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Dara Khosrowshahi
Bloomberg | Bloomberg | Getty Images
Here are the biggest calls on Wall Street on Monday:
HSBC upgraded Uber and Lyft to ‘buy’ from ‘hold’
HSBC said in its upgrade of Uber and Lyft that regulatory concerns surrounding both companies are already priced in.
“Investor sentiment has turned more sour on ride-hailing stocks following large reported losses, regulatory headlines out of California and concerns around slowing growth. We are lowering our target prices for Uber to $44 and for Lyft to $62 to reflect higher regulatory risks and a lower longer-term growth outlook for their Rides businesses. Yet, with both stocks down 23% in the last three months, we think regulatory concerns are priced in, whilst we continue to see a lot of optionality around product improvements for both Uber and Lyft.”
Read more about this call here.
UBS downgraded Hewlett-Packard to ‘neutral’ from ‘buy’
UBS downgraded the stock and said that among other things, the CEO transition creates “uncertainty.”
“We are downgrading from Buy to Neutral with a $20 price target as we see F20 EPS declining 1%, down from 4% growth. We see downside risk to printing supplies expectations of flat in F20 as visibility is low and macro remains uncertain. PC margin would likely decline greater than consensus as HP would have to pass through the component price declines and mix shifts away from commercial.CEO transition creates some additional uncertainty.”
Wells Fargo downgraded Dick’s Sporting Goods to ‘market perform’ from ‘outperform’
Wells Fargo downgraded the sporting goods retailer mainly on valuation.
“With DKS shares +25% YTD (vs. the average retailer in our coverage universe -2%) and the stock having hit our $39 price target, we are moving to the sidelines. Recall that when we upgraded the shares in January 2018, our thesis was that risk/reward skewed favorably due to a “kitchen sink” initial outlook for FY18 (the company actually raised EPS guidance 4x last year), and heading into 2019 our thesis evolved into a call that the stock would achieve multiple expansion when the negative comp trend flipped back to positive territory in Q2.”
J.P. Morgan upgraded Raytheon to ‘overweight’ from ‘neutral’
J.P. Morgan said in its upgrade of the U.S. defense contractor and industrial corporation that it sees “upside” on valuation and estimates among other things.
“We view RTN outperformance thus far in Sept as a sign of increasing investor confidence in the outlook for Raytheon and for the RTX combination, along with some mean reversion. With potential upside on both valuation and estimates, further increases in confidence point to a positive risk / reward dynamic and therefore we are upgrading to OW.”
Buckingham downgraded J.P. Morgan to ‘neutral’ from ‘buy’
Buckingham downgraded J.P. Morgan mainly on valuation.
“JPM has driven best-in-class top line growth and returns in recent years, reflecting consistent market share gains across both its consumer and institutional franchises. Considering ongoing significant investment spend and management’s record of successful execution, we see no reason why these trends won’t continue.”
Wedbush upgraded Lowe’s to ‘neutral’ from ‘outperform’
Wedbush pointed to signs of improving execution in its upgrade of the stock.
“We are upgrading our rating on LOW from NEUTRAL to OUTPERFORM and increasing our price target from $115 to $135 as signs of improving execution increase our confidence that CEO Marvin Ellison will be able to transform LOW into a much more productive and profitable company. LOW has reversed the longstanding comp with HD for the past two quarters as its productivity-driving initiatives begin to take hold, including increasing job-lot quantities, better instocks, higher service levels and more targeted promotions.”
Citi upgraded PG&E to ‘neutral’ from ‘sell’
Citi upgraded the gas and electric company after it settled claims from the 2017 and 2018 fires.
“While the settlement itself is positive as it reduces uncertainty, the bigger win is PG&E’s increased likelihood of retaining exclusivity. By showing progress through this settlement, PG&E can likely impress upon Judge Montali the benefits of extending exclusivity. If exclusivity is extended and TCC are the only holdout, there is a good chance that TCC settle at a reasonable number and not take the chance with a trial. A settlement also increases the likelihood of hitting the June 2020 exit.”
Baird initiated Zoom as ‘outperform’
Baird initiated the remote conference and cloud computing company and said it likes the company’s “strong” growth prospects.
“Addressing a large TAM, in just a few short years, ZM has revolutionized the video conferencing marketing, driving year over year revenue growth of 95.7% in FQ2, along with strong profitability, the combination of which sets it apart from most other high-growth SaaS names. Zoom Phone opens another large frontier in replacing legacy phone systems. We acknowledge the premium valuation, but believe that is justified by the industry-leading growth, estimate upside potential, strong profitability and significant Zoom Phone potential.”
