Additionally, Workday had its price target cut at three analyst firms
Check out today's top analyst calls from around Wall Street, compiled by The Fly.
CITI CUTS ADOBE TO NEUTRAL: Citi analyst Walter Pritchard downgraded Adobe (ADBE) to Neutral from Buy with a price target of $313, down from $322. The analyst believes the stock's risk/reward is "more balanced" with the company's fiscal 2020 guidance "likely to be less conservative." Consensus fiscal 2020 Digital Experience estimates are too high based on current trends, Pritchard told investors in a research note. The analyst also thinks Adobe must continue to invest in Digital Experience, likely both organically and through acquisitions, "potentially keeping margins in check." Pritchard moved to the sidelines ahead of the company's analyst day on November 5 due to lower growth and margin visibility.
MORGAN STANLEY LOWERS SERVICENOW TO EQUAL WEIGHT: Morgan Stanley analyst Keith Weiss downgraded ServiceNow (NOW) to Equal Weight from Overweight with an unchanged $267 price target. Weiss said the company remains "best-in-class," but it faces increasing near-term risks, including a CFO transition that may result in more cautious initial guidance for FY20 than most investors expect; tougher subscription billings comparisons in the second half of the year; and high expectations with the stock up more than 50% year-to-date, Weiss said. He also noted that the firm's recent CIO survey highlighted the increasingly uncertain macro environment, particularly in Europe, which is another concern for ServiceNow.
RAYMOND JAMES BOOSTS PURE STORAGE TO OUTPERFORM: Raymond James analyst Simon Leopold upgraded Pure Storage (PSTG) to Outperform from Market Perform with a $22 price target. In a research note to investors, Leopold said recent VAR/Distributor checks have reflected positive sentiment suggesting Pure can exceed current Street estimates, and said he has gained a greater appreciation for the market expansion offered by the new FlashArray//C. While he still sees recession and competitive risks, Leopold views Pure Storage's shares as attractive.
NORTHCOAST DOWNGRADES COSTCO TO NEUTRAL: Northcoast analyst Chuck Cerankosky downgraded Costco Wholesale (COST) to Neutral from Buy, citing valuation. The analyst, who raised his estimates and expects the retailer to continue posting "strong" results, views Costco's current valuation as fair. He noted the stock currently trades at 31.5 times his estimated fiscal 2021 earnings.
MULTIPLE FIRMS CUT WORKDAY'S PRICE TARGET: Stifel analyst Brad Reback said after attending the keynote and analyst day at Workday Rising 2019 that he sees the HCM opportunity moderating as Workday (WDAY) scales, making HCM up-sell and cross-sell more important. Meanwhile, the Financials segment is growing 50%, but off a small base and he does not see an inflection in the near-term. Following the event, he lowered his FY21 and FY22 subscription revenue estimates and trimmed his price target on Workday shares to $180 from $210. While Reback thinks Workday is executing well and has a large opportunity to drive revenue growth, he expects shares to trade in-line with peers, leading him to keep a Hold rating on the stock. Reback also noted that Workday signaled interest during the event to "more deeply go after" procurement, which he said is largely dominated by Coupa Software (COUP).
Deutsche Bank analyst Karl Keirstead lowered his price target for Hold-rated Workday to $185 from $200 following the company's analyst event. Workday shares traded down 3% last night due to comments about slowing core human capital management growth, some deal delays due to the macro environment and a "non-committal" view of fiscal 2021 margin improvement, Keirstead told investors in a research note.
RBC Capital analyst Alex Zukin lowered his price target on Workday to $212 but kept his Outperform rating after its Analyst Day presentation. The analyst noted that the company's growth plans look "durable" despite the slowing penetration into large accounts, adding that while sales cycles are lengthening, its win rates remain "steady". Zukin attributes the reduced price target on Workday to the stock's "consistent discount" relative to his "High Efficiency comp group," stating that it also scores "lower than average" among those peers.
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