Here are Wednesday’s biggest calls on Wall Street: BMO downgrades Microsoft to market performance from outperform BMO downgraded shares after Microsoft’s earnings report, noting that it has concerns about Azure growth. “We are downgrading MSFT to Market Perform due to the ongoing uncertainty surrounding Azure. We had previously placed Microsoft on our negative watchlist in our 2023 guidance note issued in December 2022, based primarily on concerns about Azure growth.” Read more about this call here. Oppenheimer Downgrades Block from Outperformance to Market Performance Oppenheimer said that “volumes could be more volatile in a downturn” for the company formerly known as Square. “Our outperformance rating was based on SQ’s ability to protect Adjusted EBITDA. We’ve learned that given the high growth multiple, investors really aren’t focused on Adjusted EBITDA versus Gross Income.” Wells Fargo initiates Diamondback Energy as the overweight Wells said it sees “attractive cash yield targets” for the hydrocarbon exploration company. “We start on FANG at OW at $181 PT. Core Permian, solid execution and leading FCF payout support positive outlook.” Barclays downgrades Sunrun from overweight to equal weight Barclays says it is concerned about slowing demand for residential solar power. “With US residential solar demand expected to slow in 2023, we are adjusting our ratings to reflect our expectations for SPWR and RUN and how they will fare in the changing environment.” Read more about this call here . Bank of America Initiates Purchase of Papa John’s Bank of America said the pizza chain’s stock is attractive and seeing a return to growth. “PZZA’s relative valuation of 1.4x is slightly below its 5- and 10-year moving average of 1.5x, reflecting concerns about the long-term outlook for the pizza category.” Bank of America upgrades Booking Holdings from buy neutral Bank of America said it sees “fewer valuation benefits” for the online travel booking company. “However, Booking stock has far outperformed its peers as they toughen in Q2 and we are downgrading to Neutral from Buy as we look ahead to our now over the road 2024 estimates see less valuation potential.” Gordon Haskett downgrades Airbnb for underperforming Hold Gordon Haskett downgrades Airbnb for “overly aggressive topline estimates from Street”. “Downgrade to Underperformance; Expect top and bottom lines to be revised down with consensus estimates overly optimistic.” Morgan Stanley names Tesla a new top pick Morgan Stanley named Tesla its new top pick and said it was driven by its “profitability, FCF Generation” is attracted [and] strong record. We are reducing exposure across the EV portfolio while making Tesla our top pick.” Read more about this call here. Bank of America downgrades Union Pacific to neutral from buy. Bank of America is concerned about “service and cost pressures” for Union Pacific. Given ongoing cost pressures, negative mix pressures, inflationary impact (it will be 4%) and lower fuel/accessory gains offset by targeting recovering service levels, lower fuel costs and stock gains above economic activity, we switch to neutral. ” BMO downgrades Bloomin’ Brands from outperformance to market performance BMO downgraded the owner of brands like Outback Steakhouse and said it sees a “more balanced” risk-reward trade-off.” Data, as an opportunity, to edge, because risk /reward have become more balanced.” Goldman Sachs upgrades Philip Morris to buy from neutral Goldman said it sees a “compelling” risk/reward ratio for shares in the tobacco giant. “We see a strengthened growth algorithm and a compelling risk Earnings ratio as PM enters key US market.” Bank of America reiterates Amazon as Buy Bank of America said it stands by its buy recommendation, which goes toward Amazon earnings, but is concerned about Amazon Web Services after Microsoft’s disappointing quarterly results. “Although the Azure FYQ2 beat gives us a little more confidence in AWS in C4Q (and we believe 22% growth is possible for 4Q), we expect Street to exercise more caution in C1Q according to the Azure guidance. UBS downgrades Cheesecake Factory to neutral from buy UBS downgraded the stock amid concerns over a challenging macroeconomic outlook for 2023. “We downgrade CAKE to Sell from Neutral given: i) the shares are up ~16% year-to-date, ii) our expectation of a more difficult macro this year which could impact results and earnings visibility , and iii) our view that there is a risk, ‘ 23 margin guidance.” Mizuho reiterates Robinhood as a buy Mizuho called 2023 a “transformative year” for Robinhood. “Beyond Q4, we continue to view 2023 as a transformational year for HOOD , as it should benefit from new products like new IRA offering Buy.” DA Davidson initiates Toast as a buy DA Davidson said the company’s stock is compelling for next-gen restaurant platforms. “The product is so compelling that Toast has already reached an 11% market share with no sign of slowing down.Loop initiates Mobileye as a purchase Loop said at the founding of the autonomous F hear that it is “Best-of-Breed”. “Autonomous is already real… and it’s becoming more ‘real’. We like to invest best-of-breed in strong, structural, long-term societal trends and autonomous and MBLY is that type. Loop upgrades Fox to buy it from Hold Loop upgraded the media company after the Murdoch family stated that it is withdrawing its merger efforts from News Corporation and Fox.” Fox is an underfunded media company, trading at 4x EBITDA even by our lower estimates, and is strategically positioned as it focuses on news and sports rather than the expensive streaming business participates.” Wedbush Downgrades DR Horton to Neutral from Outperformer Wedbush downgraded the homebuilder due to “lower volume expectations”. The price cuts required to maintain sales volume for F2Q23 and potentially F3Q23 may prove steeper than we previously anticipated.”
