Starbucks, Chipotle upgraded: Wall Street’s top analyst calls

The most talked about and market moving research calls around Wall Street are now in one place. Here are today’s research calls that investors need to know, as compiled by The Fly.

Top 5 Upgrades:

• Evercore ISI upgraded Starbucks (SBUX) to Outperform from In Line with a price target of $120, up from $80. The firm sees an increased probability of a U.S. brand turnaround with the hiring of Brian Niccol as Chairman and CEO, and ultimately sees 3-year earnings growth of 15%+ as possible, based largely on a traffic-led same-store sales recovery in the U.S. Deutsche Bank and Stifel also upgraded Starbucks to Buy-equivalent ratings.
• Wedbush upgraded Chipotle (CMG) to Outperform from Neutral with a price target of $58, up from $54. The firm notes that while Brian Niccol, Chairman and CEO, has accepted the role of Chairman and CEO of Starbucks, Scott Boatwright, currently Chipotle’s COO, will serve as interim CEO and Jack Hartung, who recently announced his retirement as Chipotle’s CFO, has agreed to stay with the organization indefinitely and will assume the role of President of Strategy, Finance, and Supply Chain.
• TD Cowen upgraded Illumina (ILMN) to Buy from Hold with a price target of $144, up from $126, following the company’s strategy update. The Grail distraction is behind the company, where the “massive dilution from this deal (and its strategic demerits) kept many investors away,” the firm tells investors in a research note. Barclays also upgraded Illumina to Equal Weight from Underweight with a $125 price target.
• RBC Capital upgraded Johnson Controls (JCI) to Sector Perform from Underperform with a price target of $69, up from $61. The firm says the company’s recently announced portfolio pivot and leadership transition along with constructive dialogue with Elliott Management “have sufficiently de-risked the story” and balanced the stock’s risk/reward.
• Jefferies upgraded Sportradar (SRAD) to Buy from Hold with a price target of $16, up from $12. The firm says the company has made “notable progress” in demonstrating the durability of the business model and its leverage to online sports betting growth in the U.S. and globally.

Top 5 Downgrades:

• Argus downgraded Hershey (HSY) to Hold from Buy. The firm cites the company’s recent Q2 earnings and revenue miss, with the management indicating that it continues to see customers seek value options and reduce the number of trips to the store.
• Morgan Stanley downgraded Intuit (INTU) to Equal Weight from Overweight with a price target of $685, down from $750. Along with the increased volatility from recently acquired CK and Mailchimp, the firm is concerned that “pushing too hard on price” may be contributing to share losses at TurboTax and introduces risk at QuickBooks.
• RBC Capital downgraded L3Harris Technologies (LHX) to Sector Perform from Outperform with a price target of $240, down from $250. The firm cites the company’s slower 2024 revenue growth relative to its defense peers for the downgrade.
• Stifel downgraded Medtronic (MDT) to Hold from Buy with a price target of $85, down from $100. The firm believes the company is moving “in the right direction” under the leadership of CEO Geoff Martha, but believes the progress is “taking too long.”
• RBC Capital downgraded Hexcel (HXL) to Sector Perform from Outperform with a price target of $68, down from $76. The firm says its confidence in the second half of 2024 pace of improvement in aircraft deliveries has softened.

Top 5 Initiations:

• Ladenburg initiated coverage of DTE Energy (DTE) with a Buy rating and $131 price target. The firm expects DTE to experience above average 7.5% earnings growth through 2027, driven by significant utility rate base spending and expected contribution from Section 45Z tax credits.
• BTIG initiated coverage of Enova International (ENVA) with a Buy rating and $90 price target. The firm thinks the market underappreciates Enova’s earnings power on both credit performance and net interest margin.
• Jefferies initiated coverage of VSE Corp. (VSEC) with a Buy rating and $100 price target. The firm sees a 13% organic compound annual growth rate at Aviation driven by commercial aftermarket momentum and new wins vs. the 6% peer average, differentiated distribution assets and performance that supports 18% Aviation margins in 2026E and a 21% overall EBITDA CAGR through 2026E, and an attractive valuation.
• Evercore ISI initiated coverage of Montrose Environmental (MEG) with an Outperform rating and $43 price target. The firm says Montrose is a “unique” environmental services company, with a vertically integrated business model to identify, measure, and remediate environmental risks.
• William Blair initiated coverage of Korro Bio (KRRO) with an Outperform rating and $180 fair value estimate. Korro is a leader in the adenosine deaminase acting on RNA editing field, which aims to perform precise adenosine to inosine substitutions to correct single nucleotide polymorphisms or create de novo proteins of novel function with the goal of disease-modifying therapies, the firm tells investors in a research note.