Additionally, Jefferies said it believes the plant-based meat market can expand at 25% annually to $15B over the next 10 years
Check out today's top analyst calls from around Wall Street, compiled by The Fly.
GOLDMAN SACHS BOOSTS NETEASE TO BUY: Goldman Sachs analyst Bill Liu upgraded NetEase (NTES) to Buy from Neutral with a price target of $368, up from $300. The risk/reward in owning NetEase has turned more favorable following the company's "solid" Q3 results, Liu told investors in a research note. The analyst sees improving fundamentals driven by better capital allocation after the sale of Kaola to Alibaba (BABA) and better games performance based on a "strong" pipeline.
JEFFERIES SEES PLANT-BASED MEAT MARKET REACHING $15B IN 10 YEARS: Jefferies analyst Kevin Grundy says his firm's survey of 1,800 U.S. consumers supports his view that the U.S. plant-based meat market can expand at 25% annually to $15B over the next 10 years. The survey suggests "ample scope" for plant-based meat penetration and frequency rates to rise, and an attractive demographic skew toward millennials and generation Z, with restaurants a major access point for younger consumers, Grundy said. The analyst believes Beyond Meat (BYND) will be a key beneficiary of the growth in the U.S. plant-based meat market. His 10-year model implies that plant-based meat reaches ~5% of the total U.S. meat market, which he noted is still well below plant-based dairy that comprises ~15% of the U.S. milk market. Grundy continues to view Beyond Meat "as perhaps the best growth story in Staples." However, even with the stock's recent pullback, the company's valuation at 10.5 times sales "sets a high bar," contended the analyst. As such, he kept a Hold rating on Beyond Meat shares.
RAYMOND JAMES RAISES ZIMMER BIOMET TO STRONG BUY: Raymond James analyst Lawrence Keusch upgraded Zimmer Biomet (ZBH) to Strong Buy from Outperform with a price target of $170, up from $160. In a research note to investors, Keusch said that while accelerating growth has underpinned his prior positive rating, opportunities to reduce obsolete inventory charges and inventory over the next several years increase his conviction in further shareholder value creation. The analyst called out Zimmer's annual inventory charges, which are well above large-cap comparables at over $200M. He further stated that the potential for an inflection in free cash flow and potential EPS upside may not yet be fully appreciated by investors as it is early and the shares under-owned by large long-only investors, improving fundamentals and cash flow dynamics could drive incremental ownership.
COMPASS POINT CUTS WORKDAY TO NEUTRAL: Compass Point analyst Marshall Senk downgraded Workday (WDAY) to Neutral from Buy with a price target of $199, down from $238. Management has been delivering commentary that growth forecasts for next year need to be reined in, Senk wrote in a post-earnings research note. He attributed this to maturity in the human capital management market, slower migration to cloud in the financials business, and the timing of new product rollouts, which are not expected to impact revenue materially until fiscal 2022. As such, he reduced his fiscal 2021 revenue estimate to $4.31B from $4.4B to reflect slower subscription growth. While Workday shares are off their highs, a catalyst is needed to help drive growth, which is unlikely until next year, contended Senk.
BOFA DOWNGRADES OWENS CORNING, DOESN'T SEE NEAR-TERM BREAKUP: BofA/Merrill analyst John Lovallo downgraded Owens Corning (OC) to Neutral from Buy with a $72 price target. After meeting with management, the analyst believes that a breakup of Owens Corning's business is less likely in the near-term. Further, following the recent rally, the potential value unlock appears largely reflected in the stock, Lovallo told investors.
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