Here are Thursday's biggest analyst calls of the day: Netflix, Chipotle, Best Buy, Wendy's & more

Published Thu, May 14 20209:48 AM EDT

Key Points

Jefferies initiated Netflix as buy.
Credit Suisse upgraded CVS to outperform from neutral.
Evercore ISI upgraded Best Buy to outperform from in line and downgraded Lowe's to in line from outperform.
Piper Sandler raised its price target on Chipotle to $1,100 from $850.
Stephens upgraded Rent-A-Center to overweight from equal weight.
Citi added a positive catalyst watch on LabCorp and Quest Diagnostics.
Bank of America downgraded SmileDirectClub to underperform from buy.
Evercore ISI upgraded Wendy's to outperform from in line.
Susquehanna initiated DraftKings as positive.
Needham initiated SurveyMonkey as buy.

(This story is for CNBC PRO subscribers only.) Here are the biggest calls on Wall Street on Thursday: Jefferies initiated Netflix as 'buy' Jefferies initiated the streaming service and said shares were compelling, among other things. "We see 3 reasons to Buy NFLX today. 1) Addressable market is vastly underappreciated, providing significant runway for continued double digit sub growth. 2) Improving margins with path to sustained positive FCF. 3) Proven ability to create value under evolving landscape. Near-term choppiness is expected, but we advise buying dips and owning shares LT. $520 PT implies ~40x 21E EBITDA, compelling relative to its growth and well below its peak historical multiple." Credit Suisse upgraded CVS to 'outperform' from 'neutral' Credit Suisse said CVS had low valuation and defensive business characteristics. "We believe Aetna's increasing exposure to the fast-growing MA business and greater than market growth in MA provides support to its valuation. In fact, Aetna's MA market share has increased by 300 bps since the end of 2017 to roughly 11% which compares to market share increases for the two largest MA plans (UNH and HUM, which increased 140 bps and 150 bps, respectively). Further, CVS has remained on track-to-ahead of its synergies, modernization, and transformation initiatives, which could provide future upside." Evercore ISI upgraded Best Buy to 'outperform' from 'in line' and downgraded Lowe's to 'in line' from 'outperform' Evercore ISI said in its upgrade of Best Buy that it believes earnings per share can "recover" to 2019 levels by 2021. The firm also downgraded Lowe's mainly on valuation. "Our annual survey of over 2,000 U.S. consumers anchors our forecasts for the massive channel shifts in U.S. retail. In this year's survey, we found trends BEFORE COVID-19 shutdowns which could help pick winners and losers on the other side. Two big takeaways: the Multichannel Explosion and importance of Trust were in place before the consumer behavior changes of our M.E.N.D. framework even begin to take hold. Stock Implications: we are downgrading ytd outperformers LOW and W to In Line, while upgrading multichannel leader and ytd laggard Best Buy to Outperform." Piper Sandler raised its price target on Chipotle to $1,100 from $850 Piper raised its price target on the stock to a Street high and said management continues to be "proactive" and flexible around changing consumer behavior. "Earlier this week we hosted a 'virtual' discussion with the Chipotle management team including CEO, CFO, and Global Head of IR. Fundamentally the company has the ability to pivot and the financial resources required to carry out its long-term growth strategy. From a sentiment perspective, the tone of the vast majority of questions was positive. In terms of industry derivatives, the durability of recent comp trend improvements was debated. In an effort to remain balanced, it is important to note delivery mix may have different margins implications, commodities remain volatile, and very near term growth may be disrupted due to permitting issues." Stephens upgraded Rent-A-Center to 'overweight' from 'equal weight' Stephens said in its upgrade of the company that it's largely insulated from the coronavirus crisis. "We upgrade RCII shares to Overewight/Vol. from Equal-Weight/Vol. and increase our target price to $33 from $23. Our target is 12x our new 2021E EPS, which we increase by 44%. Rent-A-Center is the first to demonstrate that COVID-19 has largely unaffected its earnings trajectory and that a recession presents opportunities for a strong 4Q20 and 2021." Citi added a 'positive catalyst watch' on LabCorp and Quest Diagnostics Citi said it was bullish on the lab testing companies as coronavirus testing continues to ramp up. "We remain optimistic around the potential volume ramp related to COVID-19 for both molecular and serology testing. In this note we provide updates on current capacity, expected capacity in the coming weeks, and current test volume being seen by DGX and LH . Additionally we are awaiting CMS release of serology reimbursement that we believe could be more favorable compared to our initial estimate of $15 per test. This coupled with continued headlines of potentially greater funding for lab testing could create favorable tailwinds and potential catalysts for the national labs, in our opinion." Bank of America downgraded SmileDirectClub to 'underperform' from 'buy' Bank of America double downgraded the teledentistry company after its earnings report and said it sees a slower recovery due to the coronavirus. "However, we still see the business model as being closely tied to advertising spend to drive volumes, and with suppressed spend levels and other overhangs (ie, recessionary environment curtailing discretionary spending), we see an even slower recovery in 2020 than we had previously projected, with added risk of an air pocket in demand. Our new estimates are for $585mn in sales in 2020, and $835mn in 2021, and with little reason to argue for multiple expansion here, we downgrade SDC to Underperform from Buy with a $7 PO from $10." Evercore ISI upgraded Wendy's to 'outperform' from 'in line' Evercore ISI upgraded the stock on the strength of the company's breakfast launch. "We are increasing our FCF estimates in 2021 and longer-term to reflect the success of Wendy's US breakfast launch. With restaurant breakfast occasions in America down 50%+ in recent weeks, Wendy's weekly breakfast sales of just under $3,000 has been very impressive. To put this in perspective, we had anticipated a bull case breakfast scenario of $3,500/week—something that if sustained could warrant a $27 upside scenario target. This upside scenario could be within reach if breakfast sales continue to build with the "reopening" of America, and if the company does not need to spend $40M+ in annual advertising subsidy in 2020 or 2021." Susquehanna initiated DraftKings as 'positive' Susquehanna initiated the fantasy sports betting and contest provider and said it's the best "pure-play" online gambling platform. "We are initiating coverage of DKNG with a Positive rating and a $33 price target. DraftKings is the first 'pure-play' online gambling platform with scale that is exclusively focused on the US TAM, a market we estimate could easily be worth $20B-$40B in 10 years. DKNG is a market leader in the US with significant advantages afforded it after seven years of operating experience, including a database of 12m registered users (~8% of which are active monthly vs. 36% that are active during the year) and an existing customer acquisition/retention engine and critical regulatory apparatus in 43 states." Needham initiated SurveyMonkey as 'buy' Needham initiated the online survey company and said it had "strong brand awareness" among other things. " SurveyMonkey is expanding beyond its consumer survey origins via the development of enterprise-grade applications to help its People Powered Platform comprehensively penetrate enterprise organizations. ... .Strong brand and enterprise focus creates durable growth opportunity in core Surveys business. SurveyMonkey has built strong brand awareness with consumers over the past 20 years. The business boasts over 17 million active users, and has converted nearly 750k of them to paid users via a low-/no-touch self-service model."

