Upgrades
Wells Fargo upgraded Comcast (CMCSA) to Equal Weight from Underweight with a price target of $38, up from $30. The firm is less negative on the company's cable outlook with slower EBITDA growth but also clearer capex. However, the firm is more negative on NBC Universal and is below Street estimates on free cash flow. Net/net, the firm now thinks Comcast is de-risked and sees fair value at $38 per share. While broadband competition is increasing, the firm notes it's not creating all the bad trends the firm had feared.
Daiwa upgraded Crowdstrike (CRWD) to Buy from Outperform with a price target of $181, down from $193. Although the quarter's operating results looked solid, the firm notes management's weakening outlook commentary and tepid guidance weighed on investor sentiment. However, the firm significantly raised the firm's non-GAAP earnings estimates for fiscal years 2023 and 2024 due to better operating margins driven by good cost control. The firm now sees 46% upside in Crowdstrike shares.
Downgrades
Deutsche Bank downgraded Starbucks (SBUX) to Hold from Buy with a price target of $106, up from $100. The firm is making a risk/reward and valuation call on the shares, saying there is not much more to it than that. The firm is truly neutral at current levels; neither positive nor negative. A bull case could emerge for $5 per share in adjusted earnings per share, equating to a $125 stock price over time, but the offsetting risk here is of course that the potential U.S. recession dynamic has not gone away.
Morgan Stanley downgraded First Republic (FRC) to Underweight from Equal Weight with a price target of $102, down from $109, as the firm initiated coverage of 12 midcap banks and took over coverage of several others. The firm prefers to be positioned in names that are best-equipped to manage the headwinds from tightening liquidity conditions as rates rise, and has Underweight ratings on three - First Republic, Silvergate (SI) and SVB Financial (SIVB) - that the firm sees having the most funding pressure due to idiosyncratic factors.
Others
Citi initiated coverage of Alaska Air (ALK) with a Buy rating and $55 price target. The firm notes the carrier's strong pricing, traffic flow from its partner airlines, and re-fleeting look attractive. The firm says these attributes could help Alaska Air offset the headwinds facing the airline industry in 2023.
Goldman initiated coverage of Day One Biopharmaceuticals (DAWN) with a Buy rating and $45 price target. The firm notes Day One is a clinical stage biotechnology company developing tovorafenib for pediatric low-grade glioma, the most common childhood brain tumor. The firm is positive into the upcoming Phase 2 FIREFLY-1 data in Q1 of 2023 to confirm tovorafenib's best-in-class profile.
