Tesla, Best Buy, Apple, Amazon
The following are Wall Street’s most important calls Wednesday. Oppenheimer upgraded CME to perform from perform Oppenheimer claimed that CME was a great defensive play during a bearish market. CME is being upgraded from Perform, to Outperform. We also introduced a target price of $223. We assume that neither recession nor extreme events are likely, so the upgrade will be based on this assumption. Additionally, there’s a defensive side to this call due to current volatility and unpredictability. Learn more about the call. Compass Point initiates Porch Group. Compass Point claimed that the company has an “unique business model” when it launched Porch Group, a real estate technology company. Porch sells its software to home-service companies and receives downstream revenues through attendant service fees. This includes premium revenue from its insurance section. You can read more on this call. JPMorgan reaffirms Charles Schwab’s overweight status. JPMorgan stated that the financial services firm is in a good position to raise rates. Investors have begun to turn to cash after the markets fell enough to cause panic selling. Schwab’s asset management revenue will be lower and the margins balances lower, but we believe there is potential for cash sorting delay and cash balances/deposits to rise. This would allow Schwab better benefit from the rising rates. JMP rates Alphabet a market performer. JMP expressed its optimism about Alphabet’s inclusion of artificial intelligence within the company. As we believe AI is improving Alphabet’s businesses in almost all segments, “We have reaffirmed our Market Outperform rating with a $3,300 price target. AI automates the creation of ads while optimizing conversion and spending across channels. This leads to a better return on investment and attracts more funds to the platform. SocGen upgrades JPMorgan after JPMorgan’s investor day. SocGen decided to upgrade the banking giant, noting that the stock has too much negativity. We upgrade to Buy because we believe too much negativity has been priced in by recession fears, as the stock is down significantly ytd. Barclays upgrade Diamondback Energy from equal weight to overweight. In its upgrade, Barclays stated that the company sees “increasing returns in cash” during the second half. FANG was upgraded to OW by Barclays from EW based upon Q1’22 as the clearing event that the stock required and increased cash returns in H2’22. Barclays lowers Best Buy’s weight to “equal weight” from “overweight”. This is after it released disappointing earnings reports and stated that the company sees electronics as being under pressure. Following the disappointing 1Q report and a reduced outlook for FY22, we are downgrading BBY shares from OW to EW. We believe that consumer electronics demand will be pressured at most through FY22. You can read more on this call. Loop reiterates Apple’s buy Loop stated that while there is risk in June Q iPhone sales, “our work indicates Street still has low iPhone revenues for September and December Q.” We believe AAPL will update its iPhone builds over the weekend. This is why we are looking at the implications for iPhone sales, iPhone revenue, and AAPL EPS. Our PT will be reduced to $180, from $210 in order to account for our new changes. Evercore ISI added Dell to its tactical outperform listing Evercore indicated that it was bullish ahead of the company’s Thursday earnings report. We are adding Dell to the Tactical Outperform List before the Apr-qtr earnings reports on Thursday, May 26, after market close. While supply chain is still a wildcard we believe demand trends will remain strong enough to allow DELL beat their FY23 guide. This rare event in such a competitive environment. Atlantic Equities elevates Air Products from neutral to overweight. Atlantic Equities stated that increasing energy prices were a “secular tailwind for Air Products. The shares could see a reversal of recent losses if the earnings momentum picks up and there is more confidence in the projects backlog. You can read more on this call. Baird maintains Amazon’s outperform status. Baird has lowered Amazon’s price target to $2900 per share, from $3750. However, it said that Amazon Web Services will continue to grow even in recessionary times. Amazon is correct-sizing its fulfillment networks, and we expect strong growth for AWS in capex to keep pace with demand. Amazon usually operates with only a few quarters capacity. Deutsche Bank Reaffirms Tesla as Buy Deutsche Bank maintained its buy rating on Tesla, saying that while the stock remains under “technical stress”, it is maintaining its buy rating. We believe that both primary EV stock, TSLA, and RIVN are under significant market and technical pressures, despite their solid operational traction. Bank of America reinforces Nvidia, Marvell and RIVN as Buy Bank of America stated that Semi stocks like Marvell and Nvidia should have “resilient demands” during a downturn. The downturn is more about the new rate regime and not a structural shift that affects demand drivers, so our top themes/picks remain consistent. Our top picks for resilient demand include: 1) Cloud computing: NVDA; AMD; MRVL ; AVGO; and 2) Cars; ON, ADI; and 3) Capx: KLAC; GFS; AMAT; LRCX; TER.