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Here are the biggest calls on Wall Street on Wednesday: TD Cowen names Liberty Formula One a top pick TD said the motorsports company is a top pick in 2024. “We view FWON as a capital-light royalty on the growth & monetization of a premium global sports league.” BMO reinstates Apollo Global as outperform BMO reinstated coverage of Apollo and said the private equity company is well positioned. “Amid a crowded fundraising environment, prized features in alternative asset management include credit origination capabilities, distribution channel diversification, and business model resiliency to higher interest rates.” Morgan Stanley downgrades Plug Power to underweight from equal weight Morgan Stanley said in its downgrade of the electric vehicle charging company that it sees deteriorating “hydrogen economics.” “In the U.S., we cut PLUG to UW on liquidity concerns and worsening hydrogen economics.” UBS upgrades Anheuser-Busch InBev to neutral from sell UBS said in its upgrade of the brewer that it’s getting more bullish on EBITDA growth. “We have been impressed with ABI’s share gains in recent years, however see a risk that part of these share gains are given back, particularly in Mexico, Brazil and South Africa.” Citi upgrades Signet to buy from neutral Citi said in its upgrade of Signet Jewelers that the “jewelry recession” is almost over. “This is a better business than pre-pandemic but achieving their 10% EBIT margin goal not necessary for the stock to work.” Bank of America names Qualcomm a top pick Bank of America said the company is a top AI beneficiary. “Our top pick is Qualcomm (QCOM US) under the on-device AI theme with its new smartphone application processor (AP), Snapdragon 8 Gen 3.” Morgan Stanley resumes J.M. Smucker at equal weight Morgan Stanley resumed coverage of the peanut butter and jelly maker, which recently closed on the purchase of Hostess Brands, with an equal weight rating, largely due to valuation. ” SJM’ s Q2 EPS beat and increased FY24 EPS guidance on the legacy business underscore its favorable topline drivers in FY24 and cost flexibility.” Raymond James upgrades Shake Shack to strong buy from outperform Raymond James said in its upgrade of the burger chain that it sees improving profit margins. “We are upgrading SHAK to Strong Buy from Outperform as we 1) believe the company is still in the early innings of driving improved margins and lowering development costs and 2) see idiosyncratic opportunities into 2024 to increase margins and potentially stimulate traffic, which could create upside to consensus 2024 expectations.” Raymond James upgrades AutoZone to strong buy from outperform Raymond James said the auto parts retailer has “compelling valuation and fundamentals.” “[W]e remain upbeat on the overall industry fundamentals (pricing environment remains rational) and AZO’s market share potential on a multiyear basis.” Bank of America upgrades Jack Henry to buy from neutral Bank of America said in its upgrade of the financial services company that it has an attractive pipeline of products. “We upgrade JKHY to Buy from Neutral, driven by the company’s high quality business model, solid bookings and pipeline, more palatable valuation, and prospect for margin expansion and [free cash flow] conversion to improve in F25.” Bank of America downgrades Toast to neutral from buy Bank of America said in its downgrade of the restaurant payment company that it sees too many risks. “We downgrade TOST to Neutral from Buy. Shares have lagged significantly since the 3Q print, and we see risks which could inhibit near-term re-rating higher.” Bank of America downgrades PayPal to neutral from buy Bank of America said it thinks it will take longer to fix the stock. “Shares have traded up from lows following PYPL’s modest 3Q beat and new CEO Alex Chriss’ fresh messaging around profitable growth and increased urgency around execution.” Bank of America upgrades Discover and Capital One to buy from neutral Bank of America upgraded several credit card stocks on Wednesday, believing “we are in the latter stages of the current credit cycle and expect losses to peak in 2H2024.” “We update our estimates for Capital One (COF) and Discover (DFS), upgrade to Buy from Neutral on both and raise POs to $129 and $116 (from $112 and $94) respectively.” JPMorgan upgrades Devon Energy to overweight from neutral JPMorgan said in its upgrade of the energy company that it sees an attractive risk/reward. “Upgrade Devon (DVN) to OW from N: DVN shares have lagged peers by ~20% YoY, but risk-reward is skewed favorably given low expectations plus self-help initiatives.” Redburn Atlantic Equities reiterates Walmart as buy Redburn is standing by its buy rating on the big box retail giant. “Overall, we believe Walmart remains exceptionally well-positioned for any macroeconomic scenario in 2024 and we maintain our Buy rating with a $180 price target.” Guggenheim reiterates Tesla as sell Guggenheim is standing by its sell rating following the cyber truck debut last week. “We believe TSLA will wait closer to launch to take orders (6-12 months prior) for vehicle to limit impact on selling current model lineup.” TD Cowen names Regeneron a top pick TD called the pharmaceutical company a top idea for 2024. ” Regeneron is one of the more fundamentally attractive companies in large-cap biotech.” Wedbush downgrades Shopify to neutral from outperform Wedbush downgraded the stock, mainly citing valuation. “While we continue to hold a favorable view of Shopify’s overall strategy and competitive positioning within eCommerce, shares have risen +53% since the company reported 3Q23 results on November 2nd and now trade at a significant premium relative to software peers across key valuation metrics.” Oppenheimer names Deere a top pick Oppenheimer says Deere is a “best-in-class through-cycle pick.” “And while we believe the downturn will prove less severe than the prior, evaluating swing factors it is simply too early to suggest 2025 can return to growth vs. 2024, adjusting all three models lower in 2025 to reflect a continued downtrend.” Guggenheim upgrades Sphere to buy from neutral Guggenheim said it’s seeing strong demand for the Las Vegas events and entertainment company. “Revenue in the quarter has been driven by strong demand for The Sphere Experience (SPHR’s owned content), the U2 show run, Exosphere activations, and the F1 takeover.” Mizuho reiterates Robinhood as buy Mizuho stood by its buy rating on Robinhood shares after a recent dinner with company management. “Following strong November crypto data (+75% vs. Oct. vs. just +60% for Coinbase), it was nice to hear that management is equally bullish on continuing to gain share in crypto.” Citi reiterates Johnson & Johnson as buy Citi said JNJ is “best-in-class” after a series of investor meetings. “What we walked away with was not just numbers and goals, but a sense that in its new formation the company and management are focused on striking a path forward and delivering best-in-class products and financial delivery.” HSBC downgrades Asana to reduce from hold HSBC said in its downgrade of the software company that it sees too many headwinds for Asana. “Margin expansion drives narrower 3Q FY24 loss; however, macroeconomic challenges continue.” KeyBanc initiates Vital Energy as overweight Key said in its initiation of the former Laredo Petroleum that it’s “in transition.” “On the heels of bold and reasonably structured (in our view) transactions, Vital is boot-strapping its way back to relevance with investors, and now has deeper and higher-quality inventory (~725 locations) it can leverage to lower cash opex/F & D costs and improve margins going forward.”
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