Walmart upgraded, AMD 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:

• JPMorgan upgraded Walmart (WMT) to Overweight from Neutral with a price target of $81, up from $66. The firm believes the stock “adds a strong balance of defense and offense” in a softening consumer backdrop with a “highly uncertain” second half of 2024 ahead.
• UBS upgraded Honeywell (HON) to Neutral from Sell with a price target of $215, up from $175. The stock’s valuation has fully reset, and downside risk is now diminished, the firm tells investors in a research note.
• Truist upgraded Krispy Kreme (DNUT) to Buy from Hold with a price target of $15, up from $13, after spending time with management. The firm came away from the meetings with the belief the Krispy Kreme story is either unknown or misunderstood by most investors.
• Jefferies upgraded Planet Fitness (PLNT) to Buy from Hold with a price target of $100, up from $62. The shares have been under pressure, but the company’s current headwinds are well understood and now there’s a more visible path to improving trends following the new CEO, franchisee model adjustments and price increases, the firm tells investors in a research note.
• Raymond James upgraded Mohawk Industries (MHK) to Strong Buy from Market Perform with a $140 price target. The shares are now below a “floor” valuation, the firm says, adding that continued expectations for “comfortable” profitability, positive free cash flow, limited net debt and current maturities, and the implications for the industry’s restrained material new capacity adds, it imagines the company’s appraised asset value should continue to act as support, thus presenting “material favorable asymmetry.”

Top 5 Downgrades:

• Morgan Stanley downgraded AMD (AMD) to Equal Weight from Overweight with an unchanged price target of $176. The firm likes the AMD story but says investor expectations for the artificial intelligence business still seem too high.
• Melius Research downgraded Adobe (ADBE) to Hold from Buy with a $510 price target. The firm believes the rise of AI-driven productivity threatens the long-relied-upon “seat model” for software-as-a-service companies, and says it has seen a “plethora of new competitors” to Adobe “get stood up much faster than we could have imagined even a year ago.”
• JPMorgan downgraded Asbury Automotive (ABG) to Neutral from Overweight with an unchanged price target of $230. While the used car market has seen a partial recovery year-to-date driven by a combination of slightly better affordability and temporarily better commercial auction supply, JPMorgan sees lingering supply constraints, both cyclical and structural, that is likely to “put a lid on any inflection in unit sales” over the next 12-18 months.
• TD Cowen downgraded Delek US (DK) to Sell from Hold with a price target of $20, down from $25, which implies 20% downside from current levels. Delek’s parent may generate limited free cash flow at mid-cycle cracks, which is apparent from its recent results and guidance, the firm tells investors in a research note.
• Compass Point downgraded MidCap Financial (MFIC) to Neutral from Buy with a price target of $16, up from $15.50. MidCap Financial has been in the midst of a long-term strategic evolution since 2016 and now is in the process of closing a three-way merger with Apollo Senior Floating Rate Fund (AFT) and Apollo Tactical Income Fund (AIF), which should eventually result in an improved cushion between net interest income and the current dividend, the firm tells investors.

Top 5 Initiations:

• Morgan Stanley resumed coverage of Broadcom (AVGO) with an Overweight rating and $1,658 price target. The firm says Broadcom has the second largest artificial intelligence exposure in its coverage and is poised to grow faster than other AI alternatives
• Citi initiated coverage of American Express (AXP) with a Neutral rating and $250 price target. The firm says that while American Express “has the tenets of an attractive long-term core holding” given the combination of attractive business model in a growth market led by a strong management team, the bar has been set fairly high in terms of the valuation multiple.
• Seaport Research initiated coverage of Dave (DAVE) with a Buy rating and $54 price target. The firm sees a path to 20%-plus revenue growth for the company over the next two years.
• Deutsche Bank resumed coverage of Blue Owl Capital (OWL) with a Buy rating and $21 price target. The firm believes Blue Owl will maintain a strong earnings growth trajectory and has several drivers for fee growth above 20% over the next three years.
• Barclays reinstated coverage of Sunoco LP (SUN) with an Overweight rating and $61 price target following the NuStar acquisition. The firm thinks Sunoco will continue to post elevated annual margins due to higher industry break-evens and its “scale and flexibility, allowing it to thrive in volatility.”