(This is CNBC Pro’s live coverage of Tuesday’s analyst calls and Wall Street chatter. Please refresh every 20-30 minutes to view the latest posts.) Analysts kicked off the week with two big upgrades. Piper Sandler raised its rating on Home Depot, citing an improving outlook for the home improvement market. Morgan Stanley also upgraded Starbucks, noting that a recent decline in shares has created an attractive entry point. Elsewhere, Boeing got a downgrade from Wells Fargo, citing concern around the a regulatory audit. Check out the latest calls and chatter below. All times ET. 6:29 a.m.: KBW initiates Shift4 Payments with outperform rating Shift4 Payments has strong growth potential ahead, according to Keefe, Bruyette & Woods. The firm initiated coverage of the payment processing company with an outperform rating. Analyst Sanjay Sakhrani’s 12-month price target of $95 implies that shares of Shift4 could rally 27%. Shift4 already has the status of being a leading provider of software and payment processing solutions for U.S. restaurants. Sakhrani thinks Shift4’s expansion into new verticals, such as stadiums and hospitality — and new geographic regions like Europe and Canada — could further boost the company’s organic growth in the future. As a catalyst, the analyst also pointed towards Shift4’s advanced product set. “What is unique in the case of Shift4’s verticals are the many integrations the company has performed with a multitude of software and point-of-sale (POS) systems that make getting into the space de novo difficult for others,” he wrote. “FOUR’s strength in the market is evidenced by its ability to raise prices on the gateway product and/or convert providers to its end-to-end processing capabilities, which we discuss as a key growth driver.” Sakhrani also cited the company’s proven track record of small strategic acquisitions as another factor that could boost its growth. “While there has been some recent pushback from investors that believe M & A is dilutive to growth stories in the payments space, we don’t agree with this view,” he wrote, listing payment companies who have successfully completed M & A transactions to strengthen their fundamentals, including Fiserv, Nuvei, Visa and MasterCard. Shares of Shift4 are fractionally higher this year. — Lisa Kailai Han 6:01 a.m.: Wells Fargo downgrades Boeing as FAA audit begins A production audit may be the last straw for Boeing , according to Wells Fargo. The bank downgraded shares of the aircraft company to equal weight from overweight on Tuesday, simultaneously lowering its price target to $225 from $280. This is only 3% higher from where Boeing stock closed on Friday. Even after Boeing’s 12.6% sell-off last week, analyst Matthew Akers believes that the stock’s valuation still does not look attractive to justify the ongoing Federal Aviation Administration audit. “With FAA taking a closer look into BA’s production, we think the risk of production/ delivery impact increases significantly,” he wrote. “Given BA’s recent track record, and greater incentive for FAA to find problems, we think the odds of a clean audit are low.” While the agency is only auditing Boeing’s 737 Max 9 airplanes for now, Akers believes that the investigation could expand to other models with common parts. Boeing shares fell more than 2% following the the downgrade. — Lisa Kailai Han 5:38 a.m.: Home Depot to outperform market and Lowe’s, Piper Sandler says After more than four years of preferring Lowe’s over Home Depot , Piper Sandler is now placing its bets on the latter. The bank upgraded shares of the home improvement retailer to an overweight rating on Tuesday and raised its price target increase to $400 from $311. The change implies that Home Depot could rally 12% from its current price. Analyst Peter Keith cited a modest increase in big-ticket remodels as a catalyst for the upgrade. “We are taking a more bullish stance on home improvement — and more specifically, large remodel projects — as home equity extraction activity (cash-out refi’s + HELOC originations) is trending toward improvement in 2024,” wrote analyst Peter Keith. Keith added that he believes Home Depot shares could outperform both the market and shares of competitor Lowe’s, citing the former’s greater exposure to pro customers. “Home Depot has been building the ecosystem to support their complex Pro customer for several years, but it was only at their June 2023 Investor Day that they quantified the sub-category as one of their biggest opportunities with a $200B [total addressable market],” he wrote. Meanwhile, Home Depot has a more favorable margin setup and higher capacity for stronger earnings growth, Keith added. Shares of Home Depot are up 2.6% this year. — Lisa Kailai Han 5:38 a.m.: Morgan Stanley upgrades Starbucks It’s time to buy shares of Starbucks after the coffee chain’s recent struggles, according to Morgan Stanley. The bank upgraded the stock to overweight from equal weight, raising its price target to $120 per share from $112 per share. That forecast implies upside of 30.5% from Friday’s close. “After recent weakness driven by real headwinds across SBUX’s global business, we see interesting risk-reward skew here,” analyst Brian Harbour wrote. “Out of consensus, weak sentiment, softer data trends, challenging commentary … near-term earnings risk, China and Middle East exposure — these legitimate headwinds have brought SBUX’s stock under substantial pressure after a constructive 4Q23 and investor day,” the analyst added. “But we’d rather wade into the controversy perhaps somewhat early, and look beyond the current quarter, as these ‘penalty box’ periods can be interesting entry points.” Starbucks shares are down 4% year to date and 14.2% over the past 12 months. SBUX 1Y mountain SBUX in past year — Fred Imbert
Tuesday’s analyst calls: Home Depot gets upgraded, big downgrade for Boeing
