Additionally, Morgan Stanley said a correction of Virgin Galactic's stock is "overdue" and "healthy"
Check out today's top analyst calls from around Wall Street, compiled by The Fly.
WELLS FARGO CUTS AMD TO EQUAL WEIGHT: Wells Fargo analyst Aaron Rakers downgraded AMD (AMD) to Equal Weight from Overweight with a price target of $64, up from $55. The analyst is positive on AMD's competitive positioning and share gain story. However, at current levels, and based on his new sum-of-the-parts analysis, he believes the shares approaching levels that present a more balanced risk/reward. The stock is now discounting estimated 2022 earnings per share of $2.50-plus, Rakers told investors in a research note partially titled "Time For A Breather."
MORGAN STANLEY SAYS VIRGIN GALACTIC CORRECTION WOULD BE "HEALTHY": Morgan Stanley analyst Adam Jonas said that he and the firm's Space Team have been surprised by the "pace of volume and volatility" around Virgin Galactic (SPCE) shares, which he attributes to enthusiasm around the emerging space economy. With the stock up nearly sixfold in 12 weeks, he contended that a "modest correction is overdue, and frankly, healthy," Jonas said. Some investors he has spoken with have advocated for a capital raise, and he sees asking whether management should consider adding to the coffers even though the company has sufficient levels of liquidity to meet the needs of launching its commercial service as "logical." The analyst, who suspects a significant portion of the discussion on the company's upcoming earnings call on February 25 will focus on upcoming testing and certification milestones for its Spaceship VSS Unity, kept an Overweight rating and $22 price target on Virgin Galactic shares.
NOMURA BOOSTS ALLY TO BUY, WHILE BARCLAYS DOWNGRADES: Nomura Instinet analyst Bill Carcache upgraded Ally Financial (ALLY) to Buy from Neutral with an unchanged price target of $36. Although the acquisition of CardWorks broadens Ally's consumer lending portfolio, makes it more directly comparable to consumer finance peers, and positions it for earnings accretion, concerns around book value dilution led shares to trade lower by 12% on Wednesday, Carcache told investors in a research note. The analyst expects the company's improved return profile to drive multiple expansion going forward. He believes Wednesday's selloff creates an attractive entry point.
However, Barclays analyst Jason Goldberg downgraded Ally Financial to Equal Weight from Overweight with a $33 price target.
JPMORGAN CUTS ANHEUSER-BUSCH TO UNDERWEIGHT: JPMorgan analyst Celine Pannuti downgraded Anheuser-Busch InBev (BUD) to Underweight from Neutral with a price target of $65, down from $79. Despite a "more benign" input cost environment, 2020 is shaping up to remain challenging for the company, leading to pressure on both gross margin and EBITDA, Pannuti told investors in a research note titled "Storm clouds showing no signs of clearing." The analyst sees AB at a "turning point." As it tries to generate volume growth the company appears to no longer be committed to raising prices in line with inflation, said the analyst. Pannuti believes risks to earnings cuts should lead to a "further de-rating" and weigh on the stock's performance.
WELLS FARGO DOWNGRADES MORGAN STANLEY AFTER E-TRADE DEAL: Wells Fargo analyst Mike Mayo downgraded Morgan Stanley (MS) to Equal Weight from Overweight with a price target of $58, down from $65, after the company announced a deal to acquire E-Trade (ETFC), which he sees bringing strategic, financial, and execution risks. The ability to combine the digital brokerage and banking platform with the legacy Morgan Stanley business is uncertain and the the move was made at a time when retail brokerage client engagement and sentiment, as well as the stock market, are at all-time highs, contends Mayo, who estimates $1.5B or more of "value destruction" related to the all-stock transaction. He prefers Goldman Sachs' (GS) "invest and build approach" over spending $13B for "such an uncertain transaction," Mayo added.
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