Tesla, DocuSign, Netflix, Roblox, Apple
These are the top Wall Street calls of Friday: Loop reiterates Apple’s purchase. Loop stated that it expects delays in production for certain versions later in this year. The iPhone 14 Pro Max is just a month behind schedule, and this could cause a delayed launch. AAPL and contract manufacturers still want a September launch of all four devices. Goldman Sachs downgrades Roblox to sell from neutral Goldman said it sees “tough comps, & normalization of margins.” “we have increasing concerns around the post-pandemic environment and expect a continuation of slowing growth, tough comps, & normalization of margins in the near-term and as such, we downgrade RBLX to Sell (from prior Neutral) reflecting a more negative risk/reward skew from current levels.” Goldman Sachs sells eBay. Goldman Sachs has downgraded eBay. It said that the company is at risk of revenue growth. With the current global consumer climate under pressure, and eCommerce growth slowing post-pandemic, we see eBay’s forward GMV (gross Marg Value) and revenue growth at high risk. Due to its excessive exposure to international markets and newly launched growth initiatives, which haven’t scaled up and need incremental investments, we see eBay’s forward GMV (gross margin value) and revenue growth at risk esp. Goldman Sachs downgrades Netflix from neutral Goldman stated in the downgrade that Netflix is now a “show me story.” “We downgrade NFLX to Sell as we have concerns around the impact of a consumer recession as well as heightened levels of competition on demand trends (both in the form of gross adds and churn), margin expansion, & levels of content spend and view NFLX as a show-me story with a light catalyst path in the next 6-12 months.” This call is more detailed here. MoffettNathanson lowers Electronic Arts from Buy to Neutral. This was mainly due to valuation. We are downgrading Electronic Arts from Buy to Neutral but increasing our PT by $147 (from 141). As our primary valuation technique, we continue to use a multiyear DCF analysis. It includes a 7.2% assumed cost of capital (and 1.5% final growth rate). Atlantic Equities elevates CME from neutral to overweight. Atlantic Equities stated that it believes there is an attractive entry point for shares in the exchange and global markets. CME is being upgraded to Overweight. Our target price remains at $235. The total return on investment will exceed 20%. This is despite the fact that the stock has a low valuation and the best fundamental background of US exchanges. You can read more on this call by clicking here. Goldman Sachs drops Kontoor Brands from neutral to buy Goldman indicated in its downgrading of Wrangler and Lee Jeans maker that it saw “value channel headwinds intensity.” KTB was originally founded on strengthening brand momentum. It also emphasized a healthy wholesale channel, which is supported by DTC growth and improved margins due to price and product changes. Barclays reaffirms Microsoft’s overweight status. Barclays claimed that Microsoft’s success was much greater than Azure cloud computing services and that Microsoft is firing on all the cylinders. We believe that investors have become too obsessed with Azure to make the MSFT investment case. There are many more compelling stories to help grow the $200 billion+ revenue base by double-digits, we argue. Bank of America reduces DocuSign from buy to neutral. Bank of America indicated in its downgrade of electronics signature company DocuSign it saw decelerating billings. To reflect the decelerating bills from near term problems, we are downgrading DocuSign shares and lowering our PO by $72 to $72 (from $120). Learn more about this call. JPMorgan elevates Spirit from neutral to overweight. JPMorgan called the tactical trade idea of the discount airline and said it considers JetBlue the most likely winner for Spirit. We also think that a merger between Spirit and JetBlue has a greater probability than a Frontier deal. Most importantly, Spirit shares are trading in line with the proposed Frontier offer, and – owing to the break fee – slightly below what Spirit shareholders would receive if the DOJ were to block the transaction today, holding current share prices constant.” This call is available here. Cowen names Grocery Outlet Holdings as a top SMIDCap Idea Cowen stated that it expects more share gains from the discount grocery retailer company. “We believe GO’ s off-price grocery model and value leadership will drive comps growth and market share gains, as baskets are on average 40% below conventionals & 20% below discounters.” Evercore ISI lowers DocuSign’s rating to underperform. The company was downgraded by Evercore after it released its earnings report. It cited difficult comps as well as billing slowdowns. We are not a fan of the post-EPS downgrade. DOCU shares may be close to bottom at present levels, but if you look longer-term, the tough comps combined with continued execution challenges/turnover in the field mean that any meaningful rebound is further away than we expected. Barclays reiterates its belief that Tesla is an underweight. Barclays has raised its price target for Tesla to $370 from $325 per share, however it still sees disappointments in production and margins. As Tesla CEO Elon Musk tries to balance outside business interests, Tesla’s second quarter production and margins will disappoint. Shanghai is shackling output. We expect Q/Q sales and production contractions. JPMorgan reaffirms Amazon’s overweight status JPMorgan stated in a Friday note that Amazon is still the fastest growing U.S. retailer. AMZN is likely to maintain its L-T pricing power. Amazon has a 40% share in US ecommerce and is the largest US scaled retailer. Wedbush upgrade SciPlay to “outperform” from neutral Wedbush upgraded both the casino and mobile gaming company on “valuation factors and growth drivers.” We are upgrading SciPlay shares to OUTPERFORM (from NEUTRAL) to reflect our 12-month revised price target at $17.00 per share. This is in addition to the increase of 20% in share prices over the past month. Morgan Stanley lowers iHeartMedia from equal to underweight Morgan Stanley stated in its downgrade that the company’s radio station is “structurally challenging.” The equity is at risk due to iHeart’s leveraged business model and the risk of a recession. We also see the core broadcast radio business, which is high-margin and has a shifting listening audience as being structurally impaired.