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Tim Cook presents at the Apple launch event in Cupertino, Calif on Sept. 10th, 2019.
(This story is part of the Weekend Brief edition of the Evening Brief newsletter. To sign up for CNBC’s Evening Brief, .)
Here are the best analyst calls on Wall Street this week:
Morgan Stanley- Apple, Overweight rating & price target to $289 from $247
Morgan Stanley raised its price target on Tuesday to a street high $289 and said that the Street was too negative on the impact of Apple TV+ on the company. The firm said its analysis shows a “different” story where Apple TV+ could lead Services growth to 20% in 2020.
“The market is skeptical that Apple TV+ will be an NPV+ investment. Our in-depth analysis tells a different story with TV+ accelerating Services growth to 20% in FY20 and becoming accretive to EPS in FY21, assuming just 1 in 10 AAPL users subscribe by FY25.”
Baird- Shopify, Outperform rating
Baird analysts said on Wednesday that despite the pullback in the software space, Shopify was “still killing it.” The heavily owned, highly valued software sector has taken a hit lately as investors question whether they have to pay such a premium for the growth now that the trade war has cooled down. The e-commerce company which helps businesses sell online, on social media, or in person is due to report earnings on Tuesday.
“Still ‘Killing It’ Despite Software Sector Pullback. We expect Shopify Q3 results slightly above consensus expectations based on continued strong levels of brand and merchant adoption and overall healthy U.S. e-commerce trends. We note the recent acquisition of 6 River Systems will reduce the Q4 pro-forma margin outlook, although we expect the expense of building out Shopify’s Fulfillment Network to be offset over time by incremental revenues. Shares remain under pressure with the rotation away from high-growth software names, but we believe company fundamentals remain strong.”
Wells Fargo- Tapestry, Outperform rating
At a time when some analysts are getting bearish on the upcoming holiday season, Wells Fargo called Tapestry a “top contrarian idea,” on Monday. The company said it liked the stock for a variety of reasons but mainly they noted the stock was “as cheap as it’s ever been.” Tapestry is a luxury fashion company and the parent of Coach, Kate Spade, and Stuart Weitzman. The company is due to report earnings on November 5.
“We view TPR as the most compelling contrarian name under coverage today (as we believe sentiment is beginning to turn and the setup on the story from here is very favorable, in our view). With shares materially underperforming our space YTD (TPR -25% vs. group +8%), we see brighter days ahead. Simply put, we view the setup for the stock as very attractive for a litany of reasons. .. .All in, the stock is as cheap as it’s ever been, management changes have been made, the “cash cow” piece of the business is actually healthy and investors are essentially getting a call option on both Weitzman and KATE.”
Goldman Sachs- Albemarle, Buy rating
As lithium stocks have fallen out of favor in the last few years, Goldman Sachs said that Albemarle was a “compelling” value in the space. Albemarle is a chemical company which manufactures lithium and other products. In the note on Tuesday the firm said that Albemarle was “unique” and that “current negative” sentiment has run opposite to the company’s fundamentals.
“This combination of sharp spot price declines and elevated investor skepticism makes the setup for a contrarian call compelling. We further note that the current negative sentiment and spot price plunge have run counter to ALB’s fundamentals, where consensus earning estimates have remained relatively flat, suggesting the majority of its share price fall represents multiple erosion not an earnings shortfall. We continue to believe that ALB remains unique in the lithium industry, as the company offers a differentiated battery-grade commercial expertise and has exposure to some of the lowest-cost and diversified raw material sources in the world.”
Nomura Instinet- CrowdStrike, Buy rating
Nomura initiated the cybersecurity technology company with a buy rating on Wednesday. The firm said the company is “disrupting” the industry and thinks CrowdStrike’s top-line growth will “exceed” expectations for many years.
“CrowdStrike is disrupting the endpoint security market with the introduction of its modern, cloud-native security platform, launched just eight years ago. .. .Superior proprietary technology, rapid customer adoption, and CRWD’s open architecture will continue to drive greater adoption both within security and beyond. Thus, we expect top-line growth to continue to exceed expectations for several years to come.”