Check out today's top analyst calls from around Wall Street, compiled by The Fly.
HERSHEY DOUBLE UPGRADED TO BUY AT BOFA: BofA/Merrill analyst Bryan Spillane upgraded Hershey (HSY) by two rating notches to Buy from Underperform and raised his price target to $120 from $92, saying the company should generate improved organic sales and operating profit growth in FY19 based on the investments it made in the past two years. The analyst also cited Hershey's strong balance sheet and cash flows, which he anticipates driving a 10% annual total shareholder return. Spillane further noted that Hershey typically trades at a premium when the market turns more defensive.
AMERICAN EXPRESS CUT TO NEUTRAL AT BOFA: BofA Merrill Lynch analyst Kenneth Bruce downgraded American Express (AXP) to Neutral from Buy as he anticipates weaker sentiment for the stock to emerge given the broader market volatility and elevated uncertainty relating to the macroeconomic environment. While he sees AmEx continuing to "deliver its somewhat unique brand of top-line and bottom line growth," Bruce thinks valuation will be restrained following the stock's recent outperformance. Bruce cut his price target on American Express shares to $115 from $125 after lowering the multiple applied to his FY20 EPS forecast.
MICRON CUT TO SECTOR PERFORM AT RBC: RBC Capital analyst Amit Daryanani downgraded Micron (MU) to Sector Perform from Outperform and lowered his price target to $40 from $59 after its disappointing Q2 outlook. The analyst cites the company's inventory risk, as the "ongoing" industry downturn has increased its inventories by 22% "and heading higher" in the February quarter, warning that memory also tends to be a "depreciating asset" as the industry correction gets more "severe". Daryanani is also concerned with "Demand risk" for Micron, with real possibility that the issue requires further reduction in capacity and/or lower pricing in mid-2019. Additionally, the analyst cites competitive risk given the lack of clarity about its peers' intentions to reduce capacity and an upside inflection in Micron's operating expenses, which could pressure earnings further in Q3.
JEFFERIES SAYS APPLE IPHONE BUSINESS SUFFICIENT TO GROW SERVICES BUSINESS: Jefferies analyst Timothy O'Shea noted that Apple (AAPL) plans to disclose its gross margin for the first time ever with its next earnings report and he believes the company intends to tell a "compelling" Services story, comparing the event to when Amazon (AMZN) first disclosed AWS margins in 2015. He estimates the company Services business has a 19% 5-year revenue CAGR with gross margin between 60-66%, which O'Shea notes is above the consensus margin estimate of 56%. While he lowered his FY19 iPhone unit sale forecast to 206M, which is below the 210M unit consensus, O'Shea added that he thinks Apple's iPhone business "still looks sufficient to build a massive, high margin, high multiple" Services business. He kept a Buy rating on Apple shares, though O'Shea lowered his price target on the stock to $225 from $265.
GENERAL ELECTRIC UPGRADED TO BUY AT VERTICAL RESEARCH: Vertical Research analyst Jeffrey Sprague upgraded General Electric (GE) to Buy from Hold with an $11 price target. In late morning trading, shares of GE are higher by 8.3% to $7.90.
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