Check out today's top analyst calls from around Wall Street, compiled by The Fly.
RELATIVELY INSULATED FROM COVID-19 HEADWINDS: Wedbush analyst Nick Setyan upgraded Wendy's (WEN) to Outperform from Neutral with a price target of $21, down from $22. The analyst told investors that he believes Wendy's is relatively insulated from near-term headwinds from COVID-19, and is well positioned for accelerated top- and bottom-line growth in a post-COVID-19 world.
BUY DOLLAR GENERAL: Wells Fargo analyst Edward Kelly upgraded Dollar General (DG) to Overweight from Equal Weight with a price target of $175, up from $155. The analyst believes Dollar General has numerous underappreciated tailwinds gaining steam that make the stock a particularly attractive investment at the moment. Further, Kelly sees the massive government stimulus in response to COVID-19 as a key comp driver that should boost the second quarter and possibly beyond, and believes Dollar General is the best stock in the consumer arsenal if COVID-19 leads to a sustained recession given its focus on consumables, small pack sizes, and leverage to consumer trade-down. Beyond favorable near-term positioning, Dollar General remains a solid long-term growth story that is only just beginning to better leverage its growing scale in staples retail, he contended, adding that the cost of its defensive position is actually quite reasonable, as the stock has trailed other COVID-19 stock-up trades with weaker long-term outlooks.
RULING IN FAVOR OF GENERICS: Goldman Sachs analyst Paul Choi downgraded Amarin (AMRN) to Neutral from Buy with a price target of $4, down from $27, after the U.S. District Court for Nevada issued a ruling in favor of the generic manufacturers in the patent trial between the company and Dr. Reddy's (RDY)/Hikma Pharmaceuticals (HKMPF). As Amarin management considers various options, the analyst believes the near-term stock performance will be limited, pending clarity on FDA approval of the new drug filings, a future circuit court appeals decision, and how quickly and effectively the company monetizes the opportunity for Vascepa in international markets, Choi contends.
Jefferies analyst Michael Yee also downgraded Amarin to Hold from Buy with a price target of $4, down from $30. The analyst expects the stock to be range-bound until there is more clarity on an appeal to the negative patent decision and scenarios where generics may not immediately hit. For value investors, Yee sees long-term value, noting Amarin isn't really burning cash anymore. However, the Street will likely not care about this in the near- to medium-term, the analyst contended. Overall, Yee is surprised by the patent ruling and loss and says that "while generics should be expected to come, the stock mostly reflects this now."
Not as bearish following the news, Oppenheimer analyst Leland Gershell upgraded Amarin to Perform from Underperform and removed his $12 price target, given the sharp decline expected in the stock on Tuesday. While the company intends to appeal, the ruling significantly reduces expectations around the product's market exclusivity period and Gershell puts generic launches in 2022-23 as a "best case," adding that at-risk launches could occur much sooner, pending ANDA approvals. Vascepa's "heavily-truncated exclusivity" meaningfully impairs Amarin's cash flow generation opportunity and "effectively removes" the company's appeal to a prospective acquirer, added Gershell, who sees the stock trading in line with the market from here.
BUY HP INC: Argus analyst Jim Kelleher upgraded HP Inc (HPQ) to Buy from Hold with a $25 price target. The analyst noted that the stock price decline of 27% comes from "non-fundamental weakness" and the perception that a takeover bid from Xerox (XRX) is even less likely. Kelleher believes, however, that the retreat overstates HP's loss of business during the pandemic as the company continues to see strong demand for PCs and printers amid an expansion of work from. While the pandemic will recede, the analyst contended that the number of work hours in remote settings will increase as a percentage of the total hours worked beyond the outbreak.
ATTRACTIVE VALUATION: Wells Fargo analyst Aaron Rakers upgraded HP Enterprise (HPE) to Overweight from Equal Weight with an unchanged price target of $14. The analyst believes the shares have adequately factored in significant estimate reductions as well as overly discounted the company's debt position. Further, the shares at current levels underappreciate HP Enterprise's recurring contributions, creating an attractive valuation, Rakers added.
Wendy's
+0.255 (+1.71%)
Dollar General
+2.91 (+1.98%)
Amarin
-9.465 (-69.65%)
Dr. Reddy's
+0.67 (+1.67%)
Hikma Pharmaceuticals
+ (+0.00%)
HP Inc.
-0.16 (-0.90%)
HP Enterprise
+ (+0.00%)
Xerox
+0.24 (+1.34%)