Here are the biggest calls on Wall Street on Tuesday: Goldman Sachs upgrades Capri Holdings to buy from neutral and downgrades Ralph Lauren to sell from buy Goldman said in its upgrade of Capri that it sees margin improvements for brands like Michael Kors. The firm also downgraded Ralph Lauren and said it sees lackluster earnings growth. "Strengthening momentum at Versace and sustainable margin improvements at Michael Kors supports growth and valuation upside. Further, we see idiosyncratic opportunity from a new management team and capital allocation. … RL-Brand momentum indicators are fading, and we anticipate a tougher sales growth environment to meet a rising cost environment, driving lackluster earnings growth." Read more about this call here . Evercore ISI downgrades Dell to in line from outperform Evercore said in its downgrade of the stock that it sees a more balanced risk/reward. "Following the completion of the VMW spin + recent debt repayments, we update our rating of DELL to In Line and keep our target price unchanged at $63. Effectively, DELL has seen near 60% appreciation in CY21 and we think incremental upside could be more muted especially as we contend with a moderating PC market especially in the out quarters." Morgan Stanley reiterates Disney as overweight Morgan Stanley kept its buy rating on Disney and said it sees more upside in the stock in 2022. "As part of our Year-Ahead Outlook, we 1) present the key questions weighing on sentiment, 2) take a deep dive into content spending, and 3) update our forecast. While we trim our legacy earnings outlook, we think shares have overreacted and see over 20% upside in shares from here, remain OW." Bank of America upgrades Apple to buy from neutral Bank of America said in its upgrade of the tech giant that it's bullish on the company's entrance into virtual reality. "We expect Apple to introduce an augmented reality/virtual reality (AR/VR) headset, either by the end of 2022 or early 2023." Read more about this call here. Goldman Sachs downgrades Big Lots and Ollie's to sell from neutral Goldman downgraded the retail discount stores due to lackluster traffic and inventory uncertainty. "Looking ahead, we anticipate further store traffic challenges as the low-end consumer likely slows discretionary spending as real wages are squeezed, especially in BIG' s key categories of furniture and home, and focuses shopping trips on more essential retailers. … While OLLI has historically demonstrated the ability to shift tactically into various categories for opportunistic buys given its vendor relationships, we do not anticipate the same optionality at this time given lean inventory across all categories." Goldman Sachs initiates coverage of Bath & Body Works as buy Goldman said it likes the company's high margins. "We initiate on BBWI with a Buy rating and a 12-month, $93 target price. We see BBWI as a strong brand with high awareness and customer retention, which supports omnichannel engagement and high margins." Goldman Sachs initiates coverage of CVS, UnitedHealth and Anthem as buy Beginning its coverage of CVS, UnitedHealth and Anthem , Goldman said that the set-up is attractive for managed care in 2022. "We have a positive outlook for the sector and see potential for 13% annual EPS growth for the large-cap MCOs over the next two years ('22-'23), more than double S & P EPS growth of 6%. The growing momentum behind value-based care (VBC) and efforts to diversify into provider services position the MCOs well to begin to bend the medical cost curve and capitalize on new profit streams." Morgan Stanley upgrades Unity Software to overweight from equal weight Morgan Stanley said in its upgrade of the video game software company that it likes Unity' s ad network. "We upgrade U to OW with a $185 PT as we see its unified game engine and ad network as the leading 'picks and shovels' offerings for gaming and interactive content." Bernstein initiates coverage of Hyatt Hotels as outperform Bernstein said that Hyatt is the "the fastest growing hotel group at an unjustified discount." "In the last five years, Hyatt delivered an organic net system growth CAGR of > 7%, beating Hilton (+6%) and Marriott (+5%). This has continued through the pandemic, with Hyatt set to grow fastest in 2021, and has a current pipeline > 40% of its existing footprint, also the highest among peers, meaning growth outperformance is set to continue." Piper Sandler upgrades Beyond Meat to neutral from underweight Piper said in its upgrade of the stock that it's getting optimistic about the alternative meat company's launch in McDonald's in 2022. "A nationwide US launch in MCD appears to be coming in late 1Q22, per our industry contacts, earlier than we anticipated, lifting our 2022 estimates. (Neither MCD nor BYND has announced a launch beyond its initial 8-store test). Price compression remains a risk broadly, both in foodservice and retail, and the margin outlook