Here are the biggest calls on Wall Street on Tuesday:
Rosenblatt is bullish on Disney‘s direct-to-consumer strategy.
“We initiate coverage on Disney with a Buy rating and a PT of $150, implying 35% upside. DIS offers a compelling risk-reward when contemplating the probability of Disney+ success. DIS’ future direct-to-consumer (DTC) success with Disney+ hinges on strong tested DTC IP and a superb track record investing and executing on plan. We expect DTC investments, along with the Fox asset acquisition, will return DIS to a double-digit earnings CAGR in ’21E and beyond.”
Seaport is bearish on the idea that millenials and future generations will ditch their cars for ridesharing.
“In our view, valuation is the toughest task with LYFT. Most investors are familiar with the brand name and the service. In order to justify its current market valuation, investors need to take a big leap of faith that the millennials and later generations will forego ownership of a car and opt instead for reliance on a ridesharing service. Despite the optics of vehicles being an underutilized asset, we believe people will continue to own their own vehicles as primary transportation and instead rely on the ridesharing services as a convenient supplement. While we believe the ridesharing market will continue to grow and expect LYFT to be a prime competitor, in our view, current valuations reflect an overly optimistic view of consumer behavior in the US. We initiate coverage with a sell rating and $42 price target.”
Deutsche Bank said that even though the chemical maker will be smaller than the old Dow, they believe it will be a better investment.
“With the separation of Dow from DowDuPont on April 1, THE iconic US chemical company has returned to the public market as an independent company after a brief 19-month hiatus following the merger of Dow and DuPont in ’17. While “New” Dow is smaller than “Old” Dow, having combined its $6B (in sales) Ag business with DuPont’s Ag business and shifting $8B of its highest margin specialty sales to DuPont, overall we believe “New” Dow will be a better company (and investment) than “Old” Dow. With an attractive dividend yield of 5.2%, we initiate coverage with a Buy rating and a price target of $62, with upside potential of 16%.”
Deutsche Bank said Intuitive Surgical which develops robotic-assisted technologies, tools and services for surgery, has “best-in-class proﬁtability.”
“Intuitive Surgical is the dominant global leader in robotic surgery and, in our view, one of the premier medtech growth stories: durable premium revenue growth with best-in-class proﬁtability despite the major step-up in investment in 2019 that belies the company’s true earnings power. A still-underpenetrated worldwide surgery market leaves substantial runway for continued robust sales growth, with technology innovation – including two novel new robotic systems now in early commercialization and a steady ﬂow of new instruments – continuing to drive both penetration of established procedure categories and addressable market expansion. While competitor surgical robot launches are likely on the horizon and cannot be overlooked, we think Intuitive’s market leadership is sustainable in light of myriad important competitive advantages enumerated herein.”
Jefferies said the clinical laboratory companies should benefit from the debut of their preferred lab networks.
“We are upgrading DGX & LH given our belief that UNH‘s upcoming rollout of its preferred lab network is a positive catalyst for both stocks, as their likely inclusion should bolster organic growth beginning in 2020. With 2019 outlooks (incl. Q1) seemingly de-risked with fairly conservative guidance ranges and 2020 Street estimates looking conservative, DGX’s and LH’s valuations, at below-historical relative averages make both stocks compelling.”
Deutsche said the maker of Twinkies could return to “top-tier” revenue growth this year.
“Since our May 2018 downgrade, TWNK has declined ~7% while the XLP has appreciated ~13%. Walmart merchandising issues, Chicago bakery margin/mix headwinds, and general cost inflation have all driven fundamental underperformance relative to peers, as revenue growth decelerated and margin contracted at Hostess. As we said coming out of our management meetings in September, after Q3’18 results in November, ahead of Q4’18 results in February, and after the recent CAGNY lunch in March, the pressures faced in 2018 could easily become tailwinds in 2019, however. If management can execute effectively, all while the Walmart merchandising issue laps, Chicago bakery finally turns profitable, and improved pricing helps to offset freight, commodity, and wage inflation, then we could (and should) have a Hostess this year that returns to top-tier revenue growth in the U.S., all while expanding margins nicely.”