Check out today's top analyst calls from around Wall Street, compiled by The Fly.
DOMINANT SHARE POSITION INCREASING: Bernstein analyst Mark Shmulik upgraded Amazon.com (AMZN) to Outperform from Market Perform with an unchanged price target of $3,400. The analyst noted that recent work suggests that Amazon is positioned to increase its "dominant share position" when the return to physical stores occurs. Further, Amazon has also "quietly made substantial inroads" into grocery and shopping verticals, the analyst pointed out. Further, Shmulik argued that Amazon.com shares have sold off 16% in the last couple of weeks, creating an "attractive entry point." The analyst also believes the company is well positioned to benefit from the "permanent pull forward" in the hyper-scale cloud market.
BUY PAYPAL, SQUARE: Loop Capital analyst Kenneth Hill initiated coverage of PayPal (PYPL) with a Buy rating and $201 price target. The analyst noted that the stock is his favorite in the Payments fintech universe given the company's ability to "leverage across" its nearly 350M active accounts. Hill further cited PayPal's outperformance during the pandemic, with net new account growth that should fuel future momentum. The analyst added that the company can further enhance its in-store experience while monetizing digital wallets to a greater degree.
Meanwhile, Hill also initiated coverage of Square (SQ) with a Buy rating and $169 price target. The analyst sees a great deal of upside ahead for the company, driven by further investment in the business and monetization of the Cash App. On the Seller side, the SMB network should "hold in well and continue a sustained recovery," he added.
DIRECT BENEFICIARY OF COVID: DA Davidson analyst Hannah Baade initiated coverage of Teladoc (TDOC) with a Buy rating and $250 price target. The analyst noted that the company is a direct beneficiary of COVID-19, with telehealth utilization rates "soaring" to 16% from historical rate of below 1%. Baade added that Teladoc is now growing over 60% organically, while its acquisitions have expanded its footprint and generated leverage to "popular direct-to-consumer markets." The analyst further stated that the company's third quarter guidance was "conservative," setting up a "likely" beat.
LONG RUNWAY FOR GROWTH: Goldman Sachs analyst Daniel Powell upgraded Carvana (CVNA) to Buy from Neutral with a price target of $205, up from $178. The analyst sees a "long runway for growth" in the online automotive sales category and believes valuations have "over-reacted" to the downside as his gross profit estimates have moved higher. COVID-19 will accelerate the shift online in used autos, and Carvana will drive this shift leveraging national scale to aggregate demand in a "highly fragmented" market and take share from the "long-tail of small dealers," Powell told investors in a research note. The current pullback in the stock warrants stepping in with a "risk/reward skewed meaningfully to the upside" for the secular winner, he added.
SELL PROGRESSIVE, BUY ALLSTATE: Keefe Bruyette analyst Meyer Shields downgraded Progressive (PGR) to Underperform from Market Perform with an unchanged price target of $87. The analyst recommended a pair trade within personal auto, upgrading Allstate to Outperform from Market Perform and downgrading Progressive to Underperform from Market Perform, primarily reflecting the shares "near-record valuation gap." Progressive currently trades at 17.6-times the Street's 2021 estimated earnings, 223% of Allstate's 7.9-times price-to-earnings multiple, Shields told investors in a research note. This is versus the 10-year average relative multiple of 157%. The analyst thinks the current valuation gap underestimates the strategic benefits of Allstate's increasing focus on the independent agency channel and overestimates Progressive's 2021 earnings potential as it lowers personal auto rates.
