Amid the market volatility, analysts say buy these stocks in Wednesday's calls of the day: Zynga, Kroger, Hershey, Ralph Lauren & more

Published Wed, Mar 18 202011:24 AM EDT

Key Points

Bank of America upgraded Tesla to neutral from underperform.
Morgan Stanley downgraded Coca-Cola and Monster Beverage to equal weight from overweight.
Bank of America downgraded Levi Strauss to neutral from buy.
Bank of America upgraded Ralph Lauren to buy from neutral.
Credit Suisse upgraded Hershey to outperform from neutral.
Telsey upgraded Kroger to outperform from market perform.
Bernstein upgraded Campbell Soup, General Mills, Conagra Brands and Kellogg to market perform from underperform.
Oppenheimer initiated Zynga as outperform.
Oppenheimer initiated Sony as outperform.
Credit Suisse named Constellation Brands a top pick.
JPMorgan upgraded D.R. Horton to overweight from neutral and downgraded Lennar and PulteGroup to neutral from overweight.
Credit Suisse upgraded Walmart to outperform from neutral.
BTIG upgraded Dunkin' Brands to buy from neutral.
Goldman Sachs added O'Reilly Automotive to the conviction buy list.
Barclays downgraded American Airlines to equal weight from overweight.
Longbow upgraded Domino's to buy from neutral.
Nomura Instinet initiated Stitch Fix and The RealReal as buy.
UBS upgraded Caterpillar to neutral from sell.

