Additionally, Cowen upgraded Skyworks and Qorvo to Outperform
Check out today's top analyst calls from around Wall Street, compiled by The Fly.
LONGBOW BOOSTS APPLE TO BUY: Longbow analyst Shawn Harrison upgraded Apple (AAPL) to Buy from Neutral with a $260 price target. His contacts, who previously gave him initial conservative forecasts for up to a 10% year-over-year decline in iPhone production in the calendar third quarter, now see flat production in the period of Apple's fiscal fourth quarter, Harrison tells investors. He estimate the iPhone 11 comprises approximately 50% of new model production and his contacts now see fiscal Q1 year-over-year growth in iPhone shipments of potentially 10% or more, Harrison stated. He also calls out Apple suppliers Skyworks (SWKS), Qorvo (QRVO) and Broadcom (AVGO) as those he covers that are best positioned to see upside based on better than expected iPhone production.
COWEN UPGRADES APPLE SUPPLIERS SKYWORKS, QORVO: Cowen analyst Karl Ackerman upgraded Skyworks (SWKS) to Outperform from Market Perform with a price target of $95, up from $80. The company's content continues to ramp this iPhone cycle, and higher radio frequency content in a 5G-enabled phone presents unit upside potential in 2020, Ackerman noted. Further, Huawei is 90% discounted into 2020 estimates, which could drive $350M in sales and 60c in earnings per share upside on a U.S./China trade resolution, adds the analyst. He also believes WiFi 6m which is "finally here," enables Skyworks to dominate in smart home applications.
Ackerman also upgraded Qorvo (QRVO) to Outperform from Market Perform with a price target of $90, up from $75. The stock's risk/reward is skewed to upside on a three-to-one basis with $7.50-$8.00 of earnings per share possible in 2021, Ackerman said. The analyst added that while Qorvo's content is lower this iPhone cycle, he sees unit upside ahead of higher radio frequency content in a 5G-enabled phone in 2020. Further, while any resolution on U.S./China trade or the Huawei ban us not likely this week, a resolution over the next few quarters may add $500M in revenue and $1 of earnings per share to 2020 estimates for the company, noted the analyst.
GOLDMAN SACHS CUTS HP, CISCO, NETAPP: Goldman Sachs analyst Rod Hall downgraded HP Inc. (HPQ) to Sell from Neutral with a price target of $14, down from $18. The analyst sees a "substantially tougher" environment for HP in 2020 as near-term tailwinds reverse in the PC business while the company attempts a "difficult transition" in the Printing business. While consumer PCs have been weak, this has been masked by strength in commercial PCs, Halls said. However, he expects this strength to fade in 2020, particularly in the second half of the year. Further, the analyst he sees "significant risk" to Printing profits as the Supplies business "continues to deteriorate." Hall's price target implies 15% downside in HP Inc. shares.
Hall downgraded Cisco Systems (CSCO) to Neutral from Buy with a price target of $48, down from $56. Large enterprise spending will continue to weaken and telecom spending activity will remain depressed in the near term, Hall said. The analyst noted that Goldman's Enterprise Activity Index deteriorated in September, while his latest reseller survey was also incrementally negative on enterprise spending trends. In the telecom segment, Hall is concerned that negative trends could persist "well into" 2020, driven by carrier pauses ahead of 5G and needed carrier network automation implementation. He thinks the market will move Cisco's multiple down to his price target, which he noted is closer to the company's historical price-to-earnings ratio.
Hall also double downgraded NetApp (NTAP) to Sell from Buy with a price target of $45, down from $61. The company's guidance is optimistic in an environment where large enterprise spending appears to be deteriorating further, Hall said. NetApp's fiscal 2020 revenue guidance implies a recovery in core product revenue growth despite the slowdown in July, said the analyst, who noted that his firm's analysis suggests large enterprise spending is likely to continue to decline in the midst of ongoing trade and economic uncertainty. Hall believes NetApp's fundamentals are likely to continue to weaken and his revised target price implies 12% downside.
GOLDMAN SACHS RAISES PURE STORAGE TO BUY: Goldman Sachs analyst Rod Hall upgraded Pure Storage (PSTG) to Buy from Neutral with a price target of $21, up from $18. The analyst expects Pure to continue gain share in the storage market with its new products and with its mid-market exposure, even as "large enterprise spending weakness disproportionately hurts larger storage vendors." He believes the company's new FlashArray//C product could drive an acceleration in revenue growth. In addition, Pure is relatively undervalued versus peers, said Hall, who sees 30% upside potential.
JEFFERIES CUTS UNITEDHEALTH TO HOLD: Jefferies analyst David Windley downgraded UnitedHealth (UNH) to Hold from Buy with a price target of $235, down from $300. Managed Care sentiment "turned abruptly negative a year ago and has stubbornly remained there," Windley noted. Further, the political risk causing this won't likely abate for at least another nine months, contended the analyst. In addition to the political overhang, he's concerned UnitedHealth's (UNH) commercial enrollment is at risk to Anthem (ANTM). Along with the downgrade of UnitedHealth, Windley cut his price target for Buy-rated Anthem to $299 from $365, for Buy-rated Centene (CNC) to $53 from $76, for Buy-rated Cigna (CI) to $203 from $233, for Buy-rated Humana (HUM) to $322 from $352, for Buy-rated Molina Healthcare (MOH) to $133 from $173 and for Hold-rated WellCare (WCG) to $264 from $302.
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