Here are Wednesday’s biggest calls on Wall Street: Deutsche Bank upgrades Pool Corp. to buy from hold Deutsche said the pool company has “increased conviction” in residential new construction, which is beneficial to Pool Corp. “Importantly, we sense a growing optimism around the recovery path for housing, which could drive relative multiples back toward levels more consistent with a mid-cycle environment, even if demand for new homes were to simply demonstrate some stabilization.” Wells Fargo adds Boeing to the signature picks list Wells said it sees “easing growth concerns underpinning strong stock gains over the coming quarters.” ” Boeing is a play on the secular growth story of global air travel. WFS Aerospace & Defense analyst Matt Akers sees robust cash generation, an undersupplied market, and easing growth concerns underpinning strong stock gains over the coming quarters.” Credit Suisse named FedEx a top pick Credit Suisse said the stock is “compelling.” ” FedEx , our top pick for ’23: The most compelling opportunities often derive from an inflection in expectations.” Bank of America downgrades Coinbase to underperform from neutral Bank of America said it sees too many headwinds for the crypto exchange. “After analyzing 4Q crypto transaction volume data (detailed in this report), and with the crypto outlook for 2023 murky at best (as evidenced by COIN’s second round of job cuts announced yesterday), we lower our 2023 revenue estimates for COIN even further below Street.” Read more about this call here . JPMorgan downgrades XPO to neutral from outperform JPMorgan said it’s concerned about the company missing expectations. “We expect XPO will miss 2023 expectations as rising interest rates weigh on earnings while LTL (less than truckload) faces a freight market less supportive for an operational turnaround.” Barclays reiterates Apple as equal weight Barclays lowered its price target on the stock to $133 per share from $144, noting it’s concerned that Apple Services estimates are “at risk.” “We estimate Dec-Q app store declined by 2%, which also puts Dec-Q consensus estimates for Services at risk.” Mizuho initiates Oracle as buy Mizuho said it likes the company’s diversified portfolio. ” Oracle’s broad portfolio of infrastructure and application products has matured, prompting the company to transition to the cloud to re-accelerate its growth profile.” Goldman Sachs names Tesla and General Motors top 2023 pick Goldman called Tesla a “cost and tech leader” and said GM is “among the leaders in autonomy.” “We would continue to be selective with auto OEM stocks as price and mix are likely to be headwinds in 2023 as supply/demand generally moderates; we prefer TSLA and GM (with Tesla a cost and tech leader in EVs/clean mobility, and both Tesla and GM Cruise among the leaders in autonomy, in our opinion).” Read more about this call here. Goldman Sachs downgrades Jefferies to neutral from buy Goldman said it sees a “backlog decline” for the investment bank company. “We expect 2023E revenue growth to underperform peers by 5pp, given greater skew to underperforming M & A/trading, and a greater backlog decline.” Oppenheimer upgrades Expedia to outperform from perform Oppenheimer thinks the travel company’s stock is discounting macro headwinds. “In the last 12 months, EXPE shares are down 48%, underperforming the S & P’s 32%, and its current EV is now 11% below pre-COVID levels, despite our forecasts for ’22E/’23E EBITDA to be 115%/127% above ’19 levels on structurally higher margins from successful cost-cutting execution.” Citi downgrades Levi’s to neutral from buy Citi said it’s concerned about weak denim trends. “While LEVI is a strong brand with good global prospects long term, in the near to medium term we expect a challenging U.S. backdrop characterized by weaker denim trends to pressure results.” Read more about this call here . Cowen reiterates Netflix as outperform Cowen said it’s standing by the stock heading into earnings next week. “We also expect investors to look for color around ad tier rollout. Meanwhile, our annual ad buyer survey suggests a large ad oppt’y over time for NFLX, while our consumer survey shows NFLX was the top choice for living room viewing in 4Q.” Bank of America names Northrop Grumman as a top 2023 pick Bank of America named the aerospace and defense company a top pick and said it’s “benefiting from rising sales on the Ground Based Strategic Deterrent and B-21 programs.” “We also continue to look favorably on Northrop Grumman as the prime remains well on track to continue benefiting from rising sales on the Ground Based Strategic Deterrent and B-21 programs, which are two of the three legs of the Nuclear Triad. As with nuclear subs, we see little risk to these strategically crucial programs even through a continuing resolution.” Bank of America upgrades Toll Brothers and Pulte Group to buy from neutral Bank of America upgraded several homebuilders, citing compelling valuations. “We upgrade PulteGroup to Buy (from Neutral), Toll Brothers to Buy (from Neutral), and Lennar to Neutral (from Underperform). Valuation is compelling for PHM (trading at 1.1x 2023E price-to-book) and TOL (trading at 0.9x 2023E price-to-book).” Guggenheim upgrades Warner Bros. Discovery to buy from neutral Guggenheim said Warner Bros. Discovery has a compelling narrative. “We see an attractive narrative for the first half of 2023, with the impact of a recently announced domestic affiliate renewals, strong cost controls, and the upcoming launch of a restructured Max product as key catalysts.” Susquehanna downgrades Southwest to neutral from positive Susquehanna said it has operational concerns for the airline. “Winter Storm Elliott clearly disrupted air travel in late December, with LUV’ s related operational meltdown front and center among U.S. peers (e.g., more than 16,000 flights cancelled, or ~4% of LUV’s planned 4Q22 inventory going into December).” Bernstein downgrades Salesforce to market perform from outperform Bernstein said in its downgrade of the stock that it’s fallen into “growth purgatory.” ” Salesforce recently announced a ~10% employee reduction, in addition to comments on other cuts, which will only drive additional deceleration in growth.” Read more about this call here . Bank of America upgrades Dow to neutral from underperform Bank of America said it’s taking a more “offensive” approach to the stock. “We are taking a more offensive stance to ratings, though refraining from going ‘all in’ on risk assets until we see more confirmation from the macro and commodity markets.” Deutsche Bank reiterates Moderna as buy Deutsche called the biotech company a “unique disruptive innovation story.” ” MRNA remains a unique disruptive innovation story and whilst that also implies a certain risk profile and the cash pile is now a lesser relative support.” JPMorgan downgrades CarMax to underweight from neutral JPMorgan said it sees an unfavorable risk/reward for the used car company. “As such, valuing KMX on a recovery multiple (peak on trough or ~30x our FY24 EPS at current levels) is premature as there are still plenty of cards to unfold, including checking the important boxes on SG & A and retail GPU execution over the next few quarters, before the industry hits a trough.” Read more about this call here. Morgan Stanley reiterates Microsoft as overweight Morgan Stanley said the stock is a “share gainer.” “However, we see Microsoft as a share gainer — benefiting from vendor consolidation and its strong positioning addressing CIO priorities and secular trends.” Cowen reiterates Amazon as outperform Cowen said it sees Amazon gaining share in digital advertising. “Per our proprietary survey of 50 senior U.S. ad buyers, Amazon is expected to gain share for the third consecutive year, next to TikTok.”
