Carvana upgraded, LegalZoom downgraded: Wall Street’s top analyst calls

The most talked about and market moving research calls around Wall Street are now in one place. Here are today’s research calls that investors need to know, as compiled by The Fly.

Top 5 Upgrades:

• Needham upgraded Carvana (CVNA) to Buy from Hold with a $160 price target, which is a high on the Street. The analyst thinks Carvana can grow unit sales and industry share by leveraging its digital-first customer experience and “under-utilized” physical footprint.
• Argus upgraded Teva (TEVA) to Buy from Hold with a $20 price target. The company appears to have “steadied its ship” following several years of challenges, launching a range of new drugs and achieving margin growth across all of its three primary business segments, the analyst tells investors in a research note.
• Citi upgraded Illumina (ILMN) to Buy from Neutral with a $140 price target. Following the Grail divestiture, the analyst sees potential core margin upside heading into next year at a “reasonable valuation.”
• Jefferies upgraded Brighthouse Financial (BHF) to Buy from Hold with a price target of $54, up from $49. The analyst stays constructive on U.S. life insurance and upgrades Brighthouse ahead of the Q2 results.
• Scotiabank upgraded Braze (BRZE) to Outperform from Sector Perform with a price target of $56, up from $48. Braze’s underlying growth has remained extremely durable relative to the broader software group, but shares have “largely gone unrewarded” with virtually no multiple expansion and shares underperforming the IGV, the analyst tells investors.

Top 5 Downgrades:

• JMP Securities downgraded LegalZoom (LZ) to Market Perform from Outperform without a price target following the announcement that Dan Wernikoff will be replaced as CEO by Jeff Stibel and as the company lowered 2024 revenue guidance to $675M-$685M from $700M-$720M. JPMorgan also downgraded LegalZoom to Neutral from Overweight with a price target of $9, down from $14. BofA double downgraded LegalZoom to Underperform from Buy.
• Redburn Atlantic downgraded Spotify (SPOT) to Sell from Neutral with a $230 price target. The analyst worries that positive momentum “has carried the stock, and the forecast expectations, too far.”
• Nomura downgraded Supermicro (SMCI) to Neutral from Buy with an unchanged price target of $930. The analyst says order uncertainties may partially offset the company’s strength in liquid cooling.
• BofA downgraded MasterCard (MA) to Neutral from Buy with a price target of $480, down from $505. While the firm maintains a favorable view on Visa (V) and MasterCard’s “premier” business model and competitive moat, it is making a non-consensus call and downgrading both as it sees limited upside potential to the valuation multiple and estimates, while also noting that investor positioning remains crowded.
• DA Davidson downgraded Helen of Troy (HELE) to Neutral from Buy with a price target of $67, down from $139. The firm is not confident in second half of FY25 top-line improvement given the harder comps in prior year and also cites heightened competition and promotional activity while cutting its FY25 EPS estimate by 19%.

Top 5 Initiations:

• Piper Sandler assumed coverage of Target (TGT) with a Neutral rating and $156 price target. The analyst likes Target’s “strong” omni-channel model and believes the company has “exceptionally strong” merchandising capabilities.
• Goldman Sachs reinstated coverage of Six Flags Entertainment (FUN) with a Neutral rating and $63 price target. The analyst believes the company’s revenue synergies may be challenging to achieve as continued pricing power will be tough from here amid a choppy macro environment and decelerating per cap trends.
• BofA initiated coverage of MKS Instruments (MKSI) with a Buy rating and $160 price target. As the leading vendor of proprietary, high-precision vacuum, photonic, laser, chemical and packaging sub-systems that are critical parts of larger tools sold by leading wafer fab equipment, or WFE, customers, the firm sees an earnings inflection ahead.
• Leerink initiated coverage of Encompass Health (EHC) with an Outperform rating and $100 price target. Encompass Health’s “recession proof” business is tied to the most inelastic and non-discretionary elements of healthcare services with election-neutral risk factors, it remains in historic pace with development activity, and its earnings revision cycle is still titled strong, the firm says.
• BofA initiated coverage of CompoSecure (CMPO) with a Buy rating and $9 price target. The firm thinks it stands to further dominate the space as metal card issuance soars, while also noting that it is growing its Arculus security and authentication services to address the rising threat of card fraud.