Check out today's top analyst calls from around Wall Street, compiled by The Fly.
BUY GAP: JPMorgan analyst Matthew Boss upgraded Gap (GPS) to Overweight from Neutral with a price target of $30, up from $22. The analyst noted that the stock has underperformed the S&P 500 by 50% the past three years and it trading at five-times EBITDA, commensurate with "distressed retail." Boss views Old Navy as a beneficiary of retail closures and disruption post pandemic, and sees zero value being attributed to the Gap and Banana Republic brands at current share levels.
SELL FOOT LOCKER: Piper Sandler analyst Erinn Murphy downgraded Foot Locker (FL) to Underweight from Neutral with a price target of $25, down from $29. The analyst sees "muted" near-term visibility as COVID cases accelerate into year-end around the globe. Over 10% of Foot Locker's global fleet is now shuttered and there are "several macro unknowns" on the holiday shopping season, Murphy told investors in a research note. Longer-term, the analyst sees the company being pressured by Nike (NKE) going direct-to-consumer and she worries that the ongoing shift to digital will pressure Foot Locker's ability to recover to pre-COVID operating margins.
'DISAPPOINTING' GUIDANCE: Credit Suisse analyst Robert Moskow downgraded Kellogg (K) to Neutral from Outperform with a price target of $68, down from $77. The analyst expects management to guide to a year of elevated investment in 2021 "without promising elevated sales growth." This makes it difficult to view Kellogg as a net beneficiary of the market changes caused by the COVID-19 pandemic longer term, Moskow told investors in a research note. The analyst expects "disappointing guidance" for 2021 for Kellogg and believes management will point to tough comparisons in North America and Mexico.
OPPORTUNITY TO TAKE SHARE: Baird analyst David Tarantino upgraded Texas Roadhouse (TXRH) and Darden (DRI) to Outperform from Neutral. Tarantino views both companies as best-in-class operators that can capitalize on an environment that is likely to include normalizing consumer traffic patterns and reduced competition over the next 12-24 months. While plenty of risks remain, the analyst expects investors will be willing to look past any near-term setbacks and focus on the opportunity for these companies to take share as 2021 and 2022 unfold.
ON THE SIDELINES: Wells Fargo analyst Jim Birchenough initiated coverage of Moderna (MRNA) with an Equal Weight rating and $92 price target. While initial COVID vaccine results suggesting 95% reduction in infection risk are "compelling and should support a strong public health benefit," important questions remain regarding product potency and durability of protection over time, Birchenough told investors in a research note. The analyst also sees risk from potential supply chain, distribution, and competitive pressures.
