Shopify upgraded, Reddit 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:

• BofA upgraded Shopify (SHOP) to Buy from Neutral with a price target of $82, up from $78. Following years of declining margin, the firm believes the company has turned a corner on balanced growth and margin under new CFO Jeff Hoffmeister.
• Mizuho upgraded Datadog (DDOG) to Outperform from Neutral with a price target of $155, up from $135. The company appears to be “solidifying its position as a clear leader in the observability market with multiple product areas at scale and newer products growing rapidly,” the firm tells investors in a research note.
• Jefferies upgraded Epam Systems (EPAM) to Buy from Hold with a price target of $237, up from $202. The firm believes Epam is well-positioned to capitalize on artificial intelligence, saying the company operates on the “leading edge of technological change and has a reputation for executing complex systems engineering projects.”
• Jefferies upgraded Cooper Companies (COO) to Buy from Hold with a price target of $115, up from $107. The firm views Cooper as best-positioned to take share in contact lens for the foreseeable future driven by daily SiHy trade-ups, significant increases in supply starting in fiscal 2025, and the company’s leadership in myopia management.
• Morgan Stanley upgraded Chegg (CHGG) to Equal Weight from Underweight with a price target of $3.25, down from $6.50. The firm says buy-side expectations for the company are already well below sell-side estimates.

Top 5 Downgrades:

• Piper Sandler downgraded Dollar Tree (DLTR) to Neutral from Overweight with a price target of $112, down from $143. While the shares are down 27% year-to-date, suggesting a lot of bad news is already priced in, the company is “uniquely disadvantaged regardless of the outcome of the Presidential election,” the firm tells investors in a research note.
• Loop Capital downgraded Reddit (RDDT) to Hold from Buy with an unchanged price target of $75. The firm says that even assuming likely upside to 2024 and 2025 estimates, it does not believe the upside reward meaningfully outweighs the downside risk.
• Evercore ISI downgraded Starbucks (SBUX) to In Line from Outperform with a price target of $80, down from $92. The firm sees lower earnings given the “realization” that recent and near-term same-store sales growth, both in the U.S. and China, will be lower than expected. Evercore ISI also downgraded Yum! Brands (YUM) to In Line from Outperform with a price target of $145, down from $160
• Argus downgraded General Mills (GIS) to Hold from Buy with no price target. The firm contends that given the company’s continued weak volume and challenges from inflation, along with the management’s slow-growth outlook, a neutral stance is “appropriate
• Mizuho downgraded Zscaler (ZS) to Neutral from Outperform with an unchanged price target of $220. The firm says that while Zscaler remains well positioned within secure access service edge, it is not confident the company can continue to close large, transformative deals at a steady pace, particularly given the macro environment coupled with an increasingly competitive market. Mizuho also downgrades Palantir (PLTR) to Underperform from Neutral.

Top 5 Initiations:

• Compass Point initiated coverage of American Express (AXP) with a Neutral rating and $260 price target. While stating that “there’s a lot to like in a franchise that boasts the strongest ROTCE in the space,” and highlighting the company’s material capital generation capabilities, best-in-class credit quality, solid loan growth, a standard for strong revenue growth and mid-teens EPS growth, the firm would await a better entry point into the shares that would afford a stronger expected return.
• Wolfe Research initiated coverage of Cloudflare (NET) with a Peer Perform rating and no price target. The company can drive “durable growth for multiple years” but the stock’s valuation fairly reflects many of its opportunities, the firm tells investors in a research note.
• JMP Securities initiated coverage of Simulations Plus (SLP) with a Market Perform rating and no price target. The firm believes the current share price adequately contemplates Simulations Plus’s growth trajectory and current demand backdrop.
• JMP Securities initiated coverage of Progyny (PGNY) with an Outperform rating and $36 price target. The firm believes the company is well positioned to continue its strong growth, with half of the self-insured employer market still greenfield, combined with a secular trend towards more equitable and inclusive benefits to better attract and retain employees.
• Compass Point initiated coverage of Synchrony (SYF) with a Buy rating and $56 price target. The firm views the current price as a “solid entry point into a highly valuable franchise with strong returns, robust capital and capital generation, and a solid longer-term growth story.”