Here are Monday’s biggest calls on Wall Street: UBS initiates Okta as buy UBS said it sees a margin expansion opportunity for the identity access management company. “We see Okta as well positioned to benefit from continued identity tailwinds, a view supported by checks across the customer and partner community highlighting strong identity spending intentions, detailed TAM analysis, and UBS Evidence Lab data.” Read more about this call here. JPMorgan upgrades HP Inc. to overweight from neutral JPMorgan said in its upgrade of HP Inc . that it sees “resilient revenue and margins.” “We expect the combination of structural margin improvement in the Print segment on account of several initiatives undertaken by the company to offset some of the margin moderation in the coming quarters with easing supply, even though margin moderation should be more muted than previously feared on better supply-demand balance.” New Street downgrades Meta to neutral from buy New Street said in its downgrade of the stock that it sees better opportunities elsewhere. “No major change in view but we see better opportunities for upside in our coverage from here after META’s outperformance relative to the group.” JPMorgan upgrades Ollie’s to neutral from underweight JPMorgan said it has more confidence in management’s same-store sales guide. “With OLLI underperforming the SPX by ~30% over the last 18 months, now trading 10% below its pre-pandemic trough valuation and our recent fieldwork and management access pointing to FY23 ‘E’ insulation ( & beat/raise 1Q near-term setup) given macro/micro top and bottom-line drivers – we upgrade OLLI to Neutral raising our Dec ’23 price target to $66. JPMorgan upgrades Lumentum to overweight from neutral JPMorgan said in its upgrade of the optical and laser tech company that it sees upside potential. “Upgrading Lumentum (LITE) to Overweight from Neutral even as there remains likelihood of further downside to consensus estimates from inventory digestion at more customers, which is a temporary and cyclical driver rather than a structural reflection of demand, as well as share loss to new entrants in 3D Sensing with Apple as a customer.” JPMorgan downgrades Dell to neutral from overweight JPMorgan said in its downgrade of Dell that HP Inc. is better positioned right now. “Leveraging our relative rating system, we are expressing our view in relation to the recovery in the second half of calendar 2023 to be more favorable for HPQ than DELL using our Overweight rating for HPQ and Neutral rating for DELL. ” JPMorgan reiterates Amazon as overweight JPMorgan said it came away “incrementally positive” from Amazon’s investor letter last week. “Importantly, we believe Andy Jassy’s second letter as CEO provided the deepest insights yet into his vision and strategy for AMZN as it touched virtually all key parts of the business and seemed to more directly address shareholder concerns.” Morgan Stanley reiterates Tesla as overweight Morgan Stanley said it’s standing by its overweight rating on the stock heading into earnings later this week. ” Tesla should be able to eke out a decent 1Q result, but defending that 20% clean auto gross margin ‘floor’ may be a different story as ‘the world has changed’ with respect to EV demand weakening relative to EV supply.” Piper Sandler upgrades Biogen to overweight from neutral Piper says the biotech company has too many attractive drivers including Biogen’s Alzheimer’s drug, Leqembi. “Raising Leqembi estimates and our price target and rating on BIIB shares, now buyers to the mid $340s based on what we see as a confluence of positive catalysts over the next several quarters.” Read more about this call here. Citi opens a negative catalyst watch on Zoom Citi says it sees too many negative catalysts ahead for the teleconferencing company. “We open a negative catalyst watch on Sell-rated ZM as we see negative data points piling up which could further pressure growth rates.” Piper Sandler upgrades Enphase Energy to overweight from neutral Piper said that it sees a favorable sales outlook for the solar company. “We are upgrading ENPH to OW from Neutral. Our prior January downgrade was driven by concerns surrounding US [residential] based on indicators at the time. Disclosures from the publics and discussions with privates indicate that Q1 originations/sales were more favorable than we feared thereby suggesting the US is more likely to decelerate than decline during ’23.” Raymond James downgrades Texas Roadhouse to market perform from outperform Raymond James downgraded the restaurant company citing lack of multiple expansion opportunities. “We are downgrading TXRH to Market Perform from Outperform on valuation as it recently achieved our price target – we remain bullish on the company’s ability to sustain strong market share gains, but see limited room for further multiple expansion given below average macro visibility and the risk of elevated beef cost inflation over the next 12-18 months.” Susquehanna upgrades Taiwan Semiconductor to positive from neutral Susquehanna said in its upgrade of the semiconductor company that the worst case scenario is already baked in. “Upgrading TSM to Positive as the worst-case earnings scenario is dialed into our estimates/ investors’ expectations.” Jefferies names Uber a top pick Jefferies named Uber a top pick and says it has a long runway for growth. “Our analysis also shows UBER has a long runway for margin expansion, with EBITDA growing ~3x faster than Bookings over the next 5 yrs.” Read more about this call here. JMP downgrades Penn to market perform from market outperform JMP downgraded the stock mainly on valuation. “Trading at 6.3x EBITDA/11% FCF, we find shares of PENN fairly valued and are downgrading our rating to Market Perform from Market Outperform.” Evercore ISI adds a tactical outperform from Arista Networks Evercore added a tactical outperform call on the cloud networking company and said the “year of Arista continues.” “Arista has enjoyed a great run since it last reported earnings with the stock up 14% (S & P 500 -1%), as they have benefited from investor interest around AI as well as a broader rotation back towards growth.” Morgan Stanley reiterates Microsoft as overweight Morgan Stanley said the stock is “compelling” heading into earnings next week. “At the depth of cyclical impacts (macro & cloud optimization) and ahead of a transformational secular shift (Cloud & AI), for which Microsoft consistently screens as best positioned to gain market share, we see a buying opportunity.” Credit Suisse reiterates Netflix as neutral Credit Suisse said it’s cautious heading into the streaming giant’s earnings report on Tuesday. “In our discussions, almost all investors are positive on Netflix , though to varying degrees, with a focus on upside to Street revenue estimates due to password sharing monetization (including Canada believed to have gone quite well), and margin upside due to operating leverage and cost containment efforts (with particular visibility on content amort), while expecting a modest 1Q23 net add beat.” Wolfe initiates Check Point Software as outperform Wolfe said the software company is a “cash generating machine.” “We get it, the macro is clearly throwing a wrench in Check Point’s ability to continue its exciting “growth” story into 2023. Have no fear though! The company is a highly efficient, cash generating machine with industry leading 40%+ operating margins (a rarity in our coverage) and mid-40% free cash flow margins which we think will enable the name to outperform this year as the macro worsens.” Morgan Stanley reiterates Alphabet as overweight Morgan Stanley said it’s bullish heading into Alphabet earnings next week. “We detail expected AI-driven behavior change that we see leading to more durable multi-year e-commerce and online ad growth, and why we believe GOOGL is positioned to drive and benefit from these changes.”
