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Here are Monday’s biggest calls on Wall Street: Bank of America reiterates Meta as buy Bank of America said the “year of efficiency” for Meta is just starting. “We see Meta as a more defensive stock in the sector this year with potential for cost rationalization to provide more downside support to EPS in a recession scenario than industry peers.” Evercore ISI upgrades Zillow to outperform from in line Evercore said it likes the company’s business model. “And given ZG’s relatively robust business model, that positive top-line inflection should quickly translate into a bottom-line inflection.” Read more about this call here. Credit Suisse upgrades AllianceBernstein to outperform from neutral Credit Suisse said shares of the investment management company are too attractive to ignore. “We raise our investment rating on the shares of AllianceBernstein to Outperform (from Neutral), raise our 2023-24 adjusted EPU estimates following better-than expected 4Q22/key expense guides for 2023.” Baird downgrades Caterpillar to neutral from outperform Baird downgraded the stock on valuation. “We believe CAT shares are nearing a cyclical pivot point following strong recent outperformance; history shows that CAT’s relative stock performance is driven by four fundamental factors: dealer stocking impact on sales growth, backlog progression, price/cost spread, and dealer retail sales.” Morgan Stanley reiterates Microsoft as overweight Morgan Stanley said shares of Microsoft are compelling at current levels. “Near-term cyclical impacts create an attractive entry point into one of the best secular growth stories in tech.” Wells Fargo reiterates Home Depot and Lowe’s as overweight Wells said it’s standing by shares of Home Depot and Lowe’s heading into earnings later this month, but added it sees a “tricky” setup. “Calling Home Improvement’s Q4 setup ‘tricky’ is an understatement. FY23 ests are too high, sentiment is bearish; yet shares are off ’22 lows & rates add support.” JPMorgan resumes Disney as overweight JPM resumed coverage of Disney and said it’s bullish on the return of CEO Bob Iger. “We are encouraged by newly appointed CEO Bob Iger’s transformation program, announced $5.5b cost cutting program, and focus on DTC (direct-to-consumer) profitability (over subs), and look to signs of improving DTC profit over the year as a guide for shares.” Read more about this call here. Barclays reiterates Apple as equal weight Barclays said it’s staying cautious on Apple shares. “Recent lackluster sell-through data out of China (was better in early January, though, due to supply normalization) also confirms our cautious bias in the near term.” Bank of America upgrades Ralph Lauren to buy from neutral Bank of America said shares of Ralph Lauren should outperform in this environment. “We are upgrading Ralph Lauren (RL) to Buy to reflect our confidence in strong revenue trends continuing given the brand’s global diversification and management’s ability to pull cost levers in this choppy environment.” Read more about this call here . Bank of America upgrades Fastly to buy from underperform Bank of America said the cloud computing company is on the “road to recovery.” “Short term results could still fluctuate, but we focus on the potential value creation in the intermediate term, and believe Fastly has solid underlying foundations, which the new management team is aiming to expose, coupled with greater focus on security and edge cloud solutions.” Bank of America reiterates Roblox as buy Bank of America said it’s bullish heading into Roblox earnings on Wednesday. “We expect EBITDA margin to exceed the 10% threshold mgmt indicated in November as Q4 bookings, driven by December outperformance, likely exceeded mgmt expectations.” Bank of America initiates Okta as underperform Bank of America said it sees limited upside for the identity access management company. “We initiate coverage of Okta, with an Underperform rating. We see elevated risks of slow growth and limited margin upside resulting from intense competition with Microsoft, pricing erosion, channel conflicts and other structural challenges.” Roth MKM upgrades Five Below to buy from hold Roth MKM said it sees attractive growth for the stock. “We have long been attracted to the growth aspects of the FIVE platform and its building reputation among core consumers.” Morgan Stanley downgrades XPO to equal weight from overweight Morgan Stanley said the logistics company is in the “penalty box.” “We also downgrade XPO from OW to EW. The 4Q print was tougher than expected and we believe the stock could be in a “penalty box” for a while, as the market seeks more evidence on execution and traction toward LT targets.” Read more about this call here. Bank of America reiterates Starbucks as buy Bank of America said it sees a margin recovery for Starbucks shares. “Over the past three years, we estimate Starbucks N. American company operated margins have compressed by ~170 bps and now stand 338 bps below their long-term average. Given our view that high-20% store level EBITDA margin is sustainable for an industry leader, we expect full recovery.”
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