JPMorgan upgrade, Exxon Mobil downgrade, and IBM initiation among today's top calls on Wall Street
Top 5 Upgrades:
Wolfe Research upgraded JPMorgan (JPM) to Outperform from Peer Perform with a $170 price target. The company's "conservative" NII guidance and accretion from its First Republic (FRC) deal are "not adequately reflected" in Street estimates, but favorable loan mix from less commercial real estate exposure and higher credit costs are better reflected in estimates, the analyst says.
Barclays upgraded Newmont (NEM) to Overweight from Equal Weight with a price target of $61, down from $62. The stock has underperformed peers since the start of 2023 and now trades well below its three-year valuation average, the analyst tells investors in a research note.
BofA upgraded Playtika (PLTK) to Neutral from Underperform with a price target of $13, up from $10, citing an improved outlook for mobile gaming in-app purchases in 2023. While the firm's bear thesis predicated on a change in user behavior due to the onset of recession "will likely not be tested this year," the analyst argues that the case for a re-rating "remains elusive for casual mobile game publishers."
Wolfe Research upgraded ConocoPhillips (COP) to Outperform from Peer Perform with a $120 price target. The bolt-on acquisition of the remaining 50% interest in Surmont from TotalEnergies (TTE) both allays free cash flow downside in a lower oil price case next year and increases free cash flow sensitivity in an upside case, the analyst tells investors.
BMO Capital upgraded Adtalem Global Education (ATGE) to Outperform from Market Perform with an unchanged price target of $44. Nursing school enrollment has normalized and returned to growth, the analyst tells investors in a research note.
Top 5 Downgrades:
Wolfe Research downgraded Exxon Mobil (XOM) to Peer Perform from Outperform without a price target. Exxon has earned a premium valuation and extended outperformance due to successful delivery of capital efficiency goals and cost reductions, the analyst tells investors in a research note.
KeyBanc downgraded KLA Corp. (KLAC) to Sector Weight from Overweight without a price target. The analyst cites valuation for the downgrade with the shares above the firm's prior $468 price target.
JPMorgan downgraded Humana (HUM) to Neutral from Overweight with a price target of $540, down from $576. The analyst believes the combination of Medicare Advantage cost trend uncertainty and the election cycle limits near-term upside for the managed care group.
Wolfe Research downgraded Wells Fargo (WFC) to Peer Perform from Outperform without a price target. The midpoint of the firm's fair value range of $48 supports 12% upside to the shares and Wells has higher exposure to commercial real estate loans versus its big bank peers, the analyst tells investors in a research note.
Citi downgraded Cedar Fair (FUN) to Neutral from Buy with a price target of $41, down from $50. The analyst also opened a "negative catalyst watch" on the shares ahead of the Q2 report, saying disappointing visitation trends for much of last year leaves the threat of yet another miss on the attendance line in Q2.
Top 5 Initiations:
JPMorgan initiated coverage of IBM (IBM) with a Neutral rating and $145 price target, implying 8% upside. Following the recent spinoff of the company's managed infrastructure services business, IBM is "cleaner and easier to follow," with over 70% of the business now attributable to the higher-growth Software and Consulting businesses well positioned to benefit from attractive secular tailwinds, the analyst says.
RBC Capital initiated coverage of Bloom Energy (BE) with an Outperform rating and $24 price target. The firm views Bloom as "positioned to play a role throughout the energy transition" as it believes that emissions regulation and social pressures to decarbonize will remain a tailwind for adoption and that customers will continue to favor Bloom's value proposition.
Deutsche Bank initiated coverage of FleetCor Technologies (FLT) with a Buy rating and $310 price target. The company has delivered "impressive" organic growth over the past eight quarters and despite a "muted" fiscal 2023 outlook driven by rising interest rates and the coming disposition of the company's Russian operations, the stock's outperformance year-to-date is "well deserved," the analyst tells investors in a research note.
Raymond James initiated coverage of Silicon Labs (SLAB) with a Market Perform rating and no price target.
William Blair resumed coverage of Kadant (KAI) with an Outperform rating. The firm says that despite inherent cyclicality within construction, with slowing consumer spending, Kadant's outlook remains "robust" due to stable aftermarket parts and consumables, and accretive capital redeployment.
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