Wells Fargo raises JPMorgan shares to Overweight amid larger turmoil in the banking sector. And here is today's full Pro Recap of the biggest analyst upgrades and downgrades over the past week.
JPMorgan upped to Overweight at Wells Fargo
What happened? Wells Fargo started the week by upgrading JPMorgan (NYSE:JPM) to Overweight with a $155 price target.
Why highlight this note? JPMorgan came under pressure first with the broader markets, and then with the risks to the banking sector, in the wake of the SVB Financial and Signature Bank collapses. Wells Fargo believes JPMorgan is positioned to play "offense" through improved market-share gains, as well as "defense" through diversification.
To wit: "JPM epitomizes our theme of 'Goliath is Winning', which should benefit both offense (market share gains) and defense (more diversified) in these less certain times," Wells Fargo said in its note.
How did the equity react? Shares were volatile in Monday's premarket session, rotating between the $136 and $130 handles for a few hours. Once the regular session opened, shares sold off 1.8% on the day. JPMorgan ended the week at $125.81, down over 4%.
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BMO (TSX:BMO) raises Intellia Therapeutics to Outperform
What happened? On Tuesday, BMO Capital upgraded Intellia Therapeutics (NASDAQ:NTLA) to Outperform with a $57 price target.
Why highlight this note? Biotech names are notoriously tough to invest in or event trade due to their complexity requiring very dedicated analysis. BMO believes NTLA's recent approval on NTLA-2022 IND which according to Intellia "offers the possibility of halting and reversing the disease by driving a deep, consistent and potentially lifelong reduction in TTR protein after a single dose." BMO writes:
We believe that the recent NTLA-2002 IND approval removed a significant overhang for NTLA, assuaging investor concerns triggered by Verve's IND hold and FDA's restrictive guidance around gene editing therapies. However, since the IND approval, NTLA is trading ~19% lower (vs. -8% for XBI), suggesting that the IND approval is largely underestimated.
How did the equity react? Scalpers spiked the equity $0.50 Monday evening to $38.88 on the headlines. As the Tuesday morning market open approached, shares were trading at $39.27. NTLA opened Tuesday's regular session at $40.20 and closed down marginally for the day, although up 4.75% from Monday's close. NTLA then ended the week up 12.5% to $39.84.
Reinsurance Group of America gets a double upgrade at Citi
What happened? Citi double upgraded Reinsurance Group of America (NYSE:RGA) - to Buy from Sell, skipping over Neutral - with a $158 price target.
Why highlight this note? Life Insurance came under fire following derivative fallout initiated with the Silvergate Capital and SVB collapses. Citi wrote in its Wednesday note:
These names should be outperforming in a market such as this given defensive characteristics including limited balance sheet/earnings risk to structured credit, real estate and equity markets, as well as more narrow, focused business mixes. We also defend broader Lifeco liquidity and lack of liability run risk.
As for the direct risks to RGA itself, Citi commented, "RGA has no equity market exposure and lower allocations to structured securities vs. the backdrop of macro uncertainty for peers."
How did the equity react? Shares of RGA brushed off the double upgrade and tracked lower to end the week down just over 6% to $121.97.
Halozyme cut to Market Perform at SVB
What happened? SVB Securities downgraded Halozyme (NASDAQ:HALO) to Market Perform with a $42 price target on Thursday.
Why highlight this note? SVB stepped to the sidelines on HALO on valuation, noting the analyst's long-term forecasts are lower, reflecting:
...risk to Darzalex and more conservative royalty assumptions for various products, culminating in 2030E rev -19% from $2.1B to $1.7B and 2030E EPS -21% from $10.83 to $8.53". Further SVB Securities noted "DCF valuation reflects greater risk of long-term royalty erosion and a higher discount rate due to rising rates.
How did the equity react? Halozyme traded lower every day this past week, ending Friday down 20% to $33.08.
American Airlines upgraded to Peer Perform at Wolfe
What happened? Wolfe Research ended the week with an upgrade for American Airlines (NASDAQ:AAL) to Peer Perform. Wolfe does not issue price targets for Peer Perform-rated securities.
Why highlight this note? Wolfe is reacting to recent updates from American over the week, noting while AAL has high short interest, the company has been executing on actions to improve operations and earnings:
AAL remains heavily shorted with a 10% short interest, but it's been consistently executing and making/beating estimates in recent quarters while running a fairly clean operation. As a result, our updated C23 EPS of $2.50 is 17% above Consensus, and AAL is now the airline where were most above Consensus in C23.
The equity has been trading in noticeably volatile fashion against peers. Wolfe noticed this as well and offers up some data:
AAL's stock is down 15% in the past 6 trading days relative to our airline index (ex-AAL) which is down 14%. AAL is now up 11% YTD, relative to our airline index which is up 5%.
How did the equity react? American Airlines tracked into the low-$14 handle, and a spike higher on the upgrade headlines added $0.45 to spike to $14.49. Shares opened Friday's session at $13.95 and closed the day at $13.98. Shares ended the week down about 7%.