remains unfavorable." Barclays reiterates Chevron as overweight Barclays kept its overweight rating on the oil and gas giant and said it's "delivering on discipline" with a "strong buyback trajectory." "While CVX is a victim of its own success with both 2022 capex at the low end of the medium-term guidance range and the buyback increase largely anticipated by the market, it reflects investor confidence in management's disciplined approach to the business." Morgan Stanley names Microsoft as a top 2022 idea Morgan Stanley reiterated its overweight rating on shares of Microsoft and said data management should be a "key source of upside" in 2022. "Our new report series dives into Microsoft's key priorities, starting w/ the Data Management. Investors often overlook Microsoft's leading position here; at ~12% of revenue, the strong database demand environment should be a key source of upside entering 2022." Goldman Sachs names McDonald's, Starbucks and Chipotle top 2022 ideas Goldman named several restaurant chains as top picks for 2022 and said it likes companies with "strong digital moats" and free cash flow. "In aggregate, we favor concepts that have (1) strong digital moats to leverage tech integration and consumer insights to drive strategic marketing initiatives, convenience, and service – CMG , SBUX, MCD, WING, (2) have stronger ties to higher-end consumer spending and continued/delayed re-opening – CMG, SBUX, SHAK, DRI, and (3) and franchise concepts where franchisee FCF is strong and benefits from consumer trade-down may be strong — MCD." Morgan Stanley reiterates Tesla and Rivian as top 2022 ideas Morgan Stanley kept its overweight rating on the automakers and said both stocks are compelling heading into 2022. " Rivian's compelling product, strong management, and deterministic access to capital are underpinned by a strategic relationship with AMZN to decarbonize the final mile. We see it as 'the one' that can challenge Tesla. ... Tesla is the leader in EV manufacturing, batteries and autonomy. Embedded within the company is a fast growing, high margin software business that has the potential for highly recurring revenues from its connected car software and services business." Read more about this call here. Evercore ISI names Apple a top 2022 pick Evercore named Apple as a top pick for 2022 and said it sees "sustained upside." "We see room for sustained upside through FY22 as AAPL benefits from multiple tailwinds ranging from sustained iPhone growth (5G SE), monetization of install base across services and wearables, new product launches, and margin expansion. Bull case narrative remains EPS approaches $6.50+ and stock works towards $225+." JPMorgan upgrades CrowdStrike to buy from neutral JPMorgan said in its upgrade of the cyber security company that it sees top-line growth upside. " CrowdStrike has been one of the premier high-growth and premium-multiple names in software for 2020-2021, but the stock valuation has compressed significantly, and we think this provides opportunity for top-line growth to provide performance upside." Barclays reiterates Nike as overweight Barclays said in a note to clients on Tuesday that's it's bullish heading into Nike's earnings report next week. "Long term, we maintain our Overweight and view NKE as one of the post-pandemic brands with even stronger global brand equity, pricing power, and innovation in the product pipeline." Cowen upgrades Planet Fitness to outperform from market perform After a change in analyst coverage, Cowen upgraded the fitness company and said it sees openings and new member growth accelerating to pre-pandemic highs. "We are constructive on the setup into FY22 as PLNT is poised for strong new member growth & openings to accelerate to +200 with pre-pandemic highs in sight. Growing ad fund & industry dislocation should accelerate the flywheel and yield ongoing share growth, pricing power, and ability to reach 4k+ gyms." Read more about this call here. Goldman Sachs names Monster and Constellation Brands as top 2022 picks Goldman named Monster and Constellation as top picks for 2022 and says it likes the limited cost pressure and high pricing power. "As a result, we favor companies with higher pricing power, less relative cost pressure in 2H22, lower trade-down/private label risk, and exposure to improving volume/demand trends as mobility accelerates. In this context our top picks for 2022 are MNST, STZ, PG, OLPX, PM, MDLZ, and BRBR." JPMorgan downgrades Adobe to neutral from overweight JPMorgan downgraded Adobe on valuation. "The reasons for the downgrades include a combination of limited upside to our price targets, valuation in light of risk that interest rates rise in 2022, adjusting discount rates for the current rate environment and re-evaluating reasonable cash flow expectations over our DCF horizon."
Michael Wirth, CEO of Chevron.
Adam Jeffery | CNBC
Here are the biggest calls on Wall Street on Tuesday: