Check out today's top analyst calls from around Wall Street, compiled by The Fly.
PIPER CUTS MCDONALD'S TO NEUTRAL: Piper Jaffray analyst Nicole Miller Regan downgraded McDonald's (MCD) to Neutral from Overweight with a price target of $195, down from $224. While the company's fundamentals are solid, CEO changes "of this magnitude tend to be disruptive," Regan told investors in a research note. As such, the analyst is taking a "more cautionary view" on the shares, noting the potential lack of momentum and time involved in formalizing a new management team. She recommended a rotation into Chipotle Mexican Grill (CMG) shares.
OTHER FIRMS DEFEND MCDONALD'S: The departure of CEO Steve Easterbrook is a "fairly significant negative" for investors, given his history of impressive and consistent global results, Stephens analyst Will Slabaugh said. The analyst, however, likes the "quick choice" of Chris Kempczinski as the next CEO, given his existing relationships with domestic operators and "leadership experience during some of the U.S.'s best years in decades." Slabaugh likes McDonald's here and views the shares as attractive on the recent pullback. He kept an Overweight rating on the name with a $225 price target.
While the CEO transition announced by McDonald's was unexpected, "and therefore not a good thing," the change was not due to operational or financial issues, but rather personal conduct, Barclays analyst Jeffrey Bernstein said. The analyst is confident the company has the depth in leadership to maintain momentum as the global quick service restaurant leader. As such, he's a buyer of McDonald's shares on any weakness and kept an Overweight rating on the name with a $225 price target.
Credit Suisse analyst Lauren Silberman thinks Easterbrook was "highly regarded" in the investment community and among franchisees, and sees potential concerns of franchisee sentiment regarding new leadership, but added that McDonald's has a "talented" bench and expects management and the board have a like-minded strategy. She said the management transition does not alter her positive view of the company, and views any material pullback pullback in the stock around the CEO change as a buying opportunity. Silberman maintained an Outperform rating and $230 price target.
NOMURA CUTS VERIZON TO NEUTRAL: Nomura Instinet analyst Jeffrey Kvaal downgraded Verizon Communications (VZ) to Neutral from Buy with a price target of $65, down from $67. AT&T's (T) new price reductions, and T-Mobile's (TMUS) likely response, reduces visibility into Verizon's near-term growth trajectory, Kvaal told investors in a research note. The analyst now has lower confidence into Verizon's long-term ability to lift pricing for 5G. While he prefers wireless over fixed over time, he moved to a Neutral stance on Verizon.
KEYBANC CUTS HARLEY-DAVIDSON TO UNDERWEIGHT: KeyBanc analyst Brett Andress downgraded Harley-Davidson (HOG) to Underweight from Sector Weight with a $33 price target. In a research note to investors, Andress cited dealer checks, deteriorating new and used conditions and a lack of near-term catalysts for the downgrade. The analyst sees Road Glide, which represents 15%-20% of Harley's U.S. retail units, pressure further weighing on mix and gross profit into FY20, potentially driving an EPS headwind of about 25c.
WELLS FARGO BOOSTS MARVELL TO OUTPERFORM: Wells Fargo analyst Gary Mobley upgraded Marvell Technology Group (MRVL) to Outperform from Market Perform with a price target of $32, up from $25. We are at a "tipping point" in adoption of Marvell's 5G system on chip and related Ethernet integrated circuits relative to "expensive" field programmable gate arrays, Mobley said. As such, he believes Marvell should continue to experience "robust" 5G-basestation-related sales to Nokia and Samsung for the balance of 2019 and into 2020. Further, recent reacceleration in data center capex should bode well for the company's OCTEON/NITROX and Fibre Channel sales, which represents a more near-term catalyst, added the analyst.
BARCLAYS SAYS BULL CASE BECOMING CLEARER FOR GE: General Electric's (GE) Q3 contained "no nasty surprises" from legacy liabilities along with "some clear signs of progress amidst the house-cleaning," Barclays analyst Julian Mitchell said. The analyst believes this will likely cause more long-term investors to start to take a closer look at GE during the second year of CEO Larry Culp's tenure. With GE's free cash flow bull case becoming clearer, long-term investors may start to take a look, says Mitchell. The analyst kept an Overweight rating on General Electric shares with a $12 price target.
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