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Here are the biggest calls on Wall Street on Thursday:
Guggenheim said Facebook‘s user trends are stable and they are becoming increasingly confident that investors are comfortable with the company’s privacy and content issues.
“Our price target increase and upgrade to buy from neutral reflect our view that investors will continue to gain comfort with the incremental financial risk created by content and privacy concerns. At the same time, we believe usage trends have remained solid (domestic blue app maturity offset by Instagram and global growth) and see the potential for commerce and messaging monetization opportunities as attractively priced within shares. We still view the company’s video strategy as un-developed and see the economic opportunity as limited without uniquely recognizable content and a presence on the television screen to complement the mobile experience.”
Read more about this call here.
Morgan Stanley said the chipmaker has seen a recent run-up in shares and a continuing oversupply of DRAM.
“Since we downgraded Micron in May of last year we have been more cautious than consensus on near-term fundamentals, but have seen risk/reward for the stock as reasonably balanced. However, the stock has rallied around recent optimism as cloud demand starts to come back (which we DO think is happening starting in 2q), and a minor product qualification challenge at a competitor (that has been happening since early February and has shown no sign of stabilizing things), looks through just how wide the gap between supply and demand is early in the year. We see DRAM remaining oversupplied throughout the year and into next. While NAND is closer to a bottom than DRAM, we do see difficult conditions persisting through the year. Our estimates for FY20 are 58% below consensus and we think there is higher likelihood of downside vs. upside to our numbers. We still see the longer term range for the stock price $30 to $60, but see a much higher likelihood that we see low 30s before we see high 50s.”
Read more about this call here.
Guggenheim downgraded Roku saying they see rising competition from Apple and Amazon.
“We believe the company’s user base (we estimate 28.6mm active accounts as of 1Q19) is a uniquely valuable asset that could be attractive to a partner or acquirer. However, at a market capitalization that represents $300 per active account and an annual ARPU of ~$18, we are concerned that a significant portion of that potential value is reflected. Our $72 price target is DCF based using a WACC of 11.0% and a long-term growth rate of 4.0% (both unchanged).”
Goldman said the Fox acquisition is a positive for Disney and sees a “positive long-term strategy,” with Disney’s direct to consumer pipeline.
“We reinstate a rating on Disney with a Buy recommendation and 12-month price target of $142, representing total return potential of 28%. It is the dawn of a new era at Disney. The $70 bn acquisition of Fox is now closed (3/20/19) and the approaching debut of Disney+ streaming service in late CY19 marks a momentous shif tin the company’s content monetization model from third-party licensing to direct-to-consumer streaming.We see the Fox acquisition resulting in economies of scale, increased bargaining power with distributors, content diversification (i.e., Fox’s edgy adult programming), and increased international reach. We estimate $2 bn in cost synergies by the 2-year anniversary, or 11% of FY19E pro-forma OI.”
Read more about this call here.
Canaccord said the growing e-commerce company has all the qualities needed to prosper in an environment dominated by Amazon.
“With an e-Commerce landscape dominated by Amazon, it takes a special value proposition for other companies to prosper. Some qualities we have seen to be helpful are a unique supplier base, a differentiated value proposition for shoppers, and a customer experience that values other elements of a transaction above fast free shipping. We see Etsy benefiting from all of these elements, with added tailwinds of a large, under-penetrated market and specific operating improvements that should continue to make the business more efficient. New management has done an admirable job bringing the platform closer to best-in-class peers, although we still see room for improving operating performance leading to robust growth and stronger profitability.”
