Robinhood coverage initiations and Dycom upgrade also among notable calls
Check out today’s top analyst calls from around Wall Street, compiled by The Fly.
MOVING TO THE SIDELINES: Arete analyst Rocco Strauss downgraded Facebook (FB) to Neutral from Buy with an unchanged price target of $381. Facebook’s growth is reliant on advertising pricing, which is likely to see pressure, Strauss told investors in a research note. The analyst sees Facebook shares moving “sideways” before initiatives such as the monetization of Reels and on-platform commerce gain traction into fiscal 2022.
BUY SNAP: Arete analyst Rocco Strauss upgraded Snap (SNAP) to Buy from Neutral with a price target of $83, up from $72. The analyst believes advertising pricing pressure on Facebook and Instagram will create a spillover effect, with Pinterest (PINS) and Snap to benefit from advertising budgets shifting to second-tier platforms.
ANALYSTS DIVERGE ON ROBINHOOD: Citi analyst Jason Bazinet initiated coverage of Robinhood (HOOD) with a Buy rating and $63 price target. The analyst sees slowing growth ahead and risk of regulatory headwinds but believes the former is likely embedded in consensus estimates and that he latter is unlikely to be material. Robinhood has enjoyed early success penetrating the less affluent segment of the U.S. brokerage market, Bazinet told investors in a research note.
Bearish on the name, JPMorgan analyst Kenneth Worthington started coverage of Robinhood with an Underweight rating and $35 price target. Robinhood has been successful at breaking into the very competitive retail U.S. brokerage business, but investor recognition of this success is already priced into the value of the shares, Worthington told investors in a research note. Further, the analyst sees a “number of risks” including regulation, pricing and market saturation. Challenges to the business include Robinhood’s focus on smaller accounts that limit its ability to reach competitive margins and profitability.
Meanwhile, Goldman Sachs analyst Will Nance initiated coverage of Robinhood with a Neutral rating and $56 price target, representing 31% upside. Robinhood demonstrated an ability to “innovatively and inexpensively” acquire a large user base and has created a strong brand associated with easy and inexpensive trading, Nance told investors in a research note. However, the potential for regulatory scrutiny regarding payment for order flow could be an overhang on the stock, and retail engagement levels may normalize on the back of all-time high levels during Covid, the analyst said.
KeyBanc, Mizuho, Rosenblatt and JMP Securities also started coverage of Robinhood with Buy-equivalent ratings, while Barclays, Deutsche Bank and Piper Sandler initiated the stock with Neutral-equivalent ratings.
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