Here are the biggest analyst calls of the day: Wells Fargo, Comcast, Spotify & more

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Here are the biggest calls on Wall Street on Friday:

Deutsche said Wells Fargo earnings could be lower than expected in the medium-term.

“Cost saving targets will likely be re-evaluated by a new CEO. While we still see opportunity for meaningful reductions over time, the timing may be pushed out and there may be offsets (such as higher investment spend in technology, for example). Changes to the business model could reduce revenue (and earnings). For example, a new CEO may choose to exit or reduce some areas in an attempt to simplify the company (as we’ve seen other large banks do post crisis). Note that WFC has already done some of this and one could argue there was less need to simplify/de-risk given strong relative performance during the 2008/09 financial crisis. Any revenue loss would be at least partially offset by cost take out and freeing up of capital, but there may be a net drag to earnings (and/or delay in redeploying the capital, taking out the costs, etc). Near-term revenue may suffer from uncertainty surrounding new leadership and potential changes coming, in our view. Some current earnings at WFC are running off with the passage of time, but a new CEO may make these items more transparent and separate from the ongoing earnings power of the bank. These include $1.1b of purchase accounting accretion in 2018 and earnings from legacy assets that are being run off (such as WFC financial mortgages and securities purchased during the financial crisis).”

Raymond James is concerned about declining revenue but said the leadership change is a positive move.

“We believe the move is a positive step, which will improve investor sentiment and reduce regulatory scrutiny, as the bank searches outside the company for a successor. However, our enthusiasm is tempered by still inferior fundamental performance, as we expect revenue to decline again in 2019; current EPS estimates to be revised lower; and profitability metrics to remain below-peer. Our suitability rating on WFC is Medium Risk/Growth.”

RBC is concerned about the acceleration of cord cutting and household growth slowing down. (Comcast is the parent organization of CNBC.)

“We’re taking a more cautious view on Cable sector fundamentals and lower expectations for broadband and video subscribers. Applying a more modest target multiple drops our target price to $42. In light of our tempered view and the strong share price run, we downgrade Comcast to Sector Perform.”

J.P. Morgan is concerned about the impact of delays in the shipping of Tesla Model 3’s in China and Europe.

“We are lowering our estimate of 1Q18 deliveries, following reports of delays in shipping Model 3s to customers in Europe and China and given emphasis in our meeting regarding the already planned back-end-loaded nature of 1Q deliveries, suggesting increased susceptibility of even modest delays to have a disproportionately material impact on 1Q financials. With that said, we have been consistently positioned below the Street relative to our estimates, and so we find that relatively little adjustment is likely needed in comparison to recent changes in consensus estimates. Furthermore, we had already been positioned for a GAAP loss in 1Q, consistent with Tesla‘s intra-quarter update that it was likely to report a GAAP loss in 1Q vs. indication earlier that it could report a small profit. Our estimate of 1Q Model 3 deliveries declines to 50,000 from 55,000 prior (and vs. current consensus of 54,590, as per the company), total deliveries go to 70,500 from 75,500 prior (vs. consensus 74,930), and adjusted EPS to $0.38 from $0.94 prior. Full-year 2019 goes to$4.25 from $4.50 and 2020 to $6.75 from $7.00 Our December 2019 price target falls to $215 from $230 prior on our lower estimates.”

Credit Suisse believes expectations are too high for revenue and subscriber growth.

“We initiate coverage of streaming music leader Spotify with an underperform rating and a $120 target price. While we expect significant subscriber (subs) and revenue growth for SPOT, we believe consensus multi-year expectations for its subs and margins are too high and see risk as ongoing battles over content costs support concerns around Spotify’s profit potential.”

PiperJaffray says long term concerns remain but valuation is “reasonable.”

“We are revisiting our prior underweight thesis and are upgrading our rating of F5 Networks to Neutral. However, we remain concerned around some of the longer-term dynamics, including F5’s dependency on on-premise application delivery controller’s, the competition, and further risk to FY19-FY20 estimates. We view the current valuation as reasonable and reflecting some of these longer-term risks, presenting a more balanced risk-reward profile than six months ago. While we are upgrading shares to Neutral and raising our price target to $163 on a slightly higher multiple, we are continuing to recommend our pair-trade idea of Akamai and F5 Networks.”

Deutsche still likes Restoration Hardware long term but thinks that the macro environment and general market volatility make it difficult to own the stock right now.

“While we continue to believe in the long-term prospects for RH and acknowledge that it is one of the few retailers growing sales, margins, profit dollars and earnings, we think the market volatility means now is not the time to continue to own the stock. Estimates are coming down as RH’s high-end, highly discretionary product falls victim to signs of a slowing economy and stock market gyrations and weakness in high-end housing trends. In this environment, sales and profit trends have become increasingly difficult to predict for RH. Thus, with signs that the U.S. economy remains strong, but slowing, we think that not only do estimates need to come down but our target multiple does as well as investors pay less for uncertainty. The stock significantly outperformed both the market and retail in 2018 and has been slightly better than the XRT prior to this report in 2019 as well. But, we think it will have trouble rebounding until we are once again in an upward revision cycle and that may not happen until the economy is on stronger footing. And even then, it will probably take a few quarters or more of better results to convince investors that the volatility has settled down.”

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