Check out today's top analyst calls from around Wall Street, compiled by The Fly.
ATLANTIC STARTS SQUARE AT UNDERWEIGHT WHILE SUNTRUST UPS TO BUY: Atlantic Equities analyst Kunaal Malde initiated coverage of Square (SQ) with an Underweight rating and $55 price target. Square's core business is decelerating and the mix shift to consumer payments increases uncertainty, Malde tells investors in a research note. The company's core merchant acquiring yields are too high versus peers that are increasingly competing with combined hardware/software platforms, adds the analyst. Further, he points out that PayPal's (PYPL) Venmo is regaining ground on Square's Cash App. Malde this morning also initiated coverage of FIS (FIS) with an Overweight rating as well as Fiserv (FISV) and Jack Henry (JKHY) with Neutral ratings.
Meanwhile, SunTrust analyst Andrew Jeffrey upgraded Square to Buy and raised his price target to $80 from $75, saying he expects the company's 2020 investments in "complex retail and restaurants" to accelerate the growth of its future revenues and EBITDA. The analyst believes that the investments will bolster the company's capabilities with large, inventory-intensive retailers where Square is currently less competitive, adding that its sale of Caviar also marked the first step in its "repositioning". While he still sees 2020 as an "investment year," Jeffrey notes that his expectations of revenue growth at Square beyond next year underpin his upgrade.
EVERCORE BOOSTS SNAP TO OUTPEFORM: Evercore ISI analyst Kevin Rippey upgraded Snap (SNAP) to Outperform from In Line and raised his price target for the shares to $20 from $18. While he has been impressed with the trajectory of Snap's fundamentals through much of 2019, Rippey said he remained on the sidelines on the view that valuation fully captured the upside related to the company's advertising business. However, the company's move into gaming, while in very early stages, has taken him off the sidelines as he believes gaming could provide Snap with about $350M in revenue at attractive EBITDA margins by 2022, Rippey said.
DEUTSCHE SAYS GE FRAUD REPORT DOESN'T MAKING COMPELLING ARGUMENT: Harry Markopolos' presentation on why he believes General Electric (GE) is headed toward bankruptcy fails to make a compelling argument, Deutsche Bank analyst Nicole DeBlase told investors in a research note. Despite obvious headwinds in the company's "messy" long-term care insurance business, the logic put forth in the presentation "appears largely poorly reasoned," said the analyst. She believes Markopolos mismatched accounting treatments and made comparisons based on data sets too small from which to draw conclusions. "Our aim was to complete an analysis of this broadside, but we find some of its arguments to be weak while others are plainly incorrect," wrote DeBlase. The analyst admitted, "We find ourselves in the unenviable position of having to defend the reserve adequacy of a business about whose future claim projections we have very deep concerns." She kept a Hold rating on shares of General Electric.
RBC RAISES AMAZON PRICE TARGET TO $2,600: RBC Capital analyst Mark Mahaney raised his price target on Amazon.com (AMZN) to $2,600 from $2,250 after his deep-dive analysis into the company's Prime one-day shipping initiative, saying its Q2 revenue and unit growth should accelerate as the offering is rolled out nationwide and worldwide. The analyst believes that Amazon is tapping into "real demand", with survey findings suggesting that 64% of U.S. internet users are "extremely" or "very" interested in next-day shipping. Based on his expectations of sustained revenue acceleration, Mahaney raises his FY20 and FY21 top-line forecasts to $337.2B and $410.9B from $334.6B and $405.9B respectively.
WELLS FARGO STARTS REALREAL WITH AN OUTPEFORM: Wells Fargo analyst Ike Boruchow started RealReal (REAL) with an Outperform rating and $20 price target. As the number one player in the "rapidly growing" used luxury goods category, the company is "extremely" well positioned to capitalize on the meaningful total addressable market, Boruchow said. Further, he believes RealReal's business model is key to driving greater supply of secondhand luxury merchandise in the marketplace. The analyst feels comfortable assuming 25%-30% sales growth for RealReal for the foreseeable future, and also believes the company should see meaningful scale.
GOLDMAN SACHS INITIATES WAYFAIR WITH A BUY: Goldman Sachs analyst Heath Terry initiated Wayfair (W) with a Buy rating and a price target of $145, saying the company is a leader in the online movement of household goods as it used its technology and scale to build a "destination" for furniture and home goods shopping over the past 16 years. The analyst further noted that the $300B U.S. home category is underpenetrated with just under 13% of sales online because of higher price points, risk of damage, and potentially expensive delivery, but believes that the company is successful with its merchandising, breadth and depth of supply.
Keywords: analyst, analyst calls, upgrades, downgrades, initiations, research, wall street