The market continues to be volatile but Wall Street analysts say there are plenty of buying opportunities. In Wednesday's calls of the day, companies getting upgrades include Ralph Lauren, Kroger, Hershey and more. (This story is for CNBC PRO subscribers only.) Here are the biggest calls on Wall Street on Wednesday: Bank of America upgraded Tesla to 'neutral' from 'underperform' Bank of America upgraded the stock mainly on valuation. "Following the halving of TSLA stock from $900/sh+ a month ago to current ~$400/sh levels, we are upgrading our investment rating on TSLA stock from Underperform to Neutral based solely on valuation. While we continue to view TSLA as a trailblazer in the electric vehicle (EV) market, we believe investor optimism around the company and its business/financial future remains overhyped and litany of risks (see below) remain underappreciated, which keeps us relatively cautious on the stock despite the upgrade." Morgan Stanley downgraded Coca-Cola and Monster Beverage to 'equal weight' from 'overweight' Morgan Stanley downgraded the beverage makers and said the coronavirus is creating short-term risk. "Government-mandated closures for businesses, and restrictions on public gatherings, with COVID-19 creating short-term risk for away from home beverage consumption for Coke and Monster . We are also moving our rating on the Beverage industry to in-line from attractive." Bank of America upgraded Ralph Lauren to 'buy' from 'neutral' and downgraded Levi Strauss to 'neutral' from 'buy' Bank of America upgraded Ralph Lauren and said the stock's downside risk was priced in. The firm also downgraded Levi Strauss and said it saw "multiple expansion" in the shares as less likely near-term. "We're also upgrading RL to Buy (from Neutral) and downgrading LEVI to Neutral (from Buy). For RL, we think the potential downside risk is largely priced in with shares at 4x our C21E EV/EBITDA, RL's margins should find some downside support from cost cutting initiatives and it stands out for strong balance sheets. For Levi's, we like its long-term growth story and strong brand momentum, but with shares at 12.7x P/E we think multiple expansion is less likely near-term." Credit Suisse upgraded Hershey to 'outperform' from 'neutral' Credit Suisse said Hershey was "highly resilient" in an economic recession. " Hershey doesn't fit the profile of a pantry-loading stock, but we like its long-term profile because 1) It is a highly durable, high quality franchise (2-4% growth) that has proven highly resilient to economic recessions. 2) The business has more pricing power than any food company we cover. We expect another price increase this year. 3) Hershey's recent investments in media, supply chain, and category management have enhanced its competitive advantages. 4) The balance sheet is highly flexible with debt/EBITDA at only 2.1x." Telsey upgraded Kroger to 'outperform' from 'market perform' Telsey said it thought the company would strongly benefit from the surge in demand for food and other items due to the coronavirus. "In the near term, Kroger's ID sales, ex-fuel, and EPS should strongly benefit from the surge in demand for food and household consumables related to COVID-19. Our industry channel checks indicate strong double-digit increases in grocery sales since the beginning of March when COVID-19 began to accelerate in the US. Kroger (and all grocery-related retailers) should benefit from the spike in volume related to the increase in at-home consumption as consumers socially distance." Bernstein upgraded Campbell Soup, General Mills, Conagra Brands and Kellogg to 'market perform from 'underperform' Bernstein said "pantry loading" could cause near-term upside for several packaged food companies. "We are tactically upgrading CAG , CPB , GIS , K , and SJM from Underperform to Market-Perform, expecting a coronavirus-related sales lift and broader economic uncertainties to support stock valuations in the near term. However, once broader market recovery begins in earnest and the near-term fundamental benefits have played out, we believe there could be a another more tactical opportunity to become more negative as longer term structural pressures resume, and the sector tends to underperform the market on a one-year forward basis once the economy is well into recession." Oppenheimer initiated Zynga as 'outperform' Oppenheimer initiated coverage of the social game developer and said it's bullish on the company due to its "history, scale, and strategy." "Its franchises include Zynga Poker , Words with Friends , CSR Racing , Merge Dragons!, and Empires & Puzzles . We believe ZNGA is unique in capturing strong fundamental growth in the mobile gaming space on leveraging its core competency of customer acquisition/monetization in both organic titles, licensed IP, and further industry consolidation. While we believe mobile gaming is very difficult to predict due to low barriers to entry and changing competitive dynamics, Zynga's history, scale, and strategy should lower the uncertainty." Oppenheimer initiated Sony as 'outperform' Oppenheimer said in its initiation of the media giant that it has a dominating gaming platform and the world's largest music catalog. " Sony has helped to define the media entertainment experience for generations of consumers since its founding over 70 years ago. It still has a leading role in shaping the end-to-end digital experience in video games, music, movies/TV and image capturing. Despite well-known challenges in consumer electronics, SNE executed a respectable turnaround that produced a dominating gaming platform and the world's largest music catalog. Its semiconductor business continues to lead high-end CMOS image sensor market. Its Pictures business stabilized with notable box office successes and more rational cost controls. We expect steady improvement in revenue growth, margins, and cash flows as Sony progresses through its digital transformation. Credit Suisse named Constellation Brands a 'top pick' Credit Suisse named the beverage maker as a top pick and said it saw an attractive entry point. "Shares down -40% vs. Feb 19th market peak which is 15pp and 29pp worse than the S & P and XLP over the same period. ... Reasons for weakness: 1. Leverage; 2. On-premise exposure; 3. Wine divesture delay; 4. Premium portfolio skew (recession concerns); 5. Tilray equity offering (Canopy read-thru). 4. With 4-turns net debt leverage, STZ shares have sold off roughly in-line with levered equities in Beverage/HPC." JPMorgan upgraded D.R. Horton to 'overweight' from 'neutral' and downgraded Lennar and PulteGroup to 'neutral' from 'overweight' JPMorgan changed its ratings on several homebuilders and said it sees economy heading into a "likely recession." "With the growing impact of COVID-19 increasingly pointing to a likely recession, we expect the current challenging backdrop to remain in place for at least the next 1-2 quarters and hence adjust our overall approach to the homebuilding sector. As such, despite our universe's stunning 56% decline since Feb. 20 (S & P down 25%), we expect the stocks to continue to reflect recession-level valuations over the near to medium term – our universe is currently trading at roughly 0.8x P/B – as we anticipate earnings visibility to remain materially impaired particularly as demand will likely decline solidly over the next several months. ... Specifically, we upgrade DHI and NVR to Overweight from Neutral, while downgrading LEN and PHM to Neutral from Overweight. " Credit Suisse upgraded Walmart to 'outperform' from 'neutral' Credit Suisse said it sees a more defensive near-term view for the retail giant. "We see this unfortunate period accelerating structural changes in consumer shopping, possibly by 5+ years, as they are introduced to new retailers and new shopping methods incl. online grocery and delivery, and further consolidate purchases at multi-category, multi-channel retailers. This change should be sticky, and favor WMT , as it's invested in its infrastructure, technology and people, to evolve its model. In our view, WMT is no longer just an early cycle, defensive, low price player, as in prior cycles. Its market share growth story and this period should validate the changes it's made. BTIG upgraded Dunkin' Brands to 'buy' from 'neutral' BTIG said investors should increase exposure to strong brands like Dunkin'. "The coronavirus outbreak is taking a mounting toll on restaurant operators big and small with significant sales disruptions from mandated closings, reduced service and social distancing. The duration of this impact remains impossible to predict though we believe investors should increase exposure to companies with strong brands, balance sheets and cash conversion in the current environment." Goldman Sachs added O'Reilly Automotive to the 'conviction buy list' Goldman said that O'Reilly is one of the most defensive names in the auto parts sector. "The auto part retailers are one of the most defensive names in the hardlines space when there is a slower macroenvironment: During the last recession, auto parts retailers (AAP, AZO, ORLY )comped +3% YoY on average during 2008-09, vs. real GDP decline of -1.3% YoY. Webelieve this dynamic is attributed to the fact that during tougher macro-economicconditions, consumers trade down, defer new car purchases, and as such,wear-and-tear on vehicles goes up, driving increased demand for auto parts retail,especially Do-It-Yourself." Barclays downgraded American Airlines to 'equal weight' from 'overweight' Barclays downgraded the airline and said liquidity remains an issue during the coronavirus crisis. " American 's aggressive balance sheet management has placed the company in a difficult predicament. While the extent of the COVID-19 impact on travel remains unknown, a prolonged downturn lasting two quarters could force the need for high cost capital at American, including likely equity dilution; we downgrade the shares to Equal Weight. It is with significant consideration that we downgrade an airline in the midst of one of the market's most challenging periods in history. However, what would have seemed outlandish just a few weeks ago has become reality: it appears close-in travel demand is nearing a standstill. We now model 2Q20 revenue to decline nearly 90% with a conservative recovery modelled through 2021." Longbow upgraded Domino's to 'buy' from 'neutral' Longbow said Domino's was "well-positioned" to benefit during the coronavirus crisis. "We are upgrading the shares of DPZ this morning to a BUY rating with a 12-month target price of $358 based on 32x our 2020 EPS estimate. Domino's is well positioned to benefit after consumers adjust to a new normal amidst the COVID-19 outbreak. DPZ's delivery and carryout models are arguably a safer choice for consumers even in comparison to preparing food at home. Heading into likely widespread store closures in the U.S. restaurant industry, Domino's is far better positioned to weather any near-term pressure than most of its peers." Nomura Instinet initiated Stitch Fix and The RealReal as 'buy' Nomura initiated the online personal styling retailers and said they had long-term earnings power. "We are initiating coverage of REAL with a Buy rating and $16 target price, RVLV with a Neutral rating and $11 target price, and SFIX with a Buy rating, and $18 target price . Investment points include: (1) these companies hold a small share in a growing TAM which they are helping to create; (2) unique barriers to entry and points of differentiation that capitalize on customers' evolving needs; (3) above-average top-line growth which we expect will continue over the next several years; (4) significant long-term earnings power (see pages 7-8); and (5) lower valuations, as recent multiples have re-rated down, even prior to the recent market turmoil." UBS upgraded Caterpillar to 'neutral' from 'sell' UBS said it saw a more balanced risk/reward for shares of the stock. "A year ago, consensus estimates had CAT growing earnings 13% in 2020, which we thought was too optimistic. Current consensus estimates (before likely further revisions) reflect an 18% decline. We think market expectations are pricing in a steeper decline, and are now more realistic than a year ago when we double downgraded to Sell. With the recent move, we see risk/reward as closer to fairly balanced. We believe there is some further near term downside risk to the stock as estimates get cut, but we think that will be well understood by the time the company reports."

