GOLDMAN ROLLS OUT RETAIL COVERAGE, SAYS BUY TARGET, SELL BED BATH: Goldman Sachs analyst Kate McShane rolled out coverage of a number of retail names after having joined the firm, starting Bed Bath & Beyond (BBBY) with a Sell rating and $11 price target. Weak in-store trends and over-reliance on coupons as a traffic driver have led to significant pressure on sales and margins, McShane told investors. She expects Bed Bath & Beyond will face ongoing sales declines and market share losses resulting from a high level of competition in the industry and continued challenges with its store fleet. Meanwhile, McShane started Target (TGT) with a Buy rating and added the shares to her firm's Americas Conviction List with a $102 price target. Target is starting to benefit meaningfully from door closures, and an inflection in operating income growth should drive accelerating earnings growth, McShane said. Among the others she initiated, McShane started Walmart (WMT), Costco (COST), Home Depot (HD) and Lowe's (LOW) all with a Buy ratings and started Best Buy (BBY) with a Neutral rating and $73 price target.
CREDIT SUISSE SEES HOMEOWNERS RISK AT ALLSTATE: Credit Suisse analyst Michael Zaremski downgraded Allstate (ALL) to Underperform from Neutral, calling it the insurer most levered to homeowners' insurance at a time when record levels of precipitation in the U.S. raises the probability of worse than expected "non-catastrophe" claims volumes in the homeowners' line of business. Additionally, despite years of industrywide margin deterioration in homeowners' insurance, pricing has not gained the momentum he had previously expected, said Zaremski, who points to a more competitive backdrop as the cause. Also, lower interest rates pose an EPS headwind for carriers, added the analyst.
JPMORGAN LESS BEARISH ON WW: JPMorgan analyst Christina Brathwaiteu upgraded WW (WW) to Neutral from Underweight and raised her price target for the shares to $22 from $17. The company's subscriber trends have stabilized, which is supportive of its ability to reach 2019 guidance, Brathwaiteu told investors. The analyst believes investors are beginning to look past the expected ~50% earnings decline this year and focusing on WW's potential growth opportunity in 2020 following the launch of a new diet program at the end of this year. Brathwaiteu thinks the stock's risk/reward is now more balanced.
MERRILL CUTS IRON MOUNTAIN TO UNDERPERFORM: BofA Merrill Lynch analyst Michael Funk downgraded Iron Mountain (IRM) to Underperform from Neutral, stating that he sees an "insurmountable headwind" to 2019 guidance given that recycled paper pricing declined 23% sequentially in Q2 and fell another 21% sequentially in the first month of Q3. While selling recycled paper is a relatively small revenue contributor for Iron Mountain, it is an "integral component" of guidance as 90%+ of every dollar flows to EBITDA, according to Funk, who has a $25 price target on the shares.
JEFFERIES SEES "SOFT SPOT" FOR GAMEMAKER TAKE-TWO: Jefferies analyst Alex Giaimo downgraded Take-Two Interactive Software (TTWO) to Hold from Buy after assuming of the name. The analyst lowered his price target for the shares to $115 from $135. The company is now in a "soft spot" when considering the timing of its next major release, Giaimo tells investors in a research note. Further, the company faces tough comps in fiscal 2020, adds the analyst.
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