Here are Wednesday's biggest analyst calls of the day: SmileDirectClub, Nike, Domino's & more

Published Wed, Feb 26 20209:13 AM EST

Key Points

HSBC downgraded Nike to hold from buy.
Argus upgraded Domino's Pizza to buy from hold.
SunTrust downgraded D.R. Horton, PulteGroup, & KB Home to hold from buy.
Baird named Capital One as a fresh pick.
Jefferies downgraded SmileDirectClub to hold from buy.

Here are the biggest calls on Wall Street on Wednesday: HSBC downgraded Nike to 'hold' from 'buy' HSBC downgraded the stock on concerns about the coronavirus and lack of margin growth. "However, in light of Nike 's recent press release concerning the impact of the coronavirus and the fact that despite this short-term slowdown (Greater China was c25% of brand NIKE EBIT before eliminations last year) and the recent USD strength, we are surprised that shares are only trading 2% below their all-time highs. The group will publish Q3 results ended February in late March, and we doubt this will be supportive." Argus upgraded Domino's Pizza to 'buy' from 'hold' Argus upgraded the pizza restaurant chain and said it liked the company's strong store level cash flows. "We expect the addition of 250 U.S. stores and 856 international locations in 2019 to benefit revenue over the next 12 months. In addition, we expect DPZ to broaden its technological lead over competitors. We also like the company's stable comps and strong store level cash flows, which are much higher than those of other franchisees. We think Domino's Pizza can continue to grow and gain market share in a fragmented market (i.e., mom and pop pizzerias) more rapidly than its current valuation suggests. Our long-term rating also remains BUY." SunTrust downgraded D.R. Horton, PulteGroup and KB Home to 'hold' from 'buy' SunTrust downgraded the homebuilders and said it sees a more balanced risk/reward over the next six to nine months. "We downgrade US homebuilders ( DHI , KBH , PHM ) to Hold from Buy as our thesis has played out better than anticipated, and see a more balanced risk/return profile over the next 6-9 months. As we look to 2020, the fundamental backdrop for the builders seems close to perfect which could support positive earnings revisions ... but it's tough to see fundamentals improving further, and we suspect new home sales will decelerate in 2H20 amid tougher comparisons. This setup seems more likely to pressure valuation than support continued multiple expansion." Baird named Capital One as a 'fresh pick' Baird named the bank holding company as a fresh pick and said it liked the risk/reward. "The BKX has sold off nearly 10% in the past few days with the sharp decline in interest rates. While the lasting impact from COVID-19 is unknown, the focus on rates and sharp risk-off trade in banks are among the rising indications of fear in the group. There are more dislocations emerging, and we would be adding to COF positions with shares trading at ~1.1x TBV and near-term fundamentals likely to remain solid." Jefferies downgraded SmileDirectClub to 'hold' from 'buy' Jefferies downgraded the teledentistry company after its earnings miss and said it was concerned the company's core U.S. market was maturing too fast. "We'd grade SDC to Hold & cut our '19-22 rev CAGR to +30% post a weak 4Q/'20 guide & material reset to its mid-term growth outlook, which leave us less confident about its ability to balance growth & profitability. We are also concerned that its core US market is maturing faster than expected. While valuation isn't demanding, climbing out of the penalty box may take a few Qs of improved execution."

Workers install a Nike logo lamp outside the Wukesong Arena in Beijing, August 28, 2019.

Tingshu Wang | Reuters

Here are the biggest calls on Wall Street on Wednesday:

HSBC downgraded Nike to 'hold' from 'buy'

HSBC downgraded the stock on concerns about the coronavirus and lack of margin growth.

"However, in light of Nike's recent press release concerning the impact of the coronavirus and the fact that despite this short-term slowdown (Greater China was c25% of brand NIKE EBIT before eliminations last year) and the recent USD strength, we are surprised that shares are only trading 2% below their all-time highs. The group will publish Q3 results ended February in late March, and we doubt this will be supportive."

Argus upgraded Domino's Pizza to 'buy' from 'hold'

Argus upgraded the pizza restaurant chain and said it liked the company's strong store level cash flows.

"We expect the addition of 250 U.S. stores and 856 international locations in 2019 to benefit revenue over the next 12 months. In addition, we expect DPZ to broaden its technological lead over competitors. We also like the company's stable comps and strong store level cash flows, which are much higher than those of other franchisees. We think Domino's Pizza can continue to grow and gain market share in a fragmented market (i.e., mom and pop pizzerias) more rapidly than its current valuation suggests. Our long-term rating also remains BUY."