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Fly News Breaks for March 20, 2017
LPLA, INTC, GOOGL, SF, MBLY, GOOG, CAL, SONC
Mar 20, 2017 | 10:27 EDT
Catch up on today's top five analyst downgrades with this list compiled by The Fly: 1. Pivotal Research analyst Brian Wieser downgraded Alphabet (GOOGL) to Hold from Buy citing brand safety concerns and valuation following the recent rally in the shares. News last week that Havas, the sixth largest global media network, is pulling its spending from Google's YouTube and Google Display Network in the U.K. because Google was "unable to provide specific reassurances, policy and guarantees that their video or display content is classified either quickly enough or with the correct filters" is a big deal, Wieser tells investors. 2. Canaccord analyst Lynne Collier downgraded Sonic (SONC) to Hold from Buy, citing challenging industry sales, the potential for Street estimates to be too high in the midst of soft sales, a lack of upcoming catalysts, and increasing competition from non-traditional venues such as convenience stores. 3. Piper Jaffray analyst Alexander Potter downgraded Mobileye (MBLY) to Neutral saying that while demanding a higher buyout price may be justified, he "begrudgingly" concluded that the price Intel (INTC) is paying for the company is fair. The analyst raised his price target for Mobileye shares to $63.54 from $60 to reflect Intel's offer. 4. Susquehanna analyst Sam Poser downgraded Caleres (CAL) citing the company's "disappointing" results and his belief that the company will not be able to overcome industry headwinds. 5. Goldman Sachs analyst Conor Fitzgerald downgraded Stifel Financial (SF) to Neutral from Buy while raising his price target for the shares to $59 from $58. The analyst believes LPL Financial (LPLA), a stock he upgraded this morning to Conviction Buy, offers more upside at current valuations. This list is just a portion of The Fly's full analyst coverage. To see The Fly's full Street Research coverage, click here.
News For GOOG;GOOGL;SONC;MBLY;INTC;CAL;SF;LPLA From the Last 2 Days
GOOGL, GOOG, INTC
Apr 28, 2017 | 12:37 EDT
The major averages began the day mixed as investors pored over the multitude of earnings reports that were released last night and this morning. The market may be a little tired after surging during the early part of the week. The most critical reports from last night were from tech bellwethers and the Nasdaq had moved to all-time highs in anticipation of solid reports from the likes of Alphabet (GOOGL), Amazon (AMZN), Microsoft (MSFT) and Intel (INTC). While the first two of those came through with better than expected results, the latter two issued reports that disappointed, leaving the market essentially flat at midday. ECONOMIC NEWS: In the U.S., GDP growth rose only 0.7% in the first quarter, weaker than expected and only about one-third of the 2.1% clip in the fourth quarter. First quarter employment costs posted a 0.8% growth pace, firmer than expected. The Chicago PMI increased 0.6 points to 58.3 in April after rising 0.3 points to 57.7 in March. In Asia, Japan's core consumer price index, which includes oil products but excludes fresh food prices, rose 0.2% in March, the unemployment rate for March was 2.8%, industrial production fell 2.1% in March from the previous month, and retail sales climbed 2.1% from a year ago. COMPANY NEWS: Alphabet Class A shares have gained over 4% after the parent of Google reported better than expected quarterly earnings and revenue. The company saw higher ad sales, helped by mobile search and ongoing strength in YouTube... Also higher was Amazon.com, which advanced about 2% after the e-commerce giant reported stronger than expected first quarter results as its retail and cloud-computing sales rose for the quarter. Responding to the results, a large number of Wall Street research firms raised their price targets on the stock... Conversely, Microsoft was fractionally down near noon after the company reported lower than expected revenue, partially due to lighter volumes for its Surface products... Also lower was QUALCOMM (QCOM), which slipped about 1% following the announcement that the company is lowering its third quarter earnings per share view after being informed by Apple (AAPL) that the latter is withholding payments to its contract manufacturers for the royalties those contract manufacturers owe under their licenses with Qualcomm for