Amazon, Netflix, Etsy, Nvidia, Nike, Tesla
Here are Wednesday’s biggest calls on Wall Street: Goldman Sachs lowers price target on Tesla to $1,000 from $1,200 Goldman lowered its price target on the automaker to $1,000 per share from $1,200, but kept its buy rating to “better reﬂect additional supply chain constraints in the near-term, and weaker demand in the intermediate term.” We assume Tesla will deliver delivery growth that is lower than the longer-term goal of at least 50%, as well as lower margins due to higher input costs. BMO launches MP Materials to outperform BMO stated in its launch of rare-earths material company MP Materials that it saw an attractive risk/reward ratio. We expect MP will benefit from the persistence of tightness and strong pricing for magnet-rare earth products that are fueled by energy transitions (EVs, winds turbines, etc.). The attractive risk-reward ratio is currently seen as MP grows downstream to ensure long-term growth, and Chinese supply chain circumvention. Piper Sandler lowers Tempur Sealy from overweight to neutral. Piper expressed concern about the slower than expected sales of the mattress manufacturer. Following a round for Memorial Day weekend checks (MDW), which indicated a poor selling period, we have decided to downgrade shares of TPX and lower our PT from $28 to neutral. Wells Fargo reiterates Bank of America’s overweight status. Wells also stated that shares of the stock are priced in for a possible recession. We reiterate our Overweight rating for BAC. A favorable reward-to risk scenario is at least 3 to 1. The weighted avg. A 40% return on the stock, with a one third chance of recession. KeyBanc’s continued support for Netflix in the sector KeyBanc announced that the company will continue to monitor Netflix stock, as it believes any potential positive catalysts won’t manifest “meaningfully” before 2023. We believe that paid net ads could be more successful than our/Street 2Q losses (2M subs) based on country rank. Our Sector Weight rating is unchanged as we think that catalysts such as ad progress and improved FCF are unlikely to be meaningfully reflected in 2H23 estimates. JPMorgan reaffirms Amazon’s best idea. JPMorgan stated that it expects Amazon to see growth accelerate in the second half of the year. While AMZN may see a slight decline in its US share by 2022, the company’s market share has grown to 650bps over 2018! We continue to believe revenue growth should reaccelerate in 2H22 as comps ease & AMZN gains greater penetration in grocery, CPG, apparel & accessories, & furniture/appliances/equipment.” Wells Fargo reiterates Warner Bros Discovery being overweight. Wells claimed that Warner Bros Discovery is an excellent opportunity for “patient investors.” WBD presents a fantastic opportunity for patient investors due to its content assets, as well as the management’s track record of successful merger execution. It’s too noisy in the near term. We think that a future investor day will be a good indicator of a catalyst. Atlantic Equities drops Medtronic from overweight to neutral. Atlantic Equities indicated that the downgraded medtech company is a sign of “no path towards cleaner execution.” Medtronic has outperformed all of its interventional med tech peers in the past year. As such, Atlantic Equities downgraded Medtronic to neutral from overweight. We believe that this valuation gap is now closed. This means we can no longer discount recent execution problems. Wells Fargo keeps Nike’s overweight rating. However, its most recent survey findings show that the Chinese situation is still “tough”. Our key takeaways are: 1) Trends in NKE s 4Q (end of May) will be difficult with our model expecting regional revenues of $1.82B, rather than consensus’ $1.93B. 2) Consumer spending is not likely to reach 2020’s pre-lockdown levels given the current lockdowns. JPMorgan lowers Sealed Air from neutral to underweight. JPMorgan stated in the downgrade that it believes there are better investments elsewhere. Sealed Air has been downgraded to underweight from neutral. This rating change does not reflect our pessimism regarding Sealed Air’s business prospects. However, it does indicate that we are more inclined to invest in other equities within the different material sub-sectors. JMP instigates Etsy to market outperform JMP claimed that Etsy’s e-commerce business has improved its “brand awareness.” ETSY’s platform is one of top performing throughout the epidemic and beyond. Its increase in brand awareness is more durable than temporary. We see plenty of opportunities for ETSY’s to drive GMV growth via further brand expansion, technology investments, and geographic expansion. This call is available here. RBC upgrade Danaher from sector perform to outperform RBC stated in the upgrading of Danaher, a manufacturer of industrial and medical products that it saw an “attractive entrance point.” We are moving Danaher to Sector Perform from Sector Perform. This is because we think its superior quality and defensive portfolio makes it incrementally more appealing given the Wall of Worry/macro worries. This call is available here. JMP confirms Amazon market outperform after a shift in analyst coverage. JMP said that Amazon is still a “well-positioned stock to navigate inflationary obstacles.” Although AMZN will be affected by e-commerce pressures in the near term, JMP believes that Amazon is well-positioned to handle inflationary headwinds. We also believe it can show resilience to a possible recession. AMZN appears to be looking at its real estate portfolio and is hoping to end some leases. We expect margin growth in 2023 and 2H22. Barclays launches Corteva because it is overweight. Barclays stated in initiating Corteva that higher demand would benefit fertilizer stocks. We are positive about the potential of these companies to continue a strong profit momentum. We expect tightness to continue in the grains and fertilizer markets beyond 2023. A return to normality will require an end to all sanctions. As we think demand pull will not decrease, it would be easier to remove them from their market. Wells Fargo reiterates Procter & Gamble as overweight Wells said investors should buy the dip in the home and personal care products company. Big picture: PG is seeing opportunity in a volatile environment with ongoing consumer demand debates. We see potential for PG to rebound from recent underperformance. This could allow us to move back into a portfolio that has the highest momentum in HPC. Citi launches a catalyst watch for Ford Citi stated that its surveys show more upside to the stock. We’ve opened a 90-Day upside catalyst watch on Ford. Another on Autoliv is also available. “We believe that a NT scenario, which sees reassuring U.S. data points, would be beneficial for both stocks. Bank of America named Nvidia as a Top Pick. Bank of America believes that Nvidia and other semiconductor stocks are “compelling.” Our top picks are in the end markets where spending/content growth drivers will be strongest, like in high-end industrial and EV/advanced driving assist systems, as well as areas such at cloud computing/AI/high-end, rising-chip complexity. This call is available here. Morgan Stanley elevates Visteon to an equal weight Morgan Stanley claimed that Visteon will perform better in current conditions than any other stocks in the firm’s coverage. VC provides investors a means to participate in production recovery. However, it is propulsion agnostic and skews towards industry megatrends like digital cockpits or electrification. Morgan Stanley has endorsed Amazon, Meta, Alphabet and other internet stocks as overweight. However, it lowered estimates and price targets for several technology and internet stocks Tuesday night. It noted that there are “growing signs” of slowing at the sector and macro levels. As we reduce our online ests, “Rising macro- and microuncertainty led us to adopt a conservative base case online advertising/ecommerce view.” This may also be a sign of reversion, as shown by our 4-year CAGR analysis. Blue-chip blue-chips FB/AMZN/GOOGL still have 30%+ upside over depressed levels, even post cuts.