Check out today's top analyst calls from around Wall Street, compiled by The Fly.
WOLFE UPGRADES TESLA AFTER PROFITABLE QUARTER: Wolfe Research analyst Dan Galves upgraded Tesla (TSLA) to Outperform from Peer Perform with a $410 price target. Galves said Q3 non-GAAP earnings of $2.90, versus consensus of 3c, and free cash flow of $881M is proof that Tesla's earnings power is likely to outperform traditional automakers. Management's focus on cost and capital efficiency boosted Galves' confidence that priorities have changed from unit growth at all cost to profitable growth and self-funding. Galves said demand and the margin outlook appears "very positive" and the fact that 50% of trade-ins on the Model 3 are non-luxury vehicles indicates the buyer base is likely bigger than expected. In late morning trading, Tesla is higher by almost 8%.
NORTHLAND UPGRADES AMD ON POST-EARNINGS PULLBACK: Northland upgraded AMD (AMD) to Outperform from Market Perform and maintained a $26 price target. Analyst Auguste Richard said the selloff in shares is "overdone" and sees catalysts from consensus estimates reflecting headwinds from the Semicustom and Crypto implosion, November 6 analyst meeting, launch of 7nm data center GPU in Q4 and 7nm Server CPU likely 1H 2019, flexible production using 2 foundries and multi chip packaging, and reduced CPU output upside in Q4. In late morning trading, AMD is lower by 14.5%.
BAIRD CUTS STMICROELECTRONICS TO UNDERPERFORM: Baird analyst Tristan Gerra double downgraded STMicroelectronics (STM) to Underperform from Outperform and slashed its price target to $10 from $28. Gerra said the company's lead times remain significantly elevated versus analog/MCU peers, indicating further downside, and expects a "significant" worsening in Q1 2019 quarter-over-quarter revenue comps. The analyst expects STM to continue to gain content share at Apple (AAPL) but said the gross margin profile will deteriorate in outer years.
JPMORGAN SAYS GE MAY BE DOUBLE COUNTING ASSETS: JPMorgan analyst Stephen Tusa says that after deeper analysis of the company's consolidated financial statements, "there emerges further support" for his view of "how challenged the financial situation" is at General Electric (GE). The company has $100B of net liabilities at present, which after normalizing interest expense, suggests GE is currently generating zero free cash flow into 2019 including Healthcare, and negative $4B including the dividend, Tusa said. The analyst thinks investors and rating agencies may be overlooking that a range of $12B-$18B in assets may be "double counted" by GE. "Whether a critical near term liquidity issue or not, this is something that we believe needs to be addressed by new management to move from a low quality levered, financially engineered laggard that we believe deserves a discount, to one that deserves parity, potential actions around which to remedy we see as ultimately dilutive for the equity holder," says Tusa. He keeps an Underweight rating on General Electric with an $18 price target. In late morning trading, GE is lower by almost 2%.
STIFEL SAYS HYNIX OUTLOOK SHOULD EASE FEARS OF MEMORY DOWNTURN: SK Hynix in last night's Q3 earnings report saw a sequential increase in gross margin with slightly higher DRAM average selling prices quarter-over-quarter while NAND Flash selling prices s declined at roughly the same rate as in Q2, Stifel analyst Kevin Cassidy tells investors in a research note. Importantly, Hynix expects the current pricing pressure to have a short duration with customers decreasing NAND flash inventories by the end of 2018 and data center DRAM demand re-accelerating in mid-2019, says Cassidy. He believes the company's outlook and the "rational response" to the pricing environment should alleviate some market concerns about an extended downturn in the memory cycle. This benefits suppliers such as Micron Technology (MU), Smart Global Holdings (SGH) and Western Digital (WDC), Cassidy said.
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