Here are Friday’s biggest calls on Wall Street: Mizuho initiates WeWork as buy Mizuho said that WeWork is an undervalued play on ever-changing work preferences. “It is well positioned to take share of the flex office market, which is poised to grow 50% ($50Bn TAM) in the next three years, as office tenants rethink footprints and lease formats.” Bank of America reiterates Amazon as buy Bank of America said in a note on Friday that it expects some gas cost pressures to hinder Amazon earnings, but that it remains very constructive on the stock. “Inflation clouds the 2022 margin recovery story, but AMZN remains our top FANG stock, with 2H eCommerce acceleration, margin improvement from a very low base ($70bn in 2023 profit potential from 3P, AWS and advertising), and enterprise exposure (corporate capex cycle) key differentiators.” UBS downgrades Union Pacific to neutral from buy UBS said that capacity issues may weigh on the stock. “We are downgrading UNP from Buy to Neutral because we expect the current capacity constraints and service issues to weigh on volume performance and these issues also reduce our conviction in UNP’s ability to execute on its volume growth strategy.” JPMorgan upgrades United to overweight from underweight and American to neutral from underweight JPMorgan said in its upgrades of United and American that it has “stepped-up-bullishness” on airline stocks. “Airline equities have rebounded as much as 60% from the recent fuel-panic lows achieved when demand trends were grossly misunderstood. But YTD gains are inside of 20%, and the sector still rests 20% below 2021 highs. But aside from fuel and geopolitical pressures, almost every fundamental input is stronger than last year (supply, demand, Covid, you name it).” Read more about this call here. Bernstein initiates Take-Two and Electronic Arts as outperform Bernstein said in its initiation of the video game companies that it sees growth potential. “We expand our video games coverage to two U.S. industry majors, Electronic Arts and Take-Two Interactive . We view the $180bn video games industry as the best structural growth opportunity in media, and rate both stocks Outperform.” Piper Sandler reiterates Microsoft as overweight Piper said in a note to clients on Friday that it’s cautiously optimistic heading into earnings next week. “The durability of the Microsoft model should be on full display next week, in part insulated by a cloud mix shift that has expanded to 48% of sales (vs. 42% one year ago and 36% in F2020).” Citi upgrades Dow to buy from neutral Citi said in its upgrade of the chemical company that it sees “strong execution amid high energy prices.” ” Dow delivered a strong 1Q in a rapid inflationary environment fueled by the war in Europe, but the company overcame the challenges with strong pricing.” Read more about this call here. Bank of America reiterates Apple as buy Bank of America said it sees some near-term risks heading into Apple earnings next Thursday but that it’s standing by shares of the tech giant. “However, we continue to view Apple as a long-term winner and believe shares have more room to rerate higher as we see significant catalysts including the opportunity to better monetize its installed base, advertising-related revenue growth, opportunity in Augmented/Virtual Reality and long-term growth in Services.” Deutsche Bank downgrades JetBlue to hold from buy Deutsche said it sees limited upside right now for the airline. “We are lowering our rating on HA and JBLU shares from Buy to Hold. The primary reason for downgrading both names is that each carrier faces specific headwinds that are likely to limit share price upside.” Read more about this call here. JPMorgan reiterates Coca-Cola as overweight JPMorgan said in a note ahead of earnings on Monday that the beverage maker is a “top defensive holding.” “Because of KO’ s strong brand equity and its products benefiting from low-price elasticity, the stock should continue to work as a high-quality defensive name with upside from reopening in an uncertain macro backdrop. KO’s more asset-light model is also attractive in this environment.” JPMorgan reiterates PepsiCo as overweight JPMorgan said in a note that it sees the top line “coming in good” when the beverage company reports earnings on Tuesday. “We believe PepsiCo has a product mix poised to deliver solid organic top-line growth and a track record of consistently beating Street expectations over the past few years, which compares favorably with large-cap Consumer Staples peers.” Argus upgrades American to buy from hold Argus said in its upgrade of the stock that it sees a business and international recovery. “We are raising our rating on American Airlines Group Inc. to BUY from HOLD. Over the next 12 months, we expect the company to benefit from an acceleration in business and international travel, as well as from management’s efforts to reduce costs.” JPMorgan reinstates coverage of Callaway Golf as overweight JPMorgan reinstated coverage of the golf company and says Callaway has a “diversified revenue base.” “Overweight as the ‘growth’ name in golf with an accelerating multiyear financial profile including ~10% revenue growth translating to +Mid/High-Teens EBITDA growth by our work w/ our SOTP pointing to $30 equity value.” Bank of America reiterates CVS as buy Bank of America said in its earnings preview note for CVS that it sees upside heading into earnings in early May. “Even with the strong 2021 stock performance, we still see room for incremental upside and thus reiterate our Buy rating and $121 PO.” Morgan Stanley reiterates Snap as overweight Morgan Stanley said in a note to clients after the social media company’s earnings on Thursday that it sees some uncertainty for the stock, but that Snap’s execution remains “strong.” “SNAP’s cautious macro guide sets the table for growing uncertainty about the state of the ad markets, while SNAP micro execution (on ads and engagement) remains strong.” Argus reiterates Tesla as buy Argus said in a note on Friday that Tesla is the “undisputed” leader in electric vehicles and that its earnings report earlier this week was “impressive.” “In our opinion, the results were impressive, as revenue, profit and gross margins continued their climb higher.”
A construction worker passes a job site at Metropolitan Park, the first phase of new construction of Amazon’s HQ2 development Arlington, Virginia October 13, 2021.
Kevin Lamarque | Reuters
Here are Friday’s biggest calls on Wall Street: