Ford, UPS, Tesla and more
These are the top Wall Street calls for Friday: JPMorgan downgrades UPS from overweight to neutral. JPMorgan stated that UPS shares may be held without any major catalyst. The U.S. continues to feel pressure and the pace of e-comm expansion slows. UPS has been operating well in dynamic environments, but further improvement is expected and we don’t see any upside to the 2022 guide. This call is more detailed here. Morgan Stanley raises Ford’s weight to match or exceed the underweight mark after a substantial drop in Ford Motor’s share price. Morgan Stanley will be taking a second look at Ford. We believe that the market might underestimate Ford’s authentic/emotional and commercial-orientated ICE (internal combustion engines) vehicles. This call is available here. HSBC raises Krispy Kreme rating after stock dropped to an all-time low. We expect higher pricing and greater scale as a result of aggressive point-of-access expansion. This will help keep earnings expectations in line. Jefferies lowers Carvana stock rating to buy from hold Jefferies noted that worries about liquidity could drive Carvana’s stock performance over the next 12 months. Jefferies also stated that macro headwinds could reduce profitability and restrict growth. We are less confident in our forecasts of an improvement in unit economy and will experience a prolonged period with high cash burn. Bank of America upgrades Republic Services to buy neutral Bank of America has upgraded Republic Services because it feels that a more long-term change is taking place at the waste collection business. RSG has achieved the ideal balance of volume, price increase, solid waste density, bolt-on acquisitions, as well as increasing operating leverage after years of being forced to renounce poor contracts. Although we remain skeptical about the RSG strategy for hazardous waste (“one-stop” shop in environmental service), it is maintaining a prudent outlook. The majority of the business, 85-90 percent, is still tied directly to solid waste. Bank of America raises Waste Management from neutral to underperform. This upgrade was made after an unexpectedly good first quarter. Given rising prices into 2023 (and rising CPI), moderated costs and a resilient business plan in the face rising macro uncertainties, we see a positive outlook to WM. Bank of America reduces Tesla’s price target from $1,300 to $925. Bank of America has revised its price targets across all of its automobile coverage. Tesla’s updated price target implies a 27% increase in price over Thursday’s closing. We raised our forward estimates following the quarter but kept our $1,300 PO. We are changing our price target from $1,000 to $925 based on lower assumed multiples and the market sell-off. This is primarily based on 13x EBITDA/Sales (prior 18x,78x on our 2023 estimates). Wolfe Research lowers KB Home’s peer performance Wolfe Research lowered the outlook for the homebuilding industry to market weight, and downgraded KB Home. There are many short-term headwinds, especially as the Fed is determined to reduce sticky inflation with persistent, demoralizing rate rises and balance sheet cuts for the future. Barclays raises Endeavor Group Holdings’ weight from the equal weight. Barclays called Endeavor Group Holdings a “defensive media play” for its holding company of talent agencies and media companies. EDR is focused on supply-side content creation and sporting events. Endeavor Group Holdings was deemed “defensive growth media play” by Barclays. Its high-growth, high margin, high FCF conversion businesses are expected to be resilient to recession. Fluence Energy downgraded to neutral by Goldman Sachs. This follows a mixed quarterly report. The stock’s near-to medium-term path still has a few headwinds, which we feel warrant a more balanced outlook at the moment. —CNBC’s Michael Bloom contributed reporting.
On a New York truck that is being parked, the United Parcel Service Inc. logo (UPS).
Getty Images| Bloomberg | Getty Images
Here’s Friday’s top Wall Street Calls: