Check out today's top analyst calls from around Wall Street, compiled by The Fly.
TRANSOCEAN, DIAMOND OFFSHORE DOUBLE UPGRADED AT BARCLAYS: Barclays analyst J. David Anderson double upgraded Transocean (RIG) to Overweight from Underweight and raised his price target for the shares to $10 from $8, and raised Diamond Offshore Drilling (DO) to Overweight from Underweight while lowering his price target for the shares to $12 from $14. The analyst said that while it has been a while since he's recommended owning the offshore oilfield service names, after almost five years of a downturn, a "transformed" offshore industry is "starting to emerge." He expects 2019 to be a transition year with 2020 "setting up to be the start of a multi-year growth trajectory." He said he views shares of both Transocean and Diamond Offshore as undervalued at current levels.
PFIZER RESUMED WITH UPGRADED RATING AT CITI: Citi analyst Andrew Baum resumed coverage of Pfizer (PFE) following a period of restriction and upgraded the shares to Neutral from Sell. He also boosted his price target for the shares to $41 from $37. The analyst said the recent pullback in the stock, along with the 5%-8% 2019-2021 consensus estimate reductions, gives him the opportunity to close his Sell rating. He believes management action on business development, cost saving or moves to better monetize Pfizer's Established Product business are likely near-term drivers of the stock.
GOLDMAN CUTS SOUTHWEST AIR TO SELL, PREFERS ALASKA AIR: Goldman Sachs analyst Catherine O'Brien downgraded Southwest Airlines (LUV) to Sell from Neutral and lowered her price target for the shares to $54 from $66. Southwest's fiscal 2019 pretax margin will decline 60 basis points due to the dilutive impact of its new Hawaii flying and unit cost ex-fuel pressures, O'Brien told investors in a research note. With the analyst forecasting most of her coverage universe to see margin expansion in 2019, she expects Southwest shares to underperform this year. O'Brien continues to be positive on the company's long-term thesis, but prefers shares of Alaska Air (ALK) at this time. She expects Alaska to see greater than industry average margin expansion in 2019.
CHARLES SCHWAB, E-TRADE DOWNGRADED AT UBS: UBS analyst Brennan Hawken downgraded Charles Schwab (SCHW) to Sell from Neutral and lowered his price target for the shares to $42 from $48. The analyst sees revenue headwinds at the same time as risk to upward pressure on expenses. This will lead to earnings and multiple compression, Hawken told investors. The analyst believes Schwab's revenue guidance, which assumes a mid-year rate hike and higher daily average revenue trades, is aggressive against the current backdrop. Expectations may be too high and could put the stock at risk, particularly since buybacks are likely not enough to "cushion the blow to the growth story," Hawken contend.
Hawken also downgraded E-Trade Financial (ETFC) to Neutral from Buy and lowered his price target for the shares to $51 from $58. The analyst wondered what catalysts could move the shares "materially higher" amid "mounting cyclical concerns." He cited the "extended time frame tied to current targets" and a low likelihood of a strategic transaction as the reasons for the downgrade. He sees "more compelling places to allocate capital."
MKM PARTNERS SEES IMAX AS POTENTIAL TARGET FOR SONY: MKM Partners analyst Eric Handler kept his Buy rating and $27 price target on Imax (IMAX) with speculation that Sony (SNE) should consider buying the company after its recent entry into the Premium Large Format movie theater business. The analyst noted that he has long considered Imax as an "underappreciated asset with an attractive, multi-revenue stream and high margin business model," adding that investors give it little credit for its "proprietary DMR technology and the ability to reformat content for a high-end visual experience." Handler contended that a large consumer products company like Sony may be able to extract greater value from Imax and would be better off with an acquisition than building its own such product.