Analyst Upgrades / Downgrades – 07/27/23

Upgrades

$BA – The Boeing Company
Recent News
Boeing received a notable upgrade from BofA, shifting its rating from Neutral to Buy. The upgrade was backed by the belief that the company has passed the worst phase and is now amidst a post-COVID commercial recovery, with passenger demand rebounding to pre-pandemic levels. The analyst expressed confidence in Boeing’s potential for growth, highlighting the strong demand that could allow the company to expand even if it maintains its approximately 40% share of the narrowbody market. Additionally, the analyst expects Boeing’s 787 to remain the preferred choice in the widebody market, retaining a significant portion compared to its competitors. The new price target of $300, up from the previous $225, reflects this optimistic outlook. Following Boeing’s better-than-expected Q2 results, including a narrower loss, impressive cash flow, and reaffirmed production guidance, the company’s stock surged 8.7% to $232.80 on Wednesday, further affirming the positive sentiment surrounding Boeing’s recovery prospects.

Brokerage Firm: BofA Securities
Rating Change: Neutral >> Buy
Price Target: $225.00 >> $300.00
Shares Outstanding: 602.50M Share Float: 601.06M

$META – Meta Platforms, Inc.
Recent News
Wells Fargo made a significant upgrade to the stock, raising it from Equal Weight to Overweight and setting a new price target of $389, up from $313. The decision was motivated by the company’s impressive performance in the second quarter, where it reported a revenue of $32 billion, representing an 11% year-over-year increase and surpassing the Street’s consensus estimate of $31.12 billion. Additionally, Meta’s earnings per share for the same period came in at $2.98, beating the Street’s consensus estimate of $2.91. Wells Fargo cited Meta’s accelerating tailwinds and “de-risked” 2024 guidance as key factors behind the upgrade. The positive outlook from Wells Fargo also coincides with other analysts making similar adjustments to their price targets on Meta following the earnings announcement, indicating a growing confidence in the company’s future prospects. As a result of the upgrade, Meta shares experienced a notable surge of 10.1% to $328.73 in pre-market trading today, signaling a positive sentiment among investors regarding the company’s potential for further growth and success.

Brokerage Firm: Wells Fargo
Rating Change: Equal Weight >> Overweight
Price Target: $313.00 >> $389.00
Shares Outstanding: 2.59B Share Float: 2.21B

Downgrades

$LUV – Southwest Airlines Co.
Recent News
BofA Securities analyst Andrew Didora recently downgraded Southwest Airlines from Buy to Neutral and lowered the price target for the airline from $45 to $35. This move aligns with similar downgrades from other analysts, with JP Morgan shifting its outlook from Overweight to Neutral and Barclays labeling Southwest Airlines as “Equal Weight.” Southwest Airlines has demonstrated resilience and impressive earnings and revenue growth, but the recent downgrades warrant careful analysis and research before making any investment decisions. As of the last recorded price of $33.06, the median target price for LUV stock stands at $40.50, suggesting a potential increase of 22.52%. However, the consensus among 21 polled investment analysts is to hold stock in Southwest Airlines Co. The next reporting date for the company’s results is scheduled for October 26, 2023.

Brokerage Firm: BofA Securities
Rating Change: Buy >> Neutral
Price Target: $45.00 >> $35.00
Shares Outstanding: $594.00 Share Float: 592.94M

$CVNA – Carvana Co
Recent News
Morgan Stanley analysts have downgraded Carvana Co to a sell-equivalent rating due to the surging valuation of the stock. Despite making significant adjustments to their model to account for stronger 2Q results, the analysts believe that the rally in the stock has gone too far, too fast. The analysts acknowledge Carvana’s positive steps towards self-financing, including positive adjusted EBITDA, better-than-expected retail gross profit per unit (GPU) performance, and reduced SG&A expenses. However, to maintain investor confidence, Carvana must sustain this progress, replicate 2Q improvements, address structural changes to prevent negative operating leverage upon scaling, and tackle liquidity concerns through debt restructuring. The analysts have also adjusted their bull case to $100 and bear case to $5, factoring in different revenue and EBITDA margin scenarios. Despite acknowledging the company’s achievements, the analysts believe that the stock’s rapid surge has made the risk-reward balance less favorable compared to other stocks they cover.

Brokerage Firm: Morgan Stanley
Rating Change: Equal Weight >> Underweight
Price Target: $12.00 >> $35.00
Shares Outstanding: 106.01 Share Float: 95.37M

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