Check out today's top analyst calls from around Wall Street, compiled by The Fly.
PEPSI UPGRADES: Credit Suisse analyst Kaumil Gajrawala upgraded PepsiCo (PEP) to Outperform from Underperform with a price target of $144, up from $138. Pepsi is a "high-quality asset trading at a discount with near, medium, and long-term drivers," Gajrawala tells investors in a research note. The analyst says the comany's multiple has contracted five-turns just as business trends are set to accelerate. Gajrawala sees signs that North America beverages, which represent one-third of PepsiCo's sales and are the weakest division, as poised to improve. Further, in the near-term, COVID-19 highlights the defensive nature of PepsiCo, which has strong positions in water, sports drinks, juice brands and should benefit from snack pantry loading, contends the anlayst.
HOME DEPOT UPGRADED TO BUY: Loop Capital analyst Laura Champine upgraded Home Depot (HD) to Buy from Hold with a price target of $235, down from $240. While she more now has more conservative sales and margin expectations, the intrinsic value of Home Depot's franchise has "changed very little in our opinion," the analyst tells investors. She sees Home Depot being less impacted than most retailers based on the fact that its stores are expected to remain open as construction is considered an essential industry, Champine added. She also expects small businesses to see disruption, which may prove permanent and should accelerate Home Depot's share gains.
UNDER ARMOUR BENCHED AT STIFEL: Stifel analyst Jim Duffy downgraded Under Armour (UAA) to Hold from Buy with a price target of $11, down from $16. The disruption from COVID-19 hinders the company's turnaround thesis, which is predicated on an inflection in North American revenue, continued strong international growth led by China and capacity for operating margin expansion, Duffy tells investors in a research note. The analyst, who remains bullish on Under Armour's strategic direction under new leadership, says the "growing list of near-term risks" puts his optimism for shares "on the bench" for the remainder of 2020. To turn constructive again beyond the COVID-19 disruptions, the analyst is looking for stabilization in the channel landscape, visibility to normalization of category inventories, and evidence of consumer appetite for new styles.
DEERE UPGRADES: JPMorgan analyst Ann Duignan upgraded Deere (DE) to Neutral from Underweight with a price target of $140, down from $145. The analyst cites valuation for the upgrade but remains cautious on the structural challenges facing U.S. agriculture, Deere's core market. These are magnified by a strong U.S. dollar and current fundamentals in ethanol, Duignan tells investors in a research note.
Telsey Advisory analyst Joseph Feldman also upgraded Deere to Outperform from Market Perform with a $101 price target.
WESTLAKE CUT TO NEUTRAL AT JPMORGAN: JPMorgan analyst Jeffrey Zekauskas downgraded Westlake Chemical (WLK) to Neutral from Overweight with a price target of $40, down from $60. North American producers of petrochemicals are no longer the global low-cost producers of ethylene derivatives for 2020 and 2021, Zekauskas tells investors in a research note titled "A New and Harsher World." Their competition is naphtha-based production, and naphtha is now about $225 per ton, not $550 as it was in January, says the analyst. Zekauskas believes that while the North American producers of petrochemicals' cost position should change for the better in 2022 or in 2023 as oil prices rise, the "days of dominance are gone" in a world where shale production has to be forced down from time to time when OPEC tires of market share losses. In this environment, the analyst expects Dow (DOW) and LyondellBasell (LYB) to rethink the magnitude of their dividends. Zekauskas rates Dow and Lyondell Neutral, despite the sharp decreases in their share prices.
PepsiCo
+1.89 (+1.57%)
Home Depot
-4.34 (-2.23%)
Under Armour
-0.45 (-5.14%)
Under Armour
-0.545 (-5.52%)
Deere
-5.07 (-3.65%)
Westlake
-2.67 (-6.59%)
Dow Inc.
-2.26 (-7.58%)
LyondellBasell
-2.69 (-4.99%)