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Interior Design area of the Restoration Hardware store in the Meatpacking District of New York.
Source: RH
Here are the biggest calls on Wall Street on Thursday:
Bank of America upgraded RH to ‘buy’ from ‘underperform’
Bank of America said in its double upgrade of the home furnishing company that it sees “higher” revenue growth and “less risk” to margins.
“After better than expected preliminary 2Q results (both sales & EPS beat) and our view that RH has further upside on stronger product momentum, price hikes and less macro risk then had assumed, we upgrade RH to Buy… We believe a higher multiple is warranted on higher revenue growth and less risk to margins. While we still see several LT risks, at least through the rest of this year, we see more levers for up than downside. “
Loop Capital upgraded Spotify to ‘hold’ from ‘sell’
Loop Capital upgraded the stock after the company reported another “good” quarter.
“We are raising our rating on SPOT to Hold From Sell as SPOT reported another good quarter, it has reached a renewal agreement with two of the four major labels for global sound recording, and we believe the company’s valuation relative to other streaming and high-growth internet companies reflects Spotify’s competitive position. “
Morgan Stanley resumed IBM as ‘overweight’
Morgan Stanley said IBM was in the “later innings of a transformation.”
“Attractive risk-reward, resume at Overweight. IBM is in the later innings of a transformation meant to return the company to growth and margin expansion, both of which kicked in over the past year and should accelerate post the closing of the Red Hat acquisition. Our $170 PT is based on 13x CY20 EV/FCF, on par with growth adjusted multiples of peers, and assumes IBM grows revenue at 2% annual adjusted rate, in-line with the run-rate implied by 2Q19 results and pro-forma Red Hat contribution. “
Susquehanna downgraded Corning to ‘neutral’ from ‘positive’
Susquehanna downgraded the specialty glass and ceramics company and said the company had failed to “execute” its managing of different business units.
“Despite ~10% correction in the stock since the June Q report, we find it prudent to downgrade and move to the sideline until we are convinced EPS CAGR can exceed S&P 500. Until then, we simply cannot justify re-rating. We have always been a fan of GLW given the company’s long standing tradition of prioritizing organic R&D and thus innovation. But, we also argue the company has recently failed to execute in managing a portfolio of diverse business units, while Optical Comm has down-ticked and disclosure weakened. “
Wedbush upgraded Western Digital to ‘neutral’ from ‘underperform’
Wedbush upgraded Western Digital and said it saw a “lower cyclical trough” for the hard disk drive manufacturer and data storage company.
“While we continue to believe end market demand remains poor, Japan’s shift in its treatment of material exports to Korea has created greater uncertainty around future NAND supply, with this shift in sentiment (aided by inventory improvement tied to the Yokaichi outage) having currently halted and reversed NAND pricing trends.”
