Airbnb Stock Drops and Pops After Upgrade: 5 Big Analyst Calls | Pro Recap

Argus calls Airbnb a Buy on burgeoning travel trends, while Capital One has been cut at Odeon. And here is your full Pro Recap of the biggest analyst calls you may have missed on InvestingPro this past week. Start your free 7-day trial to get this news first.

Airbnb

Airbnb upped to Buy at Argus

What happened? Argus Research upgraded Airbnb (NASDAQ:ABNB) to Buy with a $144 price target.

Why highlight this note? In its note Tuesday, Argus said it expects demand to remain strong and resilient in the U.S. As with many companies, Airbnb is expected to also benefit from the easing of COVID restrictions in China amid increasing travel for Chinese citizens. Overall, it would appear via Argus that Airbnb is expected to benefit in major geographies such as the U.S., Latin America, and Europe. Argus also sees buybacks as on the table thanks to expectations for stable underlying factors supporting cash flow. To wit: "Over the long term, we expect the company to post high-teens revenue and earnings growth, as travel increases in developed markets. Airbnb also generates strong cash flow, which should provide resources for share buybacks."

How did the equity react? Monday shares opened at a mid-$123 handle before selling off on the upgrade to Thursday's low of $119.36. Airbnb ended the week up 1.7% to close at $125.73.

Capital One slashed at Odeon

What happened? On Thursday, Odeon Capital downgraded Capital One (NYSE:COF) to Sell with a target price of $94.20.

Why highlight this note? The firm listed a plethora of reasons for the downgrade. There were shorter-term issues, such as: "Consumer debt has reached new record levels," "Default problems are rising," and "Expenses are difficult to cut because the company is already highly efficient." And about the longer term, Odeon writes, "The company’s business model which was golden when consumers drove the economy will be less valuable when industry drives the economy."

How did the equity react? After the downgrade, the equity sold off to a Thursday morning low of $105.84 before rebounding through Thursday's afternoon session and rising with the broader markets to rise 1.5% for the week at $109.78.

Goldman upgrades Willis Towers Watson

What happened? On Monday, Goldman Sachs upgraded Willis Towers Watson (NASDAQ:WTW) to Buy with a $290 price target.

Why highlight this note? Investment in talent is expected to be the driver of the company's growth, as opposed to an expansion of the valuation multiple (which is 12.2x 2024 EV / adj. EBITDA per the note). Goldman wrote to clients, "WTW has reported two quarters of 5%+ organic growth, an achievement we had previously believed would take longer to materialize. With accelerating contributions from significant talent investments made in 2022, we think growth can continue."

How did the equity react? Opened Monday at $240.65. Sold off most of the week following the note, down to a $230 handle before rebounding with the broader U.S. markets to close the week up fractionally at $240.85.

Philip Morris gets a Buy rating at UBS

What happened? UBS upgraded Philip Morris (NYSE:PM) to Buy with a $116 price target on Wednesday.

Why highlight this note? UBS offered four reasons to clients to support their upgrade:

i) an acceleration of HTU shipment growth in mature markets thanks to ILUMA, (ii) an expanding value-mainstream heated tobacco offering via its Lil product (15-year partnership with KT&G Corp (KS:033780))) and Bonds by IQOS, its low-cost offering (2 pilots underway, more launches in 2024), (iii) Swedish Match's (OTC:SWMAY) accretive growth and margin profile, and (iv) strong cash flow generating combustible business.

Smoke-free is taking hold as more people see the trade-off benefits (ignoring the benefits of quitting entirely).

How did the equity react? Shares recovered from an early-week slide on the Wednesday upgrade and the broader market rally, although they closed the week up by a meager 0.02% at $99.20.

Procter & Gamble upped to Overweight at JPMorgan

What happened? JPMorgan ended the week by upgrading Procter & Gamble (NYSE:PG) to Overweight with a $155 target price.

Why highlight this note? JPMorgan suspects consensus expectations are too low. The bank wrote,

"While we think PG continues to be best in class, we have even further conviction for the stock to outperform from here and become a compounder in 2HCY23 given catalysts including capacity constraints in key divisions (Fabric Care and Feminine Care) abating, pricing benefits, management’s expectation of gradual +MSD recovery in China, and potential tailwinds to margins as management guides based on spot rates, where commodities continue to ease.

How did the equity react? Shares opened Monday at a $140 handle before selling to a Wednesday low handle of $136, then rebounded to end the week up 1.2% to $140.95.

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