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Here are the biggest calls on Wall Street on Tuesday:
Deutsche Bank upgraded the stock based on valuation and consensus subscriber estimates that the bank considers conservative.
“The company now trades at 7.9x EV/2019 sales, vs in excess of 10x sales last summer, when we lowered our rating to Hold based on valuation. Our $400 12-month PT implies 7.3x 2020E sales, in line with the 3-year median multiple, and below the median multiple over the past 1 and 2 years (9.0x and 7.9x, respectively). We see growth in revenue taking Netflix to $400 over the next 12 months even with de-rating as valuation shifts from 2019 to 2020 estimates.”
Read more about this call here.
Deutsche upgraded Western Digital saying it likes the setup in earnings and beyond.
“We are starting to observe favorable data points in both HDD and NAND that will support a solid 2H CY19 recovery for WDC‘s earnings. While we acknowledge there is downside risk to near-term EPS due to weaker-than-expected NAND pricing–and hence we lower our near-term EPS estimates–supply cuts across the NAND indus-try, along with a re-acceleration of nearline HDD demand, will likely lead to a strong-er recovery off a lower base in 1H CY19. On the upcoming earnings call, we expect WDC management to highlight the improved visibility, which should be a positive catalyst for the stock. As earnings power starts to normalize and with upside risks for earnings revisions for 2H CY19 and CY20, the setup is favorable, in our view. Consequently, we upgrade our recommendation to Buy and raise our price target to $60.”
Bank of America said among other things that it is not as positive that the company will see tool revenues improve.
“We continue to expect the commercial and industry segment to post the strongest performance but at a decelerating pace through the year as global industrial trends remain tepid. As such we lower our 2019-21 EPS estimates by 1.5/3.4 /3.5%. SNA shares are now trading at a ’19 P/E of 12.4x, below SNA’s 10-yr average of 13.8x (see trend on pg. 3). With 2019-21E EPS growth decelerating to 4.5% compared to a 14% average over the past ten years, we believe it is harder to justify much more multiple expansion. We lower our PO to $168 still based on 13x 2020E EPS. SNA will report 1Q19 results on 4/18 and we forecast EPS of $2.84 vs. consensus of $2.91.”
RBC said that even though shares remain compelling over the medium term it sees a “narrowing valuation discount versus peers.”
“We remain constructive on BP for its medium term growth profile and improving cash flow framework. However, the shares have performed well versus the sector in recent months, and we see less valuation upside now, and downgrade from Top Pick to Outperform, on our unchanged 625p Price Target.”
Goldman Sachs removed Cisco from the conviction buy list but said it still sees “upside to consensus estimates.”
“We remove Cisco from the Americas Conviction List but maintain our Buy rating. Cisco has executed well on rolling out its Catalyst 9000 (Cat 9k) products that have driven solid double digit growth in campus switching revenues. Since being added to the Conviction List (March 22, 2018), Cisco’s share price has increased 31% (vs. S&P 500 +10%) and its forward P/E multiple has expanded from 15.5X to 17.2X. Post this outperformance, we remove Cisco from our Conviction List as we believe Cisco’s business model transition is now better understood by investors, with the stock now trading relatively inline with the S&P 500 (vs. a 3X-5X discount historically and an average 1X discount over the last year). However, we maintain our Buy rating as we continue to see upside to consensus estimates driven by the Cat 9k product cycle and expect Cisco’s multiple to re-rate higher to 18.5X, further narrowing its discount to broader Tech peers. We increase our Revenue/EPS forecasts for FY20 by 1.5% and 1.8% respectively and raise our 12-month price target to $62 from $58.”
Editor’s note: This call occurred before the bell on Monday
RBC sees the chemical company with a nearly 17 percent upside.
“The new Dow accepts its fate as the ultimate commodity cash machine. Option on polyethylene (PE), improving FCF profile, and a commitment to capital return keep us bullish. Initiate with $68 target and Top Pick rating. We believe the DOW story will follow a similar narrative to LYB as DOW embraces its commodity chemical roots. We see nearly 17% upside in DOW shares driven by six major themes: 1) DOW’s ~54% EBITDA exposure to trough PE conditions; 2) DOW realizing benefits from de-bottlenecking of several facilities; 3) Low cost feed advantage; 4) A potential global cyclical upturn in ethylene; 5) Low capex spend as no large-scale M&A or greenfield expansion; and 6) Impressive Value Return to shareholders.”
Citi upgraded the engines, filtration, and power generation products maker saying that emerging markets and China should help to drive a higher multiple.
“As a follow-up to our recent positive near-term call on the group, we upgrade CMI to Buy from Neutral with a $190 price target. We see upside to 2019 estimates, and think out-year cash flows stay higher for longer. Continued improvement in China / EM sentiment should help to support a higher multiple.”
