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Strauss Zelnick, CEO of Take Two Interactive.
Adam Jeffery | CNBC
Here are the biggest calls on Wall Street on Wednesday:
Cowen upgraded Take-Two Interactive to ‘outperform’ from ‘market perform’
Cowen said the video game maker is the most attractive option in the sector.
“The console-facing portion of the video game group is heading into an 18-month period that historically has provided a significant tailwind for share performance (summer followed by the run-up to a new console cycle). We believe TTWO shares are the best vehicle for exposure to this window, and are upgrading to Outperform and raising our PT to $113. “
Bank of America added NXP Semiconductors to the US 1 list
Bank of America said the global semiconductor maker has “compelling” valuation and an “improving pipeline.”
“While China recovery remains uncertain, we believe NXPI has several self-help levers that can expand GM by 200-300bp and EBIT by 400-500bp over the next few years. When coupled with buybacks, we see prospects for a 14-15% EPS CAGR from 2018-21E, among the best in diversified semis. With this report we are adding NXPI to BofAML’s US1 list and reiterating our Buy rating. “
Bank of America upgraded Corning to ‘buy’ from ‘neutral’
Bank of America said the company is an “especially attractive” buying opportunity.
“We upgrade Corning from Neutral to Buy rating as (1) we view the growth profile as better than historical and more diversified, (2) Gross profit dollar growth should scale with near term investments that are impacting gross margin rates, (3) glass pricing environment is a tailwind and could surprise incrementally to upside, (4) operating leverage should help drive incremental margin expansion over the next few years, (5) opportunity to return incremental capital to shareholders through corporate actions/incremental debt, (6) Lower capital intensity for new initiatives given ability to re-use idle capacity (e.g. Gorilla Glass), (7) We expect a positive update at the upcoming investor day in mid-June, and (8) Corning is significantly outgrowing declining unit growth in smartphones, TVs, Autos given its increasing content in each of these. Our new PO of $40 (was $38) is based on 18x C20E EPS of $2.18. We view the pullback in shares yesterday (-6% vs SPX up 0.1%) as an especially attractive buying opportunity. “
Barclays raised its price target on Disney to $150 from $130
Barclays raised its price target but said they want more “visibility” around the direct to consumer area.
“While DIS stock has outperformed since its Investor Day, there is meaningful uncertainty around earnings expectations. DIS did provide some high level financial information at the investor day and more granular information in its 8K, but there continues to be a lack of clarity on a number of details for estimates to converge around a tight range. We provide some context to make core comparisons easier. “
Longbow downgraded McDonald’s to ‘neutral’ from ‘buy’
Longbow downgraded the company mainly on valuation.
“Following MCD‘s impressive domestic comp growth performance in 1Q, we have increased confidence the company could beat same-store sales growth expectations against easing comparisons over the last three quarters of the year. . However, the shares are now trading very near to our prior 12-month target price of $200 and we believe now accurately reflect our favorable view. We are therefore downgrading the shares of MCD to NEUTRAL this morning. “
Deutsche Bank upgraded Ingersoll-Rand to ‘buy’ from ‘hold’
Deutsche Bank upgraded the industrial manufacturing company after they announced a division would merge with Gardner Denver Holdings which makes pumping equipment.
“This morning, GDI and IR announced their intent to combine all of GDI with IR’s Industrial segment (including the PFS acquisition, expected to be completed in mid- 2019), creating a global leader in flow creation and industrial technologies. The transaction is structured as a Reverse Morris Trust and, upon closing, IR shareholders will receive 210m shares of IndustrialCo (50.1% stake) and will also own all of ClimateCo, given that IR’s remaining Climate segment will become a pure-play HVAC company. ClimateCo will also receive $1.9bn cash from IndustrialCo, to be funded by newly-issued debt assumed by GDI. GDI shareholders will receive 209m shares (49.9% stake) of IndustrialCo. “
Credit Suisse upgraded ConocoPhillips to ‘outperform’ from ‘neutral’
Credit Suisse said some concerns about the company are “overdone.”
“COP has underperformed peers by ~30% YTD driven by: 1) the unwind of winners from last year that occurred in January/February, & 2) concern it makes a large, corporate acquisition. But given management’s comments today on the “very high” bar a corporate deal must clear for it to pursue (focused on full-cycle returns) & it already has ~16 BBoe of resource with a cost of supply <$30/Bbl (no need to replenish inventory), we think the aforementioned concerns are overdone. Meanwhile, COP has de-rated >2.0 turns on 2020 EV/DACF this year (largest among large-cap E&Ps) & now trades at a ~0.5x discount to the group (as well as a 10% FCF yield, twice that of peers) despite continuing to execute on its financially disciplined, returns-focused strategy. Thus, we are upgrading COP to Outperform (from Neutral) and maintaining our $75 TP.”
