Check out today's top analyst calls from around Wall Street, compiled by The Fly.
WELLS FARGO DOWNGRADES CATERPILLAR, DEERE: Wells Fargo analyst Andrew Casey downgraded Caterpillar (CAT) to Market Perform from Outperform and lowered his price target for the shares to $143 from $150, and downgraded Deere (DE) to Market Perform from Outperform with an unchanged price target of $170. The analyst downgraded both Caterpillar and Deere following "relatively lackluster" Q3 construction dealer channel check feedback. U.S. construction equipment demand is at or near peak and likely will decline during 2020 due to flattening activity and a shift to equipment rental from purchase, Casey told investors in a research note. Further, other businesses within each company's portfolio will remain flat as a potential 2020 U.S. construction equipment demand drop will put downward pressure on earnings power, contended the analyst.
UBS BOOSTS ABBVIE TO BUY: UBS analyst Navin Jacob upgraded AbbVie (ABBV) to Buy but lowered his price target on shares to $79 from $85. The analyst sees the company's acquisition of Allegan as "highly compelling," with NewCo generating over $20B of annual free cash flow and a 9% yield by 2023 when its Humira exclusivity patent expires. After 2023, Jacob expects AbbVie's cash flows to remain stable thanks to the company's key growth assets and Allergan's Aesthetics franchise.
CANACCORD UPGRADES PAYPAL, DOWNGRADES SQUARE: Canaccord Genuity analyst Joseph Vafi assumed coverage of PayPal (PYPL) and upgraded the shares to Buy from Hold with a price target of $118, up from $110. PayPal is a "payments juggernaut," and its growth in payment volumes "at this scale is impressive," Vafi told investors in a research note. The analyst sees a positive risk/reward following the recent pullback in the shares.
Vafi also assumed coverage of Square (SQ) and downgraded the shares to Hold from Buy with a price target of $64, reduced from $88. The stock will continue to react to changes in payment volume growth, which has been showing steady deceleration, Vafi said. While Sqaure's Cash App could offset merchant declines over time, it is "too small right now," added the analyst.
NOMURA RAISES ACTIVISION TO BUY: Nomura Instinet analyst Andrew Marok upgraded Activision Blizzard (ATVI) to Buy from Neutral and raised his price target for the shares to $64 from $49. Last month's launch of World of Warcraft Classic has driven "strong, above-expectations" engagement in the franchise, Marok told investors in a research note. Further, Overwatch recently added new features and last week announced a launch on the Nintendo Switch, the analyst pointed out. He believes these provides a "much more favorable backdrop" heading into November's BlizzCon, where he expects Activision will see the reveal of a World of Warcraft expansion for 2020 release and at least one of Diablo 4 or Overwatch 2.
DEUTSCHE BANK INITIATES PHARMACIES: Deutsche Bank analyst George Hill initiated CVS Health (CVS) with a Buy rating and a Top Pick designation along with a price target of $91 as part of a broader research note on Healthcare Technology & Services. The analyst contended that the company is "well positioned to deliver on a vertical integration care delivery strategy", capturing market share and generating positive earnings surprises. Hill also sees the valuation of CVS shares as "highly compelling."
Hill initiated Rite Aid (RAD) with a Sell rating and a price target of $5. The analyst told investors that he is "skeptical" about the company's regional strategy and also warned about its declining EBITDA growth from continued reimbursement pressure.
Hill also initiated Walgreens Boots Alliance (WBA) with a Sell rating and a price target of $53. The analyst warned that the company's stand-alone pharmacy business strategy will face "unrelenting competitive and reimbursement pressure," which will likely yield negative earnings revisions. Hill added that the current "punitive" multiple on the stock is warranted.
DEUTSCHE BANK INITIATES HEALTHCARE INSURERS: Deutsche Bank analyst George Hill initiated Cigna (CI) with a Buy rating and a price target of $207 as part of a broader research note on Healthcare Technology & Services. The analyst believes that the company's PBM segment does not contain the significant short-term earnings risk implied by the "steep discount" of the stock price, adding that its core commercial MCO and the perceived cross sales benefit could drive its multiple expansion.
Hill also initiated Anthem (ANTM) with a Buy rating and a price target of $323, UnitedHealth (UNH) with a Hold rating and a price target of $263, Humana (HUM) with a Hold rating and a price target of $319, and Cardinal Health (CAH) with a Hold rating and a price target of $50.
DEUTSCHE BANK INITIATES DRUG DISTRIBUTORS: Also as part of his broader research note on Healthcare Technology & Services, Deutsche Bank's Hill initiated McKesson (MCK) with a Hold rating and $155 price target, started AmerisourceBergen (ABC) with a Hold and $91 target and initiated Cardinal Health (CAH) with a Hold rating and $50 target. The analyst is positive on the "structural position" of the wholesalers in the drug supply chain, but warns that they face issues related to brand drug pricing, generic drug pricing and domestic opioid litigation.
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