Tesla Motors CEO Elon Musk speaks to the media next to its Model S.

Nora Tam | South China Morning Post | Getty Images

The market continues to be volatile but Wall Street analysts say there are plenty of buying opportunities.

In Wednesday's calls of the day, companies getting upgrades include Ralph Lauren, Kroger, Hershey and more.

(This story is for CNBC PRO subscribers only.)

Here are the biggest calls on Wall Street on Wednesday:

Bank of America upgraded Tesla to 'neutral' from 'underperform'

Bank of America upgraded the stock mainly on valuation.

"Following the halving of TSLA stock from $900/sh+ a month ago to current ~$400/sh levels, we are upgrading our investment rating on TSLA stock from Underperform to Neutral based solely on valuation. While we continue to view TSLA as a trailblazer in the electric vehicle (EV) market, we believe investor optimism around the company and its business/financial future remains overhyped and litany of risks (see below) remain underappreciated, which keeps us relatively cautious on the stock despite the upgrade."

Morgan Stanley downgraded Coca-Cola and Monster Beverage to 'equal weight' from 'overweight'

Morgan Stanley downgraded the beverage makers and said the coronavirus is creating short-term risk.

"Government-mandated closures for businesses, and restrictions on public gatherings, with COVID-19 creating short-term risk for away from home beverage consumption for Coke and Monster. We are also moving our rating on the Beverage industry to in-line from attractive."