Check out today's top analyst calls from around Wall Street, compiled by The Fly.
BARCLAYS BOOSTS PHILIP MORRIS: Barclays analyst Gaurav Jain upgraded Philip Morris (PM) to Overweight from Equal Weight and raised his price target for the shares to $100 from $82. The company's new FY19 revenue growth guidance ex-currency of 6% is towards the higher end in staples, Jain told investors in a research note. He believes "it's time to look at PM again" now that its IQOS product is "back on track."
JPMORGAN CUTS NEWS CORP TO UNDERWEIGHT: JPMorgan analyst Alexia Quadrani Thursday night downgraded News Corp. (NWSA) to Underweight from Neutral and lowered her price target for the shares to $12 from $13. The analyst said that while the stock may appear attractively valued, she has little conviction in forward estimates. Quadrani, who pointed out she's reduced News Corp.'s estimates 12 times over the last three years, believes challenges will persist in the company's News and Information Services and Subscription Video Services divisions. Further, she sees weakness in new listings at REA and "further headwinds to growth continuing." The analyst looks for stabilization in her estimates or signs of strategic change as catalysts to reevaluate her rating.
Quadrani also downgraded MSG Networks (MSGN) to Underweight from Neutral and lowered her price target for the shares to $19 from $23. Worsening trends for legacy video subscribers could lead to lower consensus estimates and further multiple contraction, Quadrani said. As such, the analyst views MSG Networks' risk/reward as skewed to the downside through year-end.
TWO FIRMS CUT ALCOA TO HOLD: Jefferies analyst Christopher LaFemina downgraded Alcoa (AA) to Hold from Buy and lowered his price target for the shares to $23 from $29. The shares are inexpensive on some metrics following yesterday's Q2 results, but that alone is not reason enough to buy them, LaFemina told investors in a research note after Thursday's closing bell. The company is not generating free cash flow, not returning large-scale capital to shareholders, and is leveraged to commodities with relatively poor fundamentals, contends the analyst. As such, he sees a lack of positive catalysts for the shares.
Argus analyst David Coleman also downgraded Alcoa to Hold after the company reported a Q2 net loss and reduced 2019 guidance along with the management's expectations of lower aluminum demand growth this year from trade tensions and macro headwinds. The analyst also cut his FY19 EPS view to (12c) from 90c and his FY20 forecast to $1.12 from $3.40. Coleman contended that the underperformance in Alcoa shares last quarter could provide long-term investors with a favorable entry point, but he sees upside for the shares in the near term as limited.
BOFA CUTS MICHAELS TO UNDERPERFORM: BofA Merrill Lynch analyst Elizabeth Suzuki downgraded Michaels (MIK) to Underperform from Neutral following a U.S. arts and crafts consumer survey that she said gave some color on why the company's same-store sales growth has been "lackluster." The survey lended support to her view that the company's potentially long-term struggles are unlikely to resolve, at least until a new CEO is found, said Suzuki, who lowered her price target on the shares to $5 from $9.
JEFFERIES LOWERS BOEING PRICE TARGET AFTER CHARGE ANNOUNCED: Jefferies analyst Sheila Kahyaoglu lowered her price target for Boeing (BA) to $420 from $448 after the company said it will take a $5.6B charge in Q2 tied to the 737 MAX that will reduce revenue and pre-tax earnings. The analyst cut her Q2 earnings per share estimate to $4.05 from $12.75 as well as her 737 program gross margin to 30% to 32% to reflect incremental block costs. She estimates Boeing will generate $5.2B of free cash flow in 2019, down 62% from 2018 levels. However, Kahyaoglu kept a Buy rating on Boeing.
Meanwhile, Morgan Stanley analyst Rajeev Lalwani laid out three key reasons why he views the news positively. First, Boeing noted that its "best estimate at this time" is for a return to service for the MAX in "early" Q4, which Lalwani called the first time the company has proactively put forth a return to service date. Second, the company has avoided an additional production cut, or possibly a halt, as a result of the prolonged grounding. Third, Boeing's production update pointed to a ramp to 57 per month in 2020 and the company said it expects built inventory to be released over "several quarters following return to service," which the analyst said supports his view for a path to normalization through next year and by 2021. Lalwani keeps an Overweight rating and $500 price target on Boeing shares
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