Here is your Pro Recap of the top takeaways from Wall Street analysts for the past week: upgrades for Oracle and Domino's, while Apple and Logitech were slashed.
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Oracle
What happened? On Monday, Wolfe Research upgrade Oracle (NYSE:ORCL) to Outperform with a $130 price target
What’s the full story? Wolfe noted that the tone of the company's results has been steadily improving:
We see a top line beat driven by Cloud outperformance, as well as a potential 1Q guide ahead of consensus. While we have spent the last year in a state of heightened skepticism around OCI's growth opportunity, the consistently improving tone of our checks has become impossible to ignore. We believe that ORCL has created a meaningful 2nd mover architectural and cost advantage around Gen 2 OCI [Oracle Cloud Infrastructure], that competitors are either unable or unwilling to match.
Outperform is described by Wolfe as:
The security is projected to outperform analyst's industry coverage universe over the next 12 months.
How did the stock react? Shares surged at 4am in New York as professional scalpers jumped in, taking the equity from $110 to $114 over a two hour period. Oracle opened the regular session Monday at $114.34 and closed at $116.43.
Apple
What happened? On Tuesday, UBS downgraded Apple (NASDAQ:AAPL) to Neutral with a $190 price target.
What’s the full story? UBS cited weakness in iPhone sales in the company's key markets:
While recent strength in emerging markets is encouraging, the US, China, and Europe represented ~70% of iPhone demand in the March quarter down from 72% last year as sell-through in these regions was down 7.5% YoY (Counterpoint). iPhone sell-through in the ROW, (includes emerging markets and other developed markets like Japan) was down 2.4% in the March quarter. India, a key focus market, represented just 3% of iPhones sold in the March quarter, up 34% YoY or 500k units.
As such, we do not believe the unit TAM and growth outside of the three largest markets is large enough to drive long-term sustainable iPhone growth above mid-single digits.
UBS describes Neutral as:
FSR [Forecast Stock Return is between -6% and 6% of the MRA [Market Return Assumption].
How did the stock react? Shares closed Monday at $183.79. The downgrade was out overnight during non-market hours. Shares opened Tuesday at $182.80 and closed at $183.31, essentially flat on the day.
Logitech
What happened? On Wednesday, Citi downgraded Logitech (NASDAQ:LOGI) to neutral with a $70 price target.
What’s the full story? Logitech's CEO resigned this week, and Citi said the development - in combination with other big management changes - foments uncertainty as to whether the company can reach its own growth targets:
After the close on June 13th, Logitech announced its president and CEO, Bracken Darrell, is immediately departing for an outside opportunity, but remaining present for a one-month transition to interim CEO Guy Gecht. The company did not actively reaffirm guidance, and while the company cited no differences in strategy as a reason for the sudden and unexpected departure, this, combined with the recent installment of a new CFO, may cause investors to question management’s ability to execute upon its current growth strategy.
A changing of the guards over the past few months creates uncertainty on when the company can revert back to achieving the growth targets it has set out in its long term model. We move to the sidelines until we get better clarity on how/when the company can achieve its long term growth targets, and we downgrade our rating on Logitech shares to Neutral from Buy.
Citi describes a Neutral as:
Buy (1) ETR of 15% or more or 25% or more for High risk stocks; and Sell (3) for negative ETR. Any covered stock not assigned a Buy or a Sell is a Neutral (2).
How did the stock react? The stock was under immense pressure in the wake of the CEO departure, and Citi's downgrade at 6:20am didn’t help matters. Shares dropped $1.50 on the headline to mid $56 handle, and closed the regular session down 12.5%.
Domino's Pizza
What happened? On Thursday, Stifel upgraded Domino’s Pizza Inc (NYSE:DPZ) to Buy with a $350 price target.
What’s the full story? Stifel is confident the company can now stabilize delivery sales, while in the short term its bottom line should be propped up by lower costs:
Our upgrade reflects our belief that over the next 12 months, the company will stabilize delivery sales and continue growing carryout sales to new record levels. Better sales performance, lower commodity costs, and higher labor productivity should boost franchisee profitability, sparking greater unit growth. We do not expect 2Q results to provide evidence that delivery sales are stabilizing, but we believe lower costs will give some near-term earnings support while new initiatives are introduced in 2H23.
Stifel describes Buy as:
Buy - We expect a total return of greater than 10% over the next 12 months with total return equal to the percentage price change plus dividend yield.
How did the stock react? Shares opened Wednesday's regular session at $302.13 and rose steadily into earnings closing Wednesday at $305.72. The upgrade came after hours and the stock rocketed up to the $325 handle, where it also closed the regular session - up about 6.5% on the day.
