Check out today's top analyst calls from around Wall Street, compiled by The Fly.
NETFLIX UPGRADED AT TWO FIRMS: Raymond James analyst Justin Patterson upgraded Netflix (NFLX) to Strong Buy from Outperform and raised his price target on the stock to $450 from $435. Netflix is approaching a profit inflection, as the company's front-loaded headcount investments will be leveraged and lead to an operating margin inflection, contended Patterson. His survey work shows Netflix's traction in film is helping it gain share against linear TV and he sees meaningful potential for Netflix to succeed in film, which Patterson believes should aid subscriber growth, retention and pricing power, he added.
UBS analyst Eric Sheridan upgraded Netflix to Buy from Neutral and raised his price target for the shares to $410 from $400. After six months of stock underperformance as key debates emerged about competition, margins and free cash flow, the debates are better understood by investors and reflected in the current stock price, Sheridan wrote in a research note partially titled "Taking The Blindfold Off." The analyst sees share upside over the near-to-medium term to subscriber growth. Current subscriber metrics such as growth, churn, spend and consumption are tracking inline to better than management's Q4 guidance and commentary, Sheridan said, citing his firm's Evidence Lab. In late morning trading, shares of Netflix are higher by over 4% to $338.20.
STARBUCKS CUT TO NEUTRAL AT GOLDMAN: Goldman Sachs analyst Karen Holthouse downgraded Starbucks (SBUX) to Neutral from Buy and lowered her price target for the shares to $68 from $75. The analyst remains "reasonably confident" that Starbucks' initiatives to drive digital engagement can lead to a "more stable" 3%-4% comp trajectory in the U.S. over the next few years. However, its valuation has "rapidly re-rated" to reflect this, and gift cards and digital trends could be points of caution in fiscal Q1, Holthouse said. Further, she has "incremental concerns" regarding the China macro environment and the company's comp trajectory in that region. Other consumer companies, like Apple (AAPL) and McDonald's (MCD), have noted weakness in China, the analyst pointed out.
YUM! BRANDS CUT TO SELL AT GOLDMAN: Goldman Sachs analyst Karen Holthouse downgraded Yum! Brands (YUM) to Sell from Neutral and lowered her price target for the shares to $76 from $83. The company's "peak valuations versus the market" are "overly dismissive of a number of risks," Holthouse told investors in a research note. The analyst remains skeptical of a U.S. Pizza Hut recovery and has concerns about Taco Bell momentum "as it starts to lap a more aggressive value push that started in late 2017." Shares of Yum! were lower by 1.5% to $90.43 in late morning trading.
GAP DOUBLE DOWNGRADED AT BARCLAYS: Barclays analyst Chethan Mallela double downgraded Gap (GPS) to Underweight from Overweight and cut his price target for the shares to $25 from $33. The analyst believes "challenging" traffic trends and "difficult" comparisons cloud visibility into the company's sales growth momentum. Further, the analyst believes the company's cost pressures will be larger than investors anticipate and pose risk to consensus estimates.
WW CUT TO NEUTRAL AT JPMORGAN: JPMorgan analyst Christina Brathwaite downgraded WW (WTW), formerly known as Weight Watchers, to Neutral from Overweight and lowered her price target for the shares to $37 from $70. The analyst's early-in-the-year channel checks point to a weak start to 2019 for the company. The checks suggest traffic to WW's website and engagement on its mobile app are down double-digit percentages year-over-year, Brathwaite told investors in a research note. In late morning trading, shares of WW are lower by 5.76% to $33.06.
VIACOM UPGRADED TO OUTPERFORM AT IMPERIAL: Imperial Capital analyst David Miller upgraded Viacom (VIAB) to Outperform and raised his price target for the shares to $37 from $30. Now is the time to get constructive given the stock's 13.5% correction over the past 12 weeks, Miller told investors in a research note. The analyst added that while Viacom's fiscal 2019 film slate does not impress him, its slate for fiscal 2020 looks more promising, highlighted by Gemini Man, G.I. Joe, another Spongebob film, Top Gun, with Tom Cruise reprising his role from the 1986 classic. He believes the stock's risk/reward now favors long positions.
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