This Week, From The Analyst Community

Stock analysts can provide valuable insight into the sentiment around a certain stock or sector and shed some light on what is possible or likely for a stock.  Stirring in the analyst community can sometimes be early signs of stock movement.  Which is why our team reviews dozens of analyst research reports each and every day with the goal of finding new investment ideas for our readers. 

Of the hundred of reports we reference weekly, some stand out among the others for various reasons.  Our team has sifted through this week’s reports and whittled it down to the most pertinent moves.   

Read on for the details on some of the most impactful actions taken by brokerage firms over the past week.  

Monday, January 3rd

  • Susquehanna’s James Friedman initiated coverage of digital banking provider Nu Holdings (NU) with a Positive rating and a $14 price target.   Nu is a “unique” growth story, already eclipsing $1B of trailing nine-month revenue, rising triple digits, Friedman tells investors in a research note. The analyst believes Nu has “good visibility on hyper-growth for many years to come” since it is “transforming, improving and expanding” the banking market.
  • Nu Holdings (NU) was also initiated with an Outperform rating and a $13 price target by Wolfe Research analyst Darrin Peller. 
  • BMO Capital analyst James Fotheringham upgraded PayPal Holdings (PYPL) to Outperform.  The analyst cites valuation for the upgrade following the “de-rating” of 2021, where the stock went from 51 times to 28 times on a rolling two-year-foreward price-to-earnings basis.  The analyst sees 21% annual organic revenue growth potential for PayPal and believes payment stocks are “set up constructively for this year.”  Tax loss selling is done and investors are focused on more normalized 2023 estimates for valuation, Fotheringham tells investors in a research note.

Tuesday, January 4th 

  • Coca-Cola (KO) was upgraded to Buy from Neutral by Gugenheim analyst Laurent Grandet along with a price target increase to $66 from $61.  The analyst says KO is seeing strong emerging markets despite low vaccination rates and that its on-premise sales are recovering faster than expected.  Further, the company’s portfolio rationalization should lead to a “more focused and agile organization” with gross margin benefits.  The analyst views Coca-Cola’s valuation as “compelling” at current share levels and sees 12% annual earnings growth through fiscal 2023.
  • Credit Suisse analyst John Walsh upgraded General Electric (GE) to Outperform from Neutral with a $122 price target.  He believes the recent selloff presents an opportunity to go long.  The 14% pullback since November 9th when the company would separate into three public companies: Energy, Aviation, and Healthcare has created an opportunity for both absolute and relative price appreciation as GE should benefit from a cyclical recovery in 2022.   The analyst  thinks a cyclical recovery in aerospace and free cash flow execution will drive the stock higher, despite a “lack of catalyst narrative” into the spinoffs.

Wednesday, January 5th

  • Northland analyst Gus Roichard upgraded Intel Corp (INTC) to Outperform from Market Perform with a $62 price target.  Richard tells investors he thinks Intel is starting to execute on a “coherent strategy” for “the first time in many years.”  Though early in its turnaround, he believes estimates are conservative and argues that Intel is likely “a good place for large-cap managers to wait out multiple compression” as high multiple stocks come under pressure. 
  • Stephens analyst James Rutherford downgraded Domino’s Pizza (DPZ) to Underweight from Equal Weight with a $500 price target noting  that his downgrade is not a negative call on the company’s upcoming Q4 report nor a sign that he lacks confidence in its business model and multi-year growth path. The move was “born out of an observation that the stock already has had a very strong run,” and for 2022 there may be a few headwinds to the business model relative to peers.  The analyst observes that Domino’s  has very hard compares in 2022, lower pricing power versus peers, and an ongoing delivery driver shortage.

Thursday, January 6th

  • Bank of America analyst Jason Kupferberg upgraded Coinbase (COIN) to Buy from Neutral, keeping a $340 price target, citing increasing signs of revenue diversification beyond retail crypto trading, a trend he believes could accelerate in 2022 and beyond.  Subscription and Services revenues represented 12% of total net revenues in the third quarter, up from 4% in 2020, and these should grow to 16% of total in 2023, Kupferberg told investors in a research note.  Drivers of this trend will likely be a combination of offerings such as staking, earn campaign, Coinbase’s non-fungible token platform, and decentralized finance products such as DeFi Yield, he added. The analyst believes scaling of these non-trading revenue streams could also catalyze increased interest in COIN among institutional investors.  Also supporting his upgrade are takeaways from his inaugural crypto data tracker, and Coinbase’s 3,500 basis points of underperformance versus the S&P 500 over the past two months, following a modest third quarter miss and pullback in the price of bitcoin.
  • Jefferies analyst Brent Thill raised the firm’s price target on Microsoft (MSFT) from $375  to $400 and maintains a Buy rating.  Despite a “massive 39% outperformance” versus the iShares Expanded Tech-Software Sector ETF (IGV) in 2021 from Microsoft he continues to see the potential in the stock as valuation provides downside protection, Thill said. However, he notes that revenue deceleration is likely after “phenomenal” 22% year-over-year growth in fiscal Q1 of FY22.

Friday, January 7th

  • Oppenheimer analyst Brian Bittner downgraded Starbucks (SBUX) from Outperform to Perform without a price target. The analyst’s updated analysis suggests earnings forecasts in 2022 and 2023 “lack upside levers needed to drive outperformance.”  Bittner tells investors in a research note that while 2022 is a well-telegraphed investment year, the Street already underwrites outsized margin and earnings growth in 2023 for Starbucks.  He believes this creates a balanced risk/reward profile.  Bittner remains positive toward Starbucks’ unit growth and same-store-sales trends, but he awaits a more favorable risk/reward setup.  RBC Capital also downgraded SBUX.
  • Wells Fargo analyst Eric Luebchow upgraded AT&T (T) from Underweight to Equal Weight with a price target of $27, up from $26.  With T shares down 12% in 2021, the “downside risks are more limited,” Luebchow tells investors in a research note. The analyst sees “sustained strength” in AT&T’s core wireless business that should deliver “industry-leading” service revenue growth in 2022.  He expects a pathway for the company’s remaining pieces to deliver 5% earnings growth and over 10% free cash flow growth through 2025. The remaining AT&T is trading at a 1-2 times EBITDA discount to Verizon (VZ) and T-Mobile (TMUS) despite a prospective yield of 6% that “should be securely covered.”

Where to invest $1,000 right now...

Before you consider buying Jabil Circuit, you'll want to see this.

Investing legend, Keith Kohl just revealed his #1 stock for 2022...

And it's not Jabil Circuit.

Jeff Bezos, Peter Thiel, and the Rockefellers are betting a colossal nine figures on this tiny company that trades publicly for $5.

Keith say’s he thinks investors will be able to turn a small $50 stake into $150,000.

Find that to be extraordinary?

Click here to watch his presentation, and decide for yourself...

But you have to act now, because a catalyst coming in a few weeks is set to take this company mainstream... And by then, it could be too late.

Click here to find out the name and ticker of Keith's #1 pick...