Slack downgrade and Quest Diagnostics upgrade also among notable calls
Check out today's top analyst calls from around Wall Street, compiled by The Fly.
'STRONG' ADVERTISER ACTIVITY: Truist analyst Youssef Squali upgraded Snap (SNAP) to Buy from Hold with a price target of $43, up from $25, after it third quarter earnings beat. The analyst noted that the quarter showed a "strong" advertiser activity, with the company looking to have made it back "to the other side of the pandemic" earlier than expected. Squali added that Snap's results outperformed expectations "on all metrics," with strong user growth and monetization reflecting the company's "improvements in the app infrastructure and accelerated product cadence for consumers."
BUY PINTEREST: Bank of America analyst Justin Post upgraded Pinterest (PINS) to Buy from Neutral with a $58 price target after Snap announced third quarter revenues that were significantly above consensus, which he reads as another sign of a strong online advertising rebound. While he has been hesitant on Pinterest's valuation and "uneven growth," Post said that advertising checks give him confidence in the company's strong user intent and ad platform innovation.
Goldman Sachs analyst Heath Terry also upgraded Pinterest to Buy from Neutral with a price target of $61, up from $37. Based on current app download data, Pinterest's "strong" user growth continued through third quarter, Terry told investors in a research note. The analyst noted that Feld checks, along with Snap's third quarter results, suggest that advertiser demand strengthened over the course of the quarter, particularly for smaller platforms like Pinterest, Twitter (TWTR), and Snap. Terry believes Pinterest's long-term monetization opportunity should drive further outperformance of the shares given the "early stage nature" of the company's advertising technology and sales investments, particularly outside the U.S.
RISING COMPETITIVE RISK: Morgan Stanley analyst Keith Weiss downgraded Slack Technologies (WORK) to Underweight from Equal Weight with a $27 price target. While Slack saw an uptick in engagement amid the current work from home environment, Weiss is increasingly concerned around Slack's ability to convert that customer interest into stronger billings. Meanwhile, customers that have standardized on Microsoft (MSFT) Teams "are not looking back" and the ubiquity of Zoom (ZM) has translated to a rising number of CIOs expressing plans to standardize on Zoom for Team Collaboration, said Weiss, who also points out added Slack competition from Google's (GOOGL) Workspace offering gaining momentum.
KEY ROLE IN COVID RESPONSE: Argus analyst Jasper Hellweg upgraded Quest Diagnostics (DGX) to Buy from Hold with a $135 price target. The analyst noted that the company is playing a key role in COVID-19 response, launching a range of new diagnostic tests and testing methods that can increase capacity and reduce the time required to obtain results. Hellweg also raised his fiscal year 2020 earnings per share view to $8.22 from $4.28 and fiscal year 2021 to $9.12 from $6.59 while lifting his long-term earnings growth forecast to 9% from 7%.
'GOOD TRENDS' FOR PAYCOM: RBC Capital analyst Alex Zukin upgraded Paycom (PAYC) to Outperform from Sector Perform with a price target of $450, up from $305. The analyst pointed to "continued improvement" in the economic environment and rising employment levels offering potential for the company to beat third quarter expectations. Zukin also cited website data indicating "good trends" for Paycom, along with the prospects of a "significantly stronger" 2021.
Keywords: analyst, analyst calls, upgrades, downgrades, initiations, research, wall street