Among the stocks cut were GE, Boeing, Micron, Starbucks, and Roku
Check out today's top analyst calls from around Wall Street, compiled by The Fly.
JPMORGAN CUTS GE TO UNDERWEIGHT: JPMorgan analyst Stephen Tusa downgraded General Electric (GE) to Underweight from Neutral and lowered his price target for the shares to $5 from $6. With the stock up 38% year-to-date, many investors are underestimating the severity of the challenges and underlying risks at GE, while overestimating the value of "small positives," Tusa told investors in a research note partially titled "Risk/Reward Reset." The analyst believes the Street is "significantly over projecting" the bounce in free cash flow at GE in the coming years, off levels that he calculates at zero currently. Power/Renewables "remains weak," General Electric Capital Services "will likely consume material cash for the foreseeable future," Aviation fundamentals, as per underlying free cash flow, are "weaker than meet the eye," contended Tusa. Further he believes GE's "lingering sector high leverage" leaves it "vulnerable to liquidity issues in the event of a recession."
BOFA CUTS BOEING TO NEUTRAL: BofA Merrill Lynch analyst Ronald Epstein downgraded Boeing (BA) to Neutral from Buy after the company announced that it will cut 737 production rates to 42 per month from 52 per month, which he takes to likely mean that the 737 delay could last longer than previously expected. Epstein now estimates 6-9 months of disruption, up from his previous estimate of 3-6 months, for Boeing's most profitable program. He lowered his price target on Boeing shares $420 from $480, telling investors that he expects the shares to trade at a 25% discount to the S&P 500 on a price to free cash flow basis.
COWEN CUTS MICRON TO MARKET PERFORM: Cowen analyst Karl Ackerman downgraded Micron Technology (MU) to Market Perform from Outperform and lowered his price target for the shares to $45 from $46. The analyst's field work indicates Micron's profitability will decline again in calendar year 2020. The work shows a "confluence of a sea change in the competitive environment" as well as an erosion in the company's NAND cost leadership, Ackerman told investors in a research note. He thinks this is a "stark contrast to what is contemplated by most investors." Channel checks indicate producers have already undercut each other in supplying server DRAM modules and enterprise solid state drives to data center customers, said the analyst. He believes Samsung's willingness to outgrow the industry in a "fairly depressed demand environment" should stymie Micron's margin progression for the balance of 2019.
UBS CUTS STARBUCKS TO NEUTRAL: UBS analyst Dennis Geiger downgraded Starbucks (SBUX) to Neutral from Buy while raising his price target for the shares to $78 from $72. The risk/reward on shares "appears balanced" with the stock up 55% since June, Geiger told investors in a research note. He believes Starbucks is better positioned going forward with improved same-store-sales momentum and streamlined operations. However, the shares "reflect this and expectations are now elevated," said Geiger. The analyst added that while repurchase activity and upside to forecasts "could support further multiple expansion," he sees risks from "downside to more elevated sales/earnings expectations as an offset.
CITI CUTS ROKU TO SELL: Citi analyst Mark May downgraded Roku (ROKU) to Sell from Neutral and lowered his price target for the shares to $50 from $53. The stock is up 110% year-to-date and near all-time highs, May wrote to investors in a research note. The analyst noted Roku trades at a 70% premium to peers and believes that recent changes in the over-the-top streaming landscape could create greater competition. Further, Roku's Platform segment revenue growth could be impacted this year due to tough comps, May told investors in a research note.
RBC BOOSTS SNAP TO OUTPERFORM: RBC Capital analyst Mark Mahaney upgraded Snap (SNAP) to Outperform from Sector Perform and raised his price target for the shares to $17 from $10. The stock closed the day up 56c to $11.84. The analyst sees early evidence that its Android platform improvements are "finally gaining traction." Snap may have reached a fundamentals inflection point, Mahaney told investors in a post-close research note. Further, the analyst views the stock's valuation as "much-less demanding" relative to 2017.
Keywords: analyst, analyst calls, upgrades, downgrades, initiations, research, wall street