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SpaceX owner and Tesla CEO Elon Musk gestures during a conversation at the E3 gaming convention in Los Angeles, June 13, 2019.
Mike Blake | Reuters
Here are the biggest calls on Wall Street on Thursday:
Credit Suisse initiated Ford as ‘outperform’
Credit Suisse said it sees Ford shares as having upside as the company works to reimagine its business.
“The central theme of our launch is “The Two Clocks,” reflecting the industry challenge of concurrently balancing cyclical (the “near”) and secular challenges (the “far”). Given the concept was originally cited by Ford, it is only fitting that Ford is the textbook case for our “two clocks” framework. Ford faces a number of risks ahead, as it redesigns its business to address profitability, while concurrently pursuing a longer-term reimagining of the business. Yet we see upside for the stock, as there have been early signs of improvement with more to come. “
Credit Suisse initiated General Motors as ‘outperform
Credit Suisse said GM has done a good job in balancing both short and long term concerns.
“The central theme of our launch is “The Two Clocks,” reflecting the auto industry challenge of concurrently balancing cyclical (the “near”) and secular challenges (the “far”). While this challenge is especially relevant for automakers, when evaluating GM on this framework, we believe it is one of the best players in our coverage in balancing the ‘near’ and ‘far,’ offering a compelling narrative on both fronts. “
Credit Suisse initiated Tesla as ‘underperform’
Credit Suisse said Tesla is likely to “settle as a niche automaker.”
“To best understand Tesla‘s prospects in its push for electric vehicles (EV) proliferation, we believe it’s worthwhile to compare it to an auto industry incumbent – most appropriately Volkswagen (VW). With both Tesla and VW committed to EV proliferation, the Tesla vs. VW debate could be relevant for the next decade or more. Tesla currently leads in areas that will likely define the future of carmaking. Yet it faces risks ahead – reflected in our below-consensus estimates. And despite growth ahead, we believe Tesla is likely to settle as a niche automaker. “
Read more about this call here.
Wedbush initiated Nvidia as ‘outperform’
Wedbush said the company has “strong” growth prospects in AI, cloud and other end markets.
“Net, we are setting a price target of $184 representing the midpoint of current multiples applied to our 2021 estimates and initiating the name with an OUTPERFORM in light of the implied ~21% upside from NVDA’s current price levels as well as NVDA‘s strong growth prospects in numerous attractive end markets (AI/deep learning/cloud, gaming, autonomous driving, high speed and intelligent NICs, etc.). “
Wedbush initiated Intel as ‘underperform’
Wedbush said Intel has an “uncertain” future due to execution struggles and cyclical downturns.
“We believe INTC‘s recent struggles with execution combined with cyclical downturns in key markets together create an uncertain future with downside risk to estimates. “
Wedbush initiated Advanced Micro Devices as ‘outperform’
Wedbush said the semiconductor company will take share from Intel in the server and PC markets over the next few years.
“We view AMD‘s reemergence in CPUs (and to a lesser extent GPUs) as one of the likely major shifts in both the PC and data center markets over the next few year. “
Wedbush initiated Western Digital as ‘underperform’
Wedbush said it sees continued margin pressure for the disk drive and flash memory maker.
“Our view is WDC is significantly overvalued, particularly as we see margins as likely to trend downwards through at least CQ3 if not year end. In turn, we believe continued margin pressure will keep EPS at close to breakeven levels and will even result in a slight loss in CQ3 per our model. “
Raymond James initiated Planet Fitness as ‘outperform’
Raymond James likes the fitness center operator’s differentiated business model.
“We are initiating coverage of Planet Fitness, one of the largest and fastest-growing franchisors and operators of fitness centers in the U.S., with an Outperform rating and $80 target price. Importantly, we believe PLNT’s differentiated business model and compelling unit economics prove advantageous. Store expansion, increased Black Card membership penetration, and rising royalty rates serve as key growth catalysts that should, in our view, effectively augment PLNT’s sales and profitability. “
Goldman Sachs downgraded Nordstrom to ‘sell’ from ‘neutral’
Goldman said Nordstrom is in a “challenging” retail environment and that headwinds “persist” ahead of earnings.
“Ongoing comp headwinds in full line and off price stores are compounded in FY19 by EBIT headwinds from ongoing strategic investments and the opening of the company’s 7-floor flagship in NYC. GS FY19/20 estimates are -11%/-21% below consensus; $30 price target implies 7% downside.”
Deutsche Bank raised its price target on Facebook to $230 from $220
Deutsche raised its price target and said the company has “several levers” for shares to go higher.
“We increase our estimates on Facebook largely modeling 4Q top line to re-accelerate revenue to 27% ex-FX in 4Q on our view that easing comps, improving checks around the Stories ad unit performance and pricing, and the expectation that Instagram Checkout can expand beyond the initial beta partners and drive more ad spend this holiday period. “
Deutsche Bank downgraded Travelers Company to ‘sell’ from ‘hold’
Deutsche Bank downgraded Travelers and said the property and casualty sector was “overvalued.”
“Generally speaking, we believe the commercial P&C sector to be largely overvalued, a reaction to an intra-sector exodus from more rate-sensitive financials into P&C insurance stocks. 5- and 10-year interest rates have now fallen to a point where they will likely begin to have a deleterious effect on EPS fore-casts for P&C insurers.”
SunTrust initiated Take-Two Interactive as ‘buy’
SunTrust said the game maker’s stock was a “long-term outperformer.”
“Big Picture – We like TTWO. The stock has been a long-term outperformer under this leadership team and the company has i) valuable recurring sports franchises in NBA 2K and WWE 2K; ii) differentiated studios and IP in Rockstar and Grand Theft Auto; iii) a strong development pipeline; iv) balance sheet/cash flow flexibility to supplement growth with acquisitions and buybacks; and v) the most exposure (of USA traded console game publishers) to the upcoming console cycle, the shift to streaming (should platform fees come down with more distributors entering the market), and consolidation. “
Bank of America upgraded Owens Corning to ‘buy’ from ‘neutral’
Bank of America said the company continues to unlock shareholder value. Owens Corning makes and develops insulation, roofing, and fiberglass.
“In our view, some building products companies have arguably become overly diversified and are essentially conglomerates of businesses lacking clear industrial logic and/or synergy opportunities. We believe focused business portfolios can allow companies to create value for shareholders by more effectively allocating capital towards opportunities with higher growth and returns or towards share repurchases, dividends and debt reduction.
