the fundamentals for grain prices in both the near term (driven by tight inventories and low crop yields) and long term (driven by secular demand growth trends), supporting MSD top-line growth through the next decade.” Oppenheimer initiates Toll Brothers as outperform Oppenheimer said Toll has a compelling valuation. “We see less downside risk to gross margin than with other builders given its to-be-built business model and backlog.” Oppenheimer initiates PulteGroup as outperform Oppenheimer said the homebuilder has one of the best balance sheets in the sector. “We like how PHM has a balanced buyer mix, which we think allows the company to capture strength in different buyer segments and offer attractive returns and risk mitigation.” Deutsche Bank reiterates Tesla as buy Deutsche said the automaker could be a top performer in 2023. “We also believe TSLA could perform well in 2023 if it can demonstrate continued strong earnings power despite bold price cuts.” JPMorgan names Meta a top pick into earnings JPMorgan said Meta is well positioned into earnings next week. “We appreciate mgmt’s newfound cost discipline, and we raised estimates following the November announcement of headcount reductions & lower expenses/capex.” Bank of America names ServiceNow as a top pick Bank of America said ServiceNow has “best-in-class” growth. “Resilient growth is driven by incremental traction with newer employee and customer organizations, on demand for quick time to value and high ROI associated with ServiceNow’s workflow automation suite.” Read more about this call here. Bank of America reiterates Disney as buy Bank of America said the return of Bob Iger has been a boost to investor sentiment and that selling ESPN is not a slam dunk. “With the return of Bob Iger as CEO, we believe DIS is likely to undergo a broader strategic review of its asset mix. Morgan Stanley reiterates Netflix as equal weight Morgan Stanley said it thinks the company’s ad-tier business is already priced into the stock heading into earnings on Thursday afternoon. “We see ad-tier and paid sharing success largely baked into expectations and valuation. At over 50% of revenue, we see leveraging content costs as key to supporting long-term margin expansion and NFLX premium valuation.” Morgan Stanley downgrades Roblox to equal weight from overweight Morgan Stanley said in its downgrade of Roblox that the good news looks already priced in. “We believe the 1H bookings reacceleration looks priced in, with more mixed catalysts ahead as we expect slower growth in 2H and minimal upside from advertising in the near term.” Read more about this call here. MoffettNathanson upgrades IBM to market perform from underperform Moffett said its survey checks show IBM should benefit from a strong demand in IT services. “Surprisingly, the survey indicated that we should expect continued strong demand for IT Services in 2023, despite – and in some cases even because of – recession concerns.
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