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Apple CEO Tim Cook attends the China Development Forum in Beijing, China March 23, 2019.
Thomas Peter | Reuters
Here are the biggest calls on Wall Street on Monday:
Rosenblatt Securities downgraded Apple to ‘sell’ from ‘neutral’
Rosenblatt said it sees Apple’s fundamentals “deteriorating.”
“We believe there is less reward for owning Apple stock after the recent stock rebound from stock buybacks and stable second quarter guidance. We do not think Apple is a short (the company has plenty of cash and a meaningful stock buy back program), however, we believe Apple will face fundamental deterioration over the next 6-12 months. “
Read more about this call here.
Needham added Apple to its ‘conviction buy’ list
Needham said it thinks Apple is making a move from a company whose value is based on “subscriber and services growth” instead of value based on “hardware unit sales.”
“We believe Apple is transitioning from a company valued based on hardware unit sales into a company based on subscriber and services growth. AAPL‘s pivot toward maximizing its lifetime value per unique user suggests more consistent revenue growth, expanding margins, and an expanding valuation multiple. “
Bank of America initiated CrowdStrike as ‘buy’
Bank of America said the cybersecurity solutions company is poised to “disrupt” the industry.
“CrowdStrike is positioned well to disrupt the $7bn endpoint security market and expand from core detection and response capabilities to adjacent areas such as IT hygiene, vulnerability management, and more. “
Deutsche Bank resumed coverage of American Express as ‘buy’
Deutsche said it thinks American Express offers a good chance for “solid” returns and moderate relative “upside” over the next year.
“We believe shares of AXP offer a better chance for solid returns and moderate relative upside over the next twelve months, driven by stronger-relative expected EPS gr. and ROTCE vs. peers, and more insulated trading multiples/earnings stream amongst the cards from any potential wor-sening of consumer/credit expectations vs. card peers. “
Guggenheim initiated Best Buy as ‘buy’
Guggenheim initiated coverage on Best Buy and said it was the “most undervalued” large-cap retailer.
“We believe the combination of 1) a large and relatively stable “core” addressable market, 2) a leading industry positioning with an innovative approach to share gains, 3) irreplaceable vendor/retailer relationships, 4) a solutions-focused culture centered around the idea of technology adoption, 5) a mature omni-channel platform with superior supply chain capabilities, 6) a healthy and improving return profile, and 7) a modest valuation, positions BBY shares for outperformance. “
Credit Suisse downgraded American Airlines to ‘underperform’ from ‘neutral’
Credit Suisse downgraded the stock due to the airline’s labor dispute and 737 Max issues.
“In our coverage universe, we see the greatest near-term downside risk to earnings estimates for AAL, driven by two primary (and mounting) headwinds: 1) the 737 MAX grounding; and 2) the ongoing mechanics labor dispute. “
Credit Suisse upgraded JetBlue to neutral from underperform
Credit Suisse said it likes JetBlue’s “execution” of cost and revenue initiatives amongst other things.
“The primary reasons behind our upgrade are 1) strong seasonal leisure demand this summer driving solid unit revenue performance; 2) continued execution of cost & revenue initiatives, which are ramping in H2 and into 2020; and 3) muted investor expectations relative to JBLU‘s 2020 EPS targets. “
Citi downgraded Verizon to ‘neutral’ from ‘buy’
Citi downgraded the stock on valuation and long-term industry “risks.”
“We are reducing our rating on Verizon from Buy to Neutral given that rising long-term industry risks and its current valuation premium are likely to limit returns over the next 12-months. “
Read more about this call here.
Citi downgraded Juniper Networks to ‘sell’ from ‘neutral’
Citi said it sees too “lofty” second half expectations for the networking & cybersecurity solutions provider.
“We are downgrading Juniper from Neutral to Sell and lowering our target price from $28 to $24. We have picked up recent competitive share gains by Arista and Cisco and this sets up for more share loss to Juniper and too lofty 2H expectations. Accordingly, we are lowering our 2H financial projections. “
Goldman Sachs downgraded F5 Networks to ‘sell’ from ‘neutral’
Goldman said that it sees earnings risks “increasing” for the company that specializes in application services and delivery networking.
“Even though FFIV is trading near the bottom of its 3-year PE range (12X-19X) we believe that earnings risks are increasing due to the weaker short-term spending environment and increasing competitive threat. Enterprise represents ~65% of F5’s revenue and short term indications for spending in that market have been weak. “
J.P. Morgan upgraded Johnson Controls to ‘neutral’ from ‘overweight’
J.P. Morgan said the company’s fundamentals look more “stable.” Johnson Controls produces electronics and HVAC equipment for buildings.
“We upgrade from UW to N on JCI, as the stock has de-rated and fundamentals look more stable now vs peers, with management executing the Battery divestiture in the least dilutive way possible (buybacks vs expensive M&A), lending confidence it will not overpay for premium valued assets. “
Morgan Stanley downgraded Bank of New York Mellon to ‘underweight’ from ‘overweight’
Morgan Stanley double downgraded Bank of New York Mellon saying it sees a lower 10 year yield & slowing global GDP.
“With large cap Banks up 23% YTD & CCAR over, there are fewer positive catalysts. Looking ahead, global GDP is slowing & US jobs growth appears to be topping out. Lowering EPS & PTs as we price in Fed Funds forwards & 30bp lower 10 yr yields.”
