Pedestrians walk outside an E*Trade Financial office in New York.
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Here are the biggest calls on Wall Street on Monday:
Bernstein downgraded Hewlett-Packard to ‘market perform’ from ‘outperform’
Bernstein said the computer and printer maker would face greater structural headwinds from a shift to digital communications.
“With supplies growth expected to be negative in both 2019 and 2020, and supplies now having declined at a 4% CAGR since 2011, we worry that printing may be facing greater structural headwinds from the shift to digital and increased pressure from cloned/remanufactured supplies. In short, there is a higher likelihood the printing business is a “melting ice-cube” – despite myriad efforts by HP to improve the business – and the stock accordingly warrants a lower multiple. We set our new price target at $20.”
Deutsche Bank upgraded Las Vegas Sands to ‘buy’ from ‘hold’
Deutsche said it saw bearish sentiment for the Macau gaming market which was creating an “attractive” entry point for medium to longer term investors.
“Given bearish Macau sentiment which, in our view, has created an opportunistic entry point for medium to longer term oriented investors, we are upgrading shares of LVS to Buy from Hold. While the fortified balance sheet and the capital return story / flexibility are widely known and appreciated, we don’t see current valuation reflecting these merits.”
KeyBanc initiated Murphy Oil as ‘overweight’
KeyBanc said that it liked the “above-average” dividend yield and “strong” balance sheet for the petroleum and natural gas exploration company.
“MUR‘s 5.2% dividend yield is well above the industry average and is supported by its solid cash flows and balance sheet. However, MUR has more limited onshore drilling inventory vs. peers with around seven years remaining, calling into question long-term production trends. MUR does have significant exploration potential that would increase inventory if success were achieved in Mexico or Brazil.”
Stifel added Activision Blizzard to the ‘select list’
Stifel said that it saw “improving” fundamentals for game maker, Activision Blizzard, among other things.
“Our positive view on the shares is based on a combination of factors including 1) possible upside for Call of Duty: Modern Warfare (launching October 25th) where expectations have been generally lower; 2) BlizzCon 2019 serving as a potential catalyst; and 3) improving fundamentals in ’20 against an easy comp.”
KBW downgraded E-Trade to ‘market perform’ from ‘outperform’
The online brokerage’s stock was downgraded based on the firm’s expectations for the federal funds rate and treasury yields.
“We are updating estimates for the e-brokers to incorporate KBW’s new economic baseline. We are reducing F2019 EPS estimates by 1% on average and we are reducing F2020 EPS estimates by 8% on average across the group. The largest reduction in 2020 EPS estimates came at ETFC (-12%), as we expect meaningful headwinds to net interest income under KBW’s new economic baseline and interest rate forecast.”
Wedbush upgraded Chipotle to ‘outperform’ from ‘neutral’
Wedbush thinks Chipotle is in position to establish a “digital moat” as the industry transitions to a larger mix of digital transactions.
“As the industry transitions towards a larger mix of digital transactions, we believe Chipotle is in a leading position to establish a digital moat. We not only continue to see near-term momentum as management executes towards this transition, we believe CMG is poised to sustain outsized SSS and EPS growth in the mediumto long-term in an industry where a dearth of growth is likely to command an increasing premium.”
Read more about this call here.
Bank of America upgraded Energizer Holdings to ‘buy’ from ‘underperform’
Bank of America said in its double upgrade of the stock that any major risks for the company are now known and it had “confidence” in the ability for the business to turn around.
“Our prior rating of underperform had been premised on our view that Auto Care challenges would take longer to remedy and that Battery cannibalization would be more onerous than the market had previously priced in. In addition, the forced sale of Varta curtailed cash for debt paydown. We continue to see potential that the integration of the recently acquired assets could result in volatility NT, but with those factors now in the base and mgmt’s solid track record in legacy ENR giving us some confidence in their ability to turn the business around, we up our rating, even if fixes could take some time.”
SunTrust raised its price target on Roku to $163 from $60
SunTrust raised its price target on the stock but said it was keeping its hold rating on valuation among other things.
“We remain positive on Roku’s execution, fundamentals, and strategic value and our concern over the company’s 2019 outlook versus consensus has kept us incorrectly on the sidelines. However, we are not chasing the stock here and maintain the Hold rating for 2 reasons: 1) valuation (absolute and relative to the market and peers) is back near-highs since IPO; and 2) we do not view 2019 Platform revenue as conservative given the implied reacceleration in revenue dollar growth.”