sales... Meanwhile, Exxon Mobil (XOM) and Chevron (CVX) have gained about 0.5% each following stronger than expected quarterly earnings. MAJOR MOVERS: Among the notable gainers was Align Technology (ALGN), which advanced almost 15% after the maker of Invisalign braces issued a forecast above consensus estimates. Also higher was Western Digital (WDC), which gained about 3.5% after the company reported better than expected third quarter results and guidance. Additionally, Honeywell (HON) rose almost 2% following news that activist investor Dan Loeb's Third Point is pushing for the conglomerate to spin off its aerospace unit. Among the noteworthy losers was Time Inc. (TIME), which slid about 19% after announcing that it is pursuing "a number" of strategic initiatives and not pursuing a sale of the company. Also lower was Intel (INTC), which slipped over 4% following quarterly results. Additionally, GoPro (GPRO) dropped almost 7% as the company's sales jump 19% but not enough to curb losses. INDEXES: Near midday, the Dow was down 19.67, or 0.09%, to 20,961.66, the Nasdaq was up 1.04, or 0.02%, to 6,049.98, and the S&P 500 was down 2.90, or 0.12%, to 2,385.87.
GOOGL, GOOG
Apr 28, 2017 | 10:58 EDT
The shares of Amazon (AMZN) are climbing after the e-commerce giant reported stronger than expected first quarter results. A large number of Wall Street research firms have responded to the results by raising their price targets on the stock. However, breaking with the bullish pack, KeyBanc downgraded the shares this morning, citing competition concerns. RESULTS: Amazon reported first quarter earnings per share of $1.48, versus the consensus outlook of $1.13. Its revenue came in at $35.7B, versus the consensus estimate of $35.31B. The revenue of the company's cloud business jumped to $3.66B in Q1, up from $2.57B a year earlier. MANY TARGETS NOW OVER $1,000: RBC Capital analyst Mark Mahaney increased his price target on Amazon to $1,100 from $900, stating that the company's Q1 results were strong and its gross margin beat expectations. Mahaney noted that the company's two largest markets -- e-commerce and the cloud -- have only reached 10% penetration levels and he says that its competitive advantages are increasing. Noting that the company's retail revenue has increased by at least 20% for 19 straight quarter, the analyst says that its retail revenue growth "has never been more consistent." Furthermore, Amazon is generating "close to 50% EBITDA margins," noted Mahaney, who kept an Outperform rating on the shares. UBS analyst Eric Sheridan raised his price target on Amazon to $1,100 from $930, as he believes the company should have "continued topline and gross profit momentum" in the second half of 2017. Long-term investors should benefit from its victories in the e-commerce and cloud sectors, according to Sheridan, who kept a Buy rating on the stock. Meanwhile, Goldman Sachs analyst Heath Terry raised Amazon's price target to $1,250 from $1,100 and reiterated his Conviction Buy rating following Q1 results, saying revenue growth accelerated to 24% from 22% in Q4. Terry continues to believe the company is in the early stages of shift towards the cloud and the transition of traditional retail online and the market underestimates the long-term financial benefit of these growth drivers. DOWNGRADE: Against this enthusiastic backdrop on the Street, KeyBanc analyst Edward Yruma downgraded Amazon to Sector Weight from Overweight. The company's results were "impressive," but it is seeing intensifying competition from Wal-Mart (WMT) on the e-commerce front, Yruma believes. Moreover, after heavily investing in their cloud businesses, Microsoft (MSFT) and Google (GOOG, GOOGL) have reduced the gap between their international presence and that of Amazon, Yruma believes. Checks indicate that Microsoft's Azure unit is "starting to gain some momentum within large enterprises and government agencies" that are moving to the public cloud, according to Yruma. Consequently, the growth of Amazon's cloud business will probably decline to 40% in 2017 and below 40% in the second half of the year, warned Yruma, Despite the downgrade, the analyst remains "constructive" on the company's longer term outlook and recommends that investors look for a more attractive entry point in the name. PRICE ACTION: In morning trading, Amazon rose 2.3% to $939.63 per share. Earlier in the session, the stock hit a 52-week high of $949.59.
