Here are the biggest analyst calls of the day: Tesla, Anheuser-Busch, Activision Blizzard & more

“Maintain Sell/High Risk as the risk/reward still appears negatively skewed despite the recent capital raise and stock pullback, mainly on lingering demand/FCF concerns (May 16 reported cost cutting memo, Model S/X price cuts, China risks). Reducing estimates to reflect the recent capital raise, Q1 results/guide and our own inputs (Citi deliveries < guide). Target goes to $191 from $238 on: (a) modestly lower terminal value margins reflecting our reduced 2019-21 estimates; (b) adjusting our Full Bull/Moderate Bull/Full Bear probability scenario weightings to 5/55/40 from 10/55/35, post the Q1 guide.”

“We are raising Anheuser-Busch InBev to our sector Best Idea (replacing KO) given our increased conviction in the US growth story following Monday’s investor seminar. We now favor ABI amongst our coverage due to 1) organic sales growth at the top of the peer range, 2) leading EBITDA margins, 3) untapped premiumization opportunities, and 4) the significant potential in emerging markets. We are increasing our EPS estimates in FY19 / FY20 / FY21 to $4.50 / $5.04 / $5.66 (from $4.49 / $5.02 / $5.63) due to higher US sales growth. Our price target is unchanged at $103. “

“With LM having made a bunch of progress towards accomplishing the mission of becoming a more stable company & now with the presence of an activist the company’s familiar with which should help them extract some more expense synergies (& hopefully spur margins up from current levels), LM doesn’t feel like an underperform to us anymore. There’s still work to do (getting costs out, some performance & margins), but we’re moving to In-Line with a $35 PT. “

“Activision bulls (ourselves included) have been willing to look past a weak 2019 by pointing to upside in 2020. Recent reporting from Kotaku about issues in the Call of Duty pipeline have begun to make that bull case look like less of a certainty. According to the article, CoD 2020 is in trouble and development is now being led by Treyarch. This breaks the 3 developer rotation that Activision has maintained since 2011 and gives Treyarch only ~2 years to develop Black Ops 5 (which could effect its quality / disrupt BO4’s live services). While we still expect 2019 to be the trough of earnings power for ATVI, we are lowering our PT to $52 and moving to Equal-Weight(Vol) for now as we see more risk to our 2020 upside case and we do not anticipate having any additional visibility into Blizzard’s pipeline until BlizzCon in November. “

“We see two competitive forces in 5G potentially helping Ericsson. First, the China vs US technology competition is heating up, and the US pressure on Ericsson’s top competitor, Huawei, may be positive for Ericsson (see Huawei business deep dive). Second, we view a potential TMUS/S merger positively. The combined company could accelerate 5G deployment, especially given its spectrum assets, which could spark a better investment environment at T/VZ as well. We expect competition and spectrum availability to drive 5G deployments in other parts of the world, translating into a prolonged cycle, which is currently at its very early innings. “

“Said differently, while we continue to believe CEO Gass’ “Blank Canvas” approach to the business is the right course of action to separate the model from brick/mortar peers – the reduced forward outlook across the model’s 3 key P/L line item drivers (SSS/GPM/SG&A) equates to high-single-digit EBITDA contraction in FY19 (& a double-digit 1H19 YOY decline) versus +2.7% in FY17/18 with the combination of moderating same-store-sales (-70bps 2-year stack slowdown in 1Q vs. TTM trend) and changing gross margin complexion (competitive pricing + digital pressure > inventory mgmt in FY19) raising incremental concern around management’s multi-year EBITDA expansion target.”