A vicious downgrade on Etsy, McDonald’s feels inflationary pain

Investors are still trying to decipher the confusion Fed chief Jerome Powell injected into the markets this week amid two days of laborious testimony to lawmakers.

Will the Fed hike interest rates by 50 basis points at its meeting later this month? When will inflation go back to normal? What will stocks do? All top of mind from within the Yahoo Finance community after a busy week for markets… and it’s not even jobs report Friday yet!

In the meantime, there’s one certainty our community can count on: Wall Street analysts are still plugging away on their multi-factor models and looking to make heroic stock calls.

To that end, here are three Wall Street analyst calls that caught our eye this morning:

Etsy

A rare double-double downgrade — in this case, to Underperform from Buy — from John Colantuoni over at Jefferies at the now former Wall Street darling Etsy.

“Buyers are churning faster and spending less on Etsy, forcing marketing higher and putting pressure on EBITDA [operating profits],” Colantuoni stated. “With more limited take rate upside and deteriorating buyer trends, we see downside to consensus from slowing top line and moderating margin expansion.”

Colantuoni slashed his price target on Etsy to $85 from $150. Etsy stock fell around 6% in pre-market trading.

Note: Citron Research short-seller may be smiling at this call: Left came in hot to Yahoo Finance Live several weeks ago (video above) following a recent short call on Etsy.

McDonald’s

Citi’s Jon Tower isn’t even making a new move on McDonald’s stock — Tower continues to view McDonald’s stock at a Neutral (which is akin to saying Hold the stock) — but Tower is delivering an early warning signal to investors on McDonald’s due to sticky levels of inflation around the world.

“Data broadly supports our view that savings, pent-up demand, a mild start to winter, and tourism supported a fairly strong IOM [international operated markets] macro backdrop through the end of 2022, but that ongoing inflationary pressures and seasonally higher energy usage without tourism/re-opening offsets could paint a different picture for early 2023,” Tower points out.

Story continues

We think that if McDonald’s fundamentals weaken after a strong 2022 to kick off 2023, it could a Tower downgrade in the first half of this year.

Mattel

After a tough Street reaction to a challenging fourth quarter earnings report a few weeks back, Mattel execs returned to the speaking scene on Wednesday with a lengthy investor day.

The takeaways: 1) It will be a big year for dolls tied to new movies; 2) Yes, the Barbie movie is slated to hit in July; 3) Mattel remains focused on cost-cutting inside of a sluggish toy demand backdrop; and 4) Guidance was reiterated.

Stifel analyst Drew Crum found the investor day helpful, and reiterated his Buy rating on Mattel. The investor day wasn’t enough for him to lift his earnings estimates, however.

“In summary, we found the detail concerning various brand initiatives to be of value, but overall there wasn’t enough to alter our estimates for 2023,” Crum stated.

Curious on Mattel’s investor day from the view of management? Lucky for you, we will be sitting down for an exclusive chat with Mattel CEO Ynon Kreiz on Yahoo Finance Live this morning. Tune in here.

Brian Sozzi is Yahoo Finance’s Executive Editor. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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