Upgrades
Truist upgraded SciPlay (SCPL) to Buy from Hold with a price target of $15, up from $14. The firm sees a more favorable risk reward on the stock, with valuation turning attractive and board additions that bring in valuable experience. The firm further cites multiple fundamental shots on goal for SciPlay with Alictus, Project X, Solitaire, DTC platform, and Project All-Star, along with its event shots on goal with Investor Day and Playtika (PLTK) strategic review.
Stephens upgraded Alcon (ALC) to Overweight from Equal Weight with a price target of $92, up from $86, following the company's Q1 report and reaffirming of its 2022 guidance. The firm notes revenue and core earnings exceeded consensus by 6.3% and 28.3%, respectively. The firm said the core business is executing well, with growth being led by new product cycles. The firm also notes that Alcon's defensive and primarily non-discretionary end markets are returning to pre-COVID norms while the stock's valuation is at a relative discount to comparable large cap med tech industry peers.
JP Morgan upgraded Valvoline (VVV) to Overweight from Neutral with a price target of $36, up from $30. The firm thinks the company is doing a good job of passing on higher raw material costs through price increases. With its separation process on track, and the shares recently falling, the firm upgrades Valvoline on valuation.
Baird upgraded Kratos Defense (KTOS) to Outperform from Neutral with an unchanged price target of $20 following what the firm calls a significant reset in its stock price over the past 15 months. Shares are down 61% from their high last year, noted the firm, who thinks investors are no longer paying for Tactical Unmanned adoption at current levels. The firm sees an attractive entry point for long-term investors with Unmanned a long-term call option given the firm's view that the core business ex-Unmanned is worth about $12 per share.
Downgrades
Barclays downgraded Beyond Meat (BYND) to Equal Weight from Overweight with a price target of $25, down from $80. The firm views the Q1 results as disappointing with guidance for Q2 that is less upbeat than expectations. The firm notes Beyond Meat's sales growth should re-accelerate in the second half of 2022, but its margins are set to remain well below historic levels. The firm cites limited short-term visibility, rising cost pressure and the company's high cash burn for the downgrade.
Wolfe Research downgraded American Express (AXP) to Peer Perform from Outperform with a $146 price target. The firm downgraded the credit card issuers group to Underweight from Market Weight on the firm's view that a recession is likely.
Piper Sandler downgraded Zoom Video Communications (ZM) to Neutral from Overweight with a price target of $96, down from $157. The firm sees limited upside to paid video with adjacent products like Phone and Rooms given the slowdown and size of video. The firm notes these dynamics result in a lack of free cash flow growth and potential risk to estimates.
Others
Citi initiated coverage of Starry (STRY) with a Neutral rating and $9.50 price target. The firm notes the company's broadband can offer competitive speeds with incumbent cable and expanding fiber services, but the spectrum used to differentiate its product may see a slower sales ramp. The firm believes Starry needs to create a broader coverage footprint and will have to raise funds to better support its multi-year build plan.
Goldman initiated coverage of DigitalOcean (DOCN) with a Buy rating and $49 price target, which implies 59% upside. The firm views the company as a "clear leader" in the cloud infrastructure market for small- to mid-sized business and individual developers. In an upside scenario, the firm thinks DigitalOcean could report $1B of revenue in 2024 with $200M of free cash flow. The firm notes positive free cash flow along with acquisition optionality should provide valuation support for the stock in the current environment.
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