These are Tuesday’s biggest calls on Wall Street. Goldman Sachs Keurig Downgrades Dr. Pepper to buy neutral Goldman said it sees increased risk to Keurig’s margins amid higher coffee prices. “We are now seeing a more balanced risk/reward, so we are downgrading the stock to a neutral rating of a Buy, given our expectation that domestic brewer penetration will begin to normalize, moderate pod attachment rates and the growth of the packaged beverage business and the KDP’s market share is beginning to slow in this environment. In addition, we see increased risk to KDP’s margins as commodity inflation, especially coffee-related, remains high for KDP relative to its competitors based on our updated commodity tracker.” Cantor Fitzgerald starts Lucid Group with an overweight rating. The Wall Street company said Lucid’s luxury and premium electric vehicles are more attractive than its competitors. “We believe that LCID’s luxury and premium vehicles offer greater efficiency, range, faster charging and more space compared to their competitors. Lucid vehicles are designed to offer a luxurious interior and a compact, efficient exterior. resulting in more space for the passengers, thus dubbed the “Space Concept” by LCID Lucid will compete in the global luxury car market, and the company’s first product, the Lucid Air, launched in 10/2021 with deliveries to customers.” UBS downgrades Norfolk Southern, CSX to neutral from buy UBS said Norfolk Southern and CSX will continue to struggle to grow in the challenging macro environment. “With the macroeconomic backdrop deteriorating, consensus 2023 EPS estimates appear too high for U.S. railroads and we expect near-term downward revisions to industrial and intermodal volume assumptions. While a significant decline in freight demand is likely to overturn existing capacity constraints and lead to the improved service levels needed for rail to regain market share from trucks, we believe it will be difficult for U.S. rail to deliver the ~2.5% volume growth currently reflected in the consensus.” Morgan Stanley cuts FedEx price target from $250 to $125 Morgan Stanley cut FedEx forecasts after the shipping giant’s profit warning. “Now that the dust has settled from FDX’s big profit warning, we believe expectations and stock have reset. However, the next leg from here will have to prove that $11-12 is not normalized EPS, although bears a path below $9…stock is at the same level today as it was in January 2020 prior to the pandemic and our PT is returning to nearly the same level it was then.” Citi puts McDonald’s on a 90-day negative catalyst The Wall Street firm has put McDonald’s stock on a 90-day negative catalyst in the face of foreign exchange headwinds and general macroeconomic challenges. “We are seeing less favorable risk rewards in MCD stocks, with FX and macro challenges in Europe looming above EPS estimates heading into the 3rd quarter/winter months, and a valuation (EV/EBITDA near from record highs versus the market) leaving little room for equities to absorb negative estimate revisions, specifically more than $0.25/2.5% of the FX’s incremental headwinds since Q2 results, and a street outlook showing IOM SSS momentum continues to rise While we assess the strength/macro resilience of the US business, the US SSS should exceed (already strong) expectations by an MSD percentage to drive the market valuation for FX and even offset an LSD decline in the European SSS outlook.” — CNBC’s Michael Bloom reported.
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