Here are the top Wall Street calls for Friday. Morgan Stanley reiterates Rivian’s status as an overweight Morgan Stanley says it is standing by the shares of the electric car company. Investors are watching to see how Rivian will perform as it emerges from a period of acute production and supply chain challenges. RIVN is on a path to breakeven, and the equity story will be deterministic. Bank of America upgraded Axis Capital from underperform to buy. The company said that in its double upgrade of both the insurance and reinsurance firm, the tide has turned. Over the past year, AXIS shares have underperformed their reinsurance counterparts as the property-catastrophe prices surged after AXIS announced its exit from the property reinsurance market in June. Our pessimistic view has changed. TD Cowen introduces Celsius Holdings with an outperform rating. TD stated in its initiation that the energy drink maker is “transforming the industry.” We initiate coverage of CELH by giving it an Outperform and $250 PT. The growing popularity of Celsius’ differentiated products, as the #3 energy drink in the U.S. market, is transforming this category and driving new consumer engagement. HSBC launches ServiceNow in order to buy HSBC stated that they see “near-term growth and earnings above peers” when launching ServiceNow. “The leader in enterprise workflow management.” We see margin expansion and strong turnover growth potential above competitors. TD Cowen introduces Anheuser Busch InBev to the outperform category. TD stated that “global growth prospects abound” for this beverage giant. We initiate coverage of ABI as an Outperform and with a EUR63PT. The U.S. is facing a number of challenges, but the trends don’t seem to be getting worse. While strong top-line growth (in the Americas and elsewhere) should be driving DD EPS in FY24, margin tailwinds due to easing commodities will also drive DD EPS. You can read more about this forecast here. Needham holds Arm Needham stated in its initiation that Arm’s stock valuation was full at the moment. Arm’s technology is the foundation for smartphones. However, we believe that the world will enter a post-smartphone era where high-performance computing (HPC) and IoT will lead the next phase in semiconductor growth. Piper Sandler upgraded KeyCorp from neutral to overweight Piper stated in its upgrade that it is “comfortable with the trajectory of its net interest income.” But first, we’re raising KEY to Overweight. The stock is already showing signs of recovery, but it still ranks among our worst performers YTD. We are more confident in KEY’s NII-
trajectory as funding issues begin to fade. Redburn Atlantic Equities upgraded Estee Lauder from sell to neutral. Redburn stated that Estee is experiencing a “strong technological benefit” as customers are returning to normal order patterns. “A prolonged earnings downgrade is ending, and we upgrade this stock from Sell to Neutral. The risk of medium-term profitability is what prevents a further bullishness. UBS initiated TKO Group to buy UBS stated that the WWE and UFC combined is a “rare” play in live sports. TKO, through the combination of WWE with UFC, is a pure-play live sports entertainment company where rights renewals, merger synergies, and $4B+ in shareholder returns are possible. Wolfe introduces Applied Materials to outperform Wolfe stated that Applied Materials was the firm’s preferred name in the semiconductor equipment capital equipment sector. “Balanced exposition to leading edge and lagging edge; well-positioned for a cyclical rebound in logic/memory expenditure.” Goldman Sachs introduces Casella Waste Systems to its portfolio as a buy Goldman stated in the initiation of this waste company that Casella is a “compounder when it comes to pricing.” Casella’s local market share is 60%, the highest of any company we cover. This leads to industry-leading pricing and growth opportunities. MoffettNathanson lowers DoorDash’s rating to Market Perform from Outperform. Moffett stated that DoorDash is vulnerable to the resumption student loan payments. Does the resumed repayment of student loans introduce bookings risks to food delivery?” The answer is “yes.” HSBC recommends Zoom for purchase HSBC stated that Zoom was the leader in video conferencing. “We see the potential for margin growth. We apply a reasonable discount on valuation.” We expected that turnover growth would accelerate as operations normalized. HSBC introduces Deere to buy HSBC stated that they see “upside” in the Deere cycle. The shares have fallen 6% on worries about the peaking US equipment cycle, and trade at only 11.1x PE 2024e. We believe that the growth of renewable aviation fuel and diesel should continue to drive up crop prices and farmer’s incomes and keep them high. Morgan Stanley upgraded Keysight Technologies from equal to overweight Morgan Stanley stated that investors should purchase the shares of Keysight at the current dip. We believe the current downturn is a great opportunity to buy, since valuations are currently missing a double-digit earnings profile as well as diverse and long term revenue growth drivers. You can read more about this report here. HSBC introduces Salesforce as a buy HSBC stated in its initiation that the stock is a “margin-expansion story.” “Leader of the CRM software sector; benefits from the transition to the cloud.” “Moving from a story of growth to one of margin expansion.” HSBC initiated Snowflake as a buy HSBC stated that Snowflake was well positioned for AI. “We expect top- and bottom line growth to be above competitors with margin expansion. We expect that key operational metrics will outperform peers in the near term. HSBC buys Oracle HSBC has said that it is impressed with Oracle’s cloud-based platform. “Leader of enterprise software; one of first cloud users. The revamped platform of its cloud offers growth and upselling opportunities.” Bank of America upgraded Unity from neutral to buy. The bank said that the gaming software provider is “unlocking an engine for growth.” We are upgrading Unity to Buy from Neutral based on our proprietary analysis, which indicates improved monetization for the company’s leading mobile game creation tool; and 2) our belief that mobile gaming advertising metrics in 2H23 have stabilised with easier comparisons. This call is available here. UBS reiterates Amazon’s buy UBS said that Amazon was still the firm’s top pick for the internet space. We also believe that Amazon’s retail margins can grow to double-digits with time. Northcoast upgraded Shake Shack from Hold to Buy. Northcoast stated that the company sees improving fundamentals in its upgrade. We are upgrading Shake Shack from Hold to Buy to reflect our more optimistic outlook on the brand’s fundamentals. UBS confirms Apple is a buy UBS stated that its survey checks showed Apple to be the preferred brand in America. Apple’s share of the Chinese market dropped 100 basis points sequentially, to 20%. However, it was tied with Lenovo as the brand that consumers were most likely to purchase. Goldman Sachs confirms Salesforce as a buy Goldman stated that Salesforce is “well-positioned for AI.” As the demand backdrop appears stable, we can see the potential of pronounced end user productivity, setting the stage for an improved growth narrative. This is without compromising the significant step-up in operating profits that’s expected, and it can be a boon to the stock. Bank of America reiterates Adobe is a buy Bank of America stated that it stands by its buy recommendation after Adobe’s quarterly earnings report on Thursday, and it believes there will be more AI and pricing power. The shares are trading at 25x the FCF estimate for CY25, or 1.5x after adjusting for growth in the mid-teens, which is reasonable for the software GARP Group, given the potential for meaningful acceleration of AI/price increases throughout the year. You can read more about this report here. Morgan Stanley confirms Ford and General Motors are overweight Morgan Stanley confirmed that it is standing by its overweight ratings on Ford and GM shares despite the UAW’s strike. We believe that the downside risk in shares should be limited as a result of this news alone. “[net interest income]
