Check out today's top analyst calls from around Wall Street, compiled by The Fly.
ARAMARK UPGRADED AT TWO FIRMS: Stifel analyst Shlomo Rosenbaum upgraded Aramark (ARMK) to Buy from Hold after activist fund Mantle Ridge disclosed on Friday night that it has built a 9.8% stake in the shares and a total economic interest of 20% including derivatives. Mantle Ridge CEO Paul Hilal has a track record of success and his involvement "changes the picture materially" for Aramark, argues Rosenbaum, who expects the activist to install a "first-class management team" and increase operational efficiency. He raised his price target on Aramark shares to $49 from $36.
Meanwhile, Nomura Instinet analyst Dan Dolev upgraded Aramark to Buy from Neutral and raised his price target to $50 from $28. Dolev updated his FY19 EPS expectations to $2.27 from $2.26 and his FY20 EPS expectations to $2.55 from $2.43 in a note entitled "O Activist Thanks for Showing Up," a follow up to his March report entitled "O Activist, Where Art Thou?," after Mantle Ridge and its associates disclosed a 20% combined stake in Aramark.
PG&E DOUBLE DOWNGRADED TO SELL AT CITI: Citi analyst Praful Mehta double downgraded PG&E (PCG), to Sell from Buy, after a U.S. Bankruptcy Court judge in San Francisco allowed PG&E to hold on to sole rights to construct a chapter 11 exit plan but also allowed the Tubbs fire to be tried in jury trial in California state court. The Tubbs fire, which could an incremental $15B in total liabilities for PG&E, is "too big" and a jury trial is "too risky," said Mehta, who slashed his price target on PG&E shares to $4 from $33, stating that the difference in target is due to now incorporating $15B of Tubbs wildfire liabilities in his estimates.
CHEVRON, EXXON INITIATED AT BARCLAYS: Barclays analyst Jeanine Wai initiated Chevron (CVX) with an Overweight rating and $145 price target, citing her view that the company is well positioned to fund its 3-4% five-year growth CAGR guidance while also returning significant free cash flow to shareholders. The stock's discount to Exxon (XOM) shares should invert over the next year as the market becomes comfortable with the sustainability of Chevron's cash return program, contended Wai.
Wai also initiated Exxon Mobil with an Equal Weight rating and $73 price target, stating that while she thinks the company's counter-cyclical investment approach will eventually pay off, it leaves a near-term free cash flow deficit after dividend at lower oil prices.
PEABODY, ALLIANCE RESOURCE DOWNGRADED AT JPMORGAN: JPMorgan analyst John Bridges downgraded Peabody Energy (BTU) to Neutral from Overweight, saying coal stock prices have fallen well below his and the Street's price targets based on long-term value, and citing the rising risk of recession for the downgrade as he feels better entry points could develop. The analyst, who also downgraded Alliance Resource Partners (ARLP), lowered his price target to $30 from $35 to highlight the potential of the coal stocks to deliver a tobacco-like recovery on the basis that while the sector's products are unpopular they are still needed.
SONOS BOOSTED TO STRONG BUY AT RAYMOND JAMES: Raymond James upgraded Sonos (SONO) to Strong Buy from Market Perform and established a $19 price target. Analyst Adam Tindle sees a "free option" on Sonos' product roadmap over the next few quarters as the company scales beyond its existing markets. Tindle is encouraged by early IKEA partnership checks and thinks it could "prime the pump" for future Sonos purchases. The analyst anticipates further product announcements, one potentially at the end of August, that will further scale Sonos "outside the home."
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