A driver unloads merchandise in New Rochelle, New York, March 16, 2020.

Angus Mordant | Bloomberg | Getty Images

(This story is for CNBC PRO subscribers only.)

Here are the biggest calls on Wall Street on Thursday:

Jefferies initiated Netflix as 'buy'

Jefferies initiated the streaming service and said shares were compelling, among other things.

"We see 3 reasons to Buy NFLX today. 1) Addressable market is vastly underappreciated, providing significant runway for continued double digit sub growth. 2) Improving margins with path to sustained positive FCF. 3) Proven ability to create value under evolving landscape. Near-term choppiness is expected, but we advise buying dips and owning shares LT. $520 PT implies ~40x 21E EBITDA, compelling relative to its growth and well below its peak historical multiple."

Credit Suisse upgraded CVS to 'outperform' from 'neutral'

Credit Suisse said CVS had low valuation and defensive business characteristics.

"We believe Aetna's increasing exposure to the fast-growing MA business and greater than market growth in MA provides support to its valuation. In fact, Aetna's MA market share has increased by 300 bps since the end of 2017 to roughly 11% which compares to market share increases for the two largest MA plans (UNH and HUM, which increased 140 bps and 150 bps, respectively). Further, CVS has remained on track-to-ahead of its synergies, modernization, and transformation initiatives, which could provide future upside."