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Elon Musk, chief executive officer of Tesla Inc., arrives at federal court in New York, on Thursday, April 4, 2019.
Natan Dvir | Bloomberg | Getty Images
Here are the biggest calls on Wall Street on Thursday:
Goldman Sachs lowered its price target on Tesla to $158 from $200
Goldman said it sees a lower probability that upside volume scenarios will be achieved for Tesla.
“While TSLA shares have been under pressure this year, they are currently bouncing back on near-term deliveries. And while we believe 2Q19 should be fine — and the company likely achieves volumes near FactSet consensus — we do believe 2H19 (and beyond) volume estimates look high considering there are fewer levers to pull to stoke demand going forward (i.e., company released lower priced variants of the Model 3, a leasing option was introduced, and right-hand drive orders have begun). Further, when coupled with a lack of direct impetus to open up new demand pockets (other than introducing incentives or more attractive financing rates) and another step-down in the US Federal Tax Credit for TSLA vehicles beginning on July 1 — we believe 2Q19 was a better environment for demand and thus deliveries, but to a level that is likely not sustainable. We believe that is the largest question for investors to underwrite at this point — what are sustainable demand levels for the Model S, Model X, and Model 3 — and how does that change with the introduction of Model Y production.”
Read more about this call here.
Deutsche Bank initiated Apple as ‘hold’
Deutsche initiated with a hold mainly due to “macro and economic policy” issues as well as possible tariffs.
“Our neutral view is based on 4 main points: 1) We fear a 2019 iPhone cycle lull ahead of 5G iPhones in 2020; 2) Other hardware is transitioning to growth (Watch/AirPods), but this is more of the slow-and-steady variety; 3) Services could provide a partial offset and contribute 2-3 points of growth, however the business increasingly faces a law of large numbers dynamic; 4) AAPL‘s balance sheet offers some positive optionali-ty, but this is largely contemplated in estimates. Overall, when we balance AAPL’s valuation with the company’s fundamental levers for further EPS upside, we see a balance reward profile relative to the risks. We see Services growing at a mid-to-high teens y/y growth rate over the next few years, which could provide some relief. “
Deutsche Bank initiated Dell as ‘buy’
Deutsche said the likely slowdown in IT infrastructure growth is already reflected in the stock’s price, following a recent 25 percent pullback.
“Our bullish thesis is predicated on 4 main points: 1) Street estimates may prove conservative over the next 2-3 years as a 15-20% discount to Dell‘s implied EPS target seems too large; 2) Rising investor fears of slowing IT infrastructure spending are further magnified by Dell’s high debt levels. While we appreciate this risk, we believe Dell can consistently deleverage its balance sheet through a wide array of cash-generating actions, while also poten-tially benefiting from refinancing opportunities given the possibility of lower inter-est rates; 3) We have confidence in Dell’s progression towards its 12% operating-margin target, driven by an improvement in Storage and higher VMware mix; 4) We believe the recent pullback in Dell’s share price and resulting valuation offers down-side protection. “
D.A. Davidson initiated Hostess Brands as ‘buy’
D.A. Davidson said “recent” company headwinds are largely in the mirror.
“We are initiating coverage of Hostess Brands with a BUY rating and $16 price target. We think recent headwinds (leadership turnover, dilutive M&A, mix pressures, and lower mass channel promotional support) are now largely behind the company, setting up achievable expectations (guidance & consensus) over the next two years. “
Piper Jaffray downgraded Hershey to ‘underweight’ from ‘neutral’
Piper said the chocolate maker has stable growth but is trading at a historically high premium to its peers.
“Hershey has a US-centric portfolio with generally stable top-line and earnings growth, but valuation now looks inconsistent with consensus expectations. It now trades at a historically high premium relative to US consumer peers, despite consensus EPS growth expectations that are more in-line with peers. Notably, HSY shares trade at a 70% premium to K shares even though Hershey’s consensus EPS growth outlook is in-line with Kellogg’s. We also do a reverse DCF analysis that suggests 3% implied market expectations for Hershey’s topline growth, more than twice its 1.3% consensus sales growth expectations for 2020-21. We maintain our 2019E/20E EPS of $5.70/$6.00 and raise our target to $125 (based on a higher multiple of ~21x our 2020E EPS of $6.00) to recognize better market sentiment for defensive stocks, but lower our rating to UW. “
Wolfe Research initiated Netflix as ‘outperform’
Wolfe initiated coverage on the stock and said it has a “more bullish view on the Disney versus Netflix debate.”
“We initiate NFLX with an Outperform and $442 PT. Our positive thesis has to do with: 1) NFLX’s unparalleled global scale; and 2) our more bullish view on the DIS-vs.-NFLX debate (we remind you we are positive on DIS and Disney+). “
