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Here are the biggest calls on Wall Street on Tuesday
Cowen upgraded Disney saying they were bullish on Star Wars and the streaming service launch.
“We view Disney’s catalyst path for the next year as highly attractive, and believe Thursday’s investor day will likely be a deck-clearing event for sentiment. Upgrade to Outperform with our PT going from $102 to $131. Note however that we continue to have longer-term concerns about the the Fox acquisition and the ability of DTC video to improve deteriorating content aggregation economics.”
Read more about this call here.
Morgan Stanley said Instagram commerce will be a key area of focus for Facebook.
“Instagram commerce is top of investors’ minds. We see the ~$4bn+ opportunity but believe a stronger payments offering is key to capitalize, which takes time. Monetizing Stories took time too; good news is we believe Stories are monetizing now, as we raise ’19 EPS by 1%, PT to $195 and remain OW.”
Goldman Sachs lowered their price target on Boeing primarily on 737 issues.
“We revise our 12-month price target to $393 from $425 which reflects the flow through of our reduced estimates, still based on 18.7X CY19E P/E. We have also revised our core 2021-2023 EPS estimates to $25.91/29.43/32.17 from $26.81/29.30/33.47 to reflect changes in the 737 ramp. Key risks: (1) the pace of air traffic growth, (2) 737 MAX reliability, (3) DoD spending priorities.”
Credit Suisse said the steel maker’s “competitive position has weakened.”
“We downgrade X to Underperform and cut our target price to $13 from $21. Our new target price assumes X trades at 4.5x EV/EBITDA on blended 2019 and 2020 estimates, which we view as more normalized. Note we use pension adjusted framework and HRC value of $700/ton average in 19/20, levels we view above mid-cycle. In this report we perform deep dive analysis on US Steel Flat Rolled segment and conclude the step-function rise in unit costs the past several years coupled with loss of automotive share suggests X is in a weaker competitive position versus peers entering the “Sheet Tsunami” period in the US from 2021-2022. We see the market awarding a lower multiple on medium term earnings given this dynamic. We lower 2019 EBITDA to $1.06bn.”
Wedbush said that they are seeing trends showing a more stable environment for the iPhone.
“While there is still “wood to chop” ahead for Cook & Co, we are seeing more stable iPhone demand trends in the field after a turbulent few months with hurricane-like clouds slowly clearing in China for Apple. We maintain our OUTPERFORM rating and are raising our price target from $215 to $225 to reflect more stable demand trends in the field and a valuation starting to get more “Street cred” for the linchpin services segment.”
UBS said the German-based European multinational software corporation has “limited upside potential.”
“While we expect an in-line Q1, we are not expecting an inflection in S/4 adoption this year and see Qualtrics as unlikely to transform near-term prospects. Also, while we now see cloud margins being on a steadily improving trajectory, the 2020 target of a 71% gross margin still seems unattainable, implying as it does an 80%-plus contribution on an incremental €3.3-3.8bn of sales. The ongoing shift toward a “Customer First” sales approach and developing deeper industry expertise in sales (likely given further impetus after SAP’s Net Promoter Score fell to -5 in 2018), should help long-term but may reduce sales predictability in the near-term. Also, while there is a promise of stronger FCF in 2020, FCF this year will remain depressed, and with the shares now at a near-20x 2020E PE, we see their value as fair.”
Morgan Stanley said that China concerns and merchandising issues have started to dissipate for the clothing company.
“We see the concerns that have pressured PVH stock over the last eight months turning into positives in 2H19. China worries (slowing consumer and potential tariffs) as well as Calvin Klein fashion/merchandising execution issues fueled a 45% decline in the stock from a July 2018 high of $157. We view these issues as transitory, as 1) CK management recalibrates its balance between fashion and core/basics and 2) as supportive China policy measures stabilize consumer spending in 2Q19. As these issues resolve and EPS growth reaccelerates, we expect PVH stock can retrace to higher levels, and at the current valuation of 12.2x P/E (~10% below its 5-year historical average and ~6-turn discount to peers) we see a compelling opportunity to own this global growth story.”
Macquarie said that although shares have underperformed, “efforts across Sky/Xfinity/NBCU could be meaningful.”
“We raise our CMCSA TP to US$49 as we fine tune numbers for Sky. At 13x/8x/12x ’20 P/E, EBITDA, and FCF estimates, and top-line poised to grow at a 10% 3-year CAGR, CMCSA shares trade at an undemanding multiple (Fig 3). Applying 16x to our ’20 P/E (on adj. EPS) would imply a US$51 valuation.”
Disclosure: Comcast is the owner of NBCUniversal, parent company of CNBC and CNBC.com.
