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Uber CEO Dara Khosrowshahi (center) joins other employees in ringing the Opening Bell at the New York Stock Exchange (NYSE) as the ride-hailing company Uber makes its highly anticipated initial public offering (IPO) on May 10, 2019 in New York City.
Spencer Platt | Getty Images News | Getty Images
Here are the biggest calls on Wall Street on Wednesday:
Raymond James initiated Uber as ‘outperform’
Raymond James said Uber is well positioned for the “offline” era of the internet.
“We are initiating coverage on UBER with an Outperform rating and $50 target price (9.2x 2020E EV/GP). Shares have clearly been pressured on reasonable concerns on unit economics, competition, and duration of losses. Our view is: 1) competition continues to rationalize over the next 12 months; 2) growth re-accelerates, making unit economics more transparent; and 3) this causes concerns about the “true” TAM and long-term profitability to subside. Net, we believe Uber is strongly positioned for the “offline” era of Internet and should sustain 25%+ revenue growth over the next five years.”
Read more about this call here.
Telsey upgraded Churchill Downs to ‘outperform’ from ‘market perform’
Telsey said the recently passed Illinois gaming legislation will be actually be a plus for the horse racing and entertainment company.
“The sentiment surrounding the recently (6/2) passed Illinois gaming legislation (SB690) has been that it will be a positive for the equipment sector, but a negative for existing operators due to increased competition. While this is broadly correct, we believe CHDN is an exception that is poised to benefit tremendously due in large part to its 61% stake in the Rivers Casino. This is not overly surprising as the casino is still managed by Rush Street and Neil Bluhm who was actively involved in shaping the bill. The benefits to CHDN are three-fold: (1) the newly revised tax schedule is particularly beneficial to Rivers; (2) Rivers will be able to expand from 1,200 gaming positions to 2,000 positions (also true for the other 9 existing casinos); and (3) CHDN will be able to install 1,200 positions at Arlington. “
Wells Fargo upgraded Medtronic to ‘outperform’ from ‘market perform’
Wells Fargo upgraded the stock and said the company’s pipeline will help “accelerate” growth.
“We are upgrading MDT to Outperform from Market Perform because we believe the company’s late stage pipeline will help accelerate growth over the next several quarters and into F2021 (begins May 2020). In addition, the company has done a better job over the past year of managing Street expectations. In fact, MDT has exceeded consensus EPS estimates by an average of $0.06-0.07 the past four quarters. Lastly, MDT is currently trading at a ~20% discount to the large cap medtech peer group average (16.3x vs. 21.0x on CY2020 estimates) and we believe this gap will close as the pipeline materializes and topline growth accelerates. We raise our F2020-F2024 revenue estimates by $22M, $181M, $342M, $483M, and $554M, respectively, due to (1) greater share capture from Micra AV (leadless pacemaker); (2) adding the surgical robot to our model (launch in F2020); and (3) adding back renal denervation (RDN) estimates to our MDT model. We also raise our F2020-F2024 EPS estimates by $0.01, $0.03, $0.06, $0.10, and $0.06, respectively. “
Guggenheim upgraded Roku to ‘buy’ from ‘neutral’
Guggenheim upgraded the stock based on faster growth in video advertising as well as other metrics.
“We are raising our rating on Roku shares to BUY from NEUTRAL reflecting strong secular tailwinds for streaming video consumption as we believe 1Q results were representative of the core trajectory for key metrics. As detailed within this note we update our advertising and content revenue outlooks and addressable universe assumptions. We have raised our 12-month price target to $119 from our prior $75. “
Read more about this call here.
Bank of America upgraded Cronos Group to ‘buy’ from ‘underperform’
Bank of America said it likes the cannabis research, technology and product development company based on the prospects for U.S. expansion.
“We upgrade Cronos shares to Buy from Underperform with our PO on YCRON/CRON to C$27/US$20 (was C$17/US$13), 39% upside potential, on 62x CY20E EV/sales backed by our L-T DCF. While clearly a high multiple even vs peers, following recent mgmt comments, we have improved confidence CRON is near announcing its launch, in our view a significant catalyst: (1) improving near-term visibility in the largest market for cannabis derived compounds in the world, (2) CRON beginning to flex its near group-leading balance sheet (C$2.4bn cash) and partnerships (Altria, MO) to begin a transformation we see creating a vastly different co. in the years ahead. As this process accelerates, the N-T bear thesis, one to which we ascribed (initiation), becomes increasingly untenable, esp. with CRON value fractions peers despite more cash and similar market opportunity. “
Stifel upgraded NXP Semiconductors to ‘hold’ from ‘sell’
Stifel said the semiconductor company has a more “balanced” risk/reward profile.
“We are upgrading our rating on NXPI shares for three primary reasons, including: (1) Reduced debt risk in the current persistently low-interest rate environment; (2) Reduced risk to estimates following cuts made since the 3Q18 peak; (3) A more strategic use of capital (vs. large-scale, debt-financed share buybacks); and (4) Meaningful exposure to key secular growth cycles (especially 5G Infrastructure, Industrial/IoT, and content growth in Automotive). That said, key risk factors remain: (1) current challenging global Auto (units) environment; (2) Impact from lost business momentum due to the cancelled QCOM deal could begin impacting business over the next 12-18 months; (3) Elevated debt levels still pose some risk/flexibility limitations, despite the current low-interest rate environment. “
Deutsche Bank downgraded AIG to ‘hold’ from ‘buy’
Deutsche downgraded the multinational finance and insurance corporation on valuation compared to peers.
“We are downgrading shares of AIG to Hold. Among the principal reasons for our downgrade is the same principal reasons for our 10/30 upgrade: relative valuation compared with peers. Whereas that stood at a multi-year trough seven months ago, it now appears close to a multi-year near peak. Additionally, AIG stock stands at a P/E premium to peers at a moment when its commercial P&C peers are trading at arguably multi-year relative premiums to financials broadly. Given our forecast no longer assumes notably EPS beats vs. consensus, we believe the stock is more likely to be an in-line with peer performer. “