GOOG, GOOGL
Apr 28, 2017 | 09:30 EDT
Needham analyst Kerry Rice raised his price target for Alphabet to $1050 from $935 after the company posted "another solid quarter" with Q1 revenue and EPS exceeding expectations. Looking ahead, the analyst believes the trends driving solid growth over the last few quarters are sustainable, and expects operating margin to modestly expand in 2017. He reiterates a Buy rating on the shares.
GOOG, GOOGL
Apr 28, 2017 | 09:26 EDT
After Alphabet (GOOG, GOOGL) reported stronger than expected Q1 results, Wedbush analyst James Dix says that traffic acquisition costs are "an issue" for the company, as sites TAC as a percentage of Sites revenue rose to 10.4% from 8.5% during the same period a year earlier. Additionally, the analyst says that it's too early to assess the impact on Alphabet of Amazon's new ad products and YouTube's difficulties. He keeps a Neutral rating on Alphabet.
GOOGL, GOOG
Apr 28, 2017 | 09:07 EDT
UP AFTER EARNINGS: Alphabet (GOOG, GOOGL), up 3.7% and 3.9%, respectively... Amazon.com (AMZN), up 3.2%... Western Digital (WDC), up 7.9%... Honeywell (HON), up 3.6%... Chevron (CVX), up 2.2%... Exxon Mobil (XOM), up 1.7%... General Motors (GM), up just under 1%. DOWN AFTER EARNINGS: Weatherford (WFT), down 3.4%... VF Corp (VFC), down 4.9%... Starbucks (SBUX), down 3.5%... Synchrony Financial (SYF), down 13%... Autoliv (ALV), down 3.5%. ALSO LOWER: Time (TIME), down 18.9% after announcing that it is pursuing "a number" of strategic initiatives and not pursuing a sale of the company.
INTC
Apr 28, 2017 | 09:01 EDT
Pacific Crest analyst Michael McConnell continues to expect Intel's new Purley chips to cause its DCG revenue growth to accelerate in 2H17. The analyst views the company's CCG and DCG guidance as conservative. He keeps a $43 price target and recommends buying the shares.
GOOGL
Apr 28, 2017 | 07:54 EDT
Credit Suisse analyst Stephen Ju raised his price target for Alphabet to $1150 from $1100 following quarterly results. The analyst believes the shares continue to exhibit the best risk/reward among the large cap Internet stocks and reiterates an Outperform rating, citing monetization improvements in Search, larger than expected contribution from Google's larger non-Search businesses, and optionality for value creation from new monetization initiatives such as Maps as well as the eventual commercialization of Google's Other Bets.
GOOGL, GOOG
Apr 28, 2017 | 07:49 EDT
Google (GOOG, GOOGL) has hired Oren Teich for its cloud computing business to assist in running the Google App Engine, a development environment run on Google's infrastructure, Fortune reports, citing sources. Teich, who works under Sam Ramji, VP of product for Google's cloud business, served as COO and general manager at Heroku, a software development web site bought by Salesforce (CRM) in 2010. He left Salesforce in 2014 to start Canvas, a company that built a collaborative word processing application. Max Schoening, Teich's Canvas co-founder, has also joined Google, Fortune reports. Reference Link
LPLA
Apr 28, 2017 | 06:51 EDT
Citi analyst William Katz upgraded LPL Financial to Buy and raised his price target for the shares to $47 from $43 following the stronger than expected Q1 results. The analyst sees a path to $47 per share over the next 12 months given his outlook for higher revenue and increased margins. Nomura Instinet this morning also upgraded LPL.
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