AB-InBev downgrade and GrubHub upgrade also among notable calls
Check out today's top analyst calls from around Wall Street, compiled by The Fly.
STIFEL CUTS E&P STOCK RATINGS: Stifel analyst Michael Scialla downgraded several E&P stocks, citing an impending oil price war after Russia's refusal to join the most recent OPEC+ production proposal prompted Saudi Arabia to slash prices. The firm downgraded:
Cimarex Energy (XEC) to Hold from Buy;
W&T Offshore (WTI) to Hold from Buy;
SM Energy (SM) to Hold from Buy;
Rosehill Resources (ROSE) to Hold from Buy;
PDC Energy (PDCE) to Hold from Buy;
Noble Energy (NBL) to Hold from Buy;
Matador (MTDR) to Hold from Buy;
EOG Resources (EOG) to Hold from Buy;
Bonanza Creek (BCEI) to Hold from Buy;
Abraxas Petroleum (AXAS) to Hold from Buy;
Apache (APA) to Hold from Buy.
BOFA DOWNGRADES SEVERAL OIL NAMES, UPS TC ENERGY: With the oil path now expected to be worse than previously anticipated given the blow-up between Sandi Arabia and Russia, BofA analyst Asit Sen downgraded:
Ovintiv (OVV) to Neutral from Buy;
Callon Petroleum (CPE) to Neutral from Buy;
PDC Energy (PDCE) to Neutral from Buy;
Vermilion Energy (VET) to Neutral from Buy.
Meanwhile, he has added TC Energy (TRP) to his list of defensive names based on its low 2020 earnings risk and upgraded the units to Buy from Neutral with an increased price target of C$80, up from C$76.
Helmerich & Payne (HP) to Underperform from Neutral;
Helix Energy (HLX) to Neutral from Buy;
Core Laboratories (CLB) to Underperform from Buy;
Forum Energy (FET) to Underperform from Neutral;
Cactus (WHD) to Underperform from Neutral.
BAIRD CUTS ENERGY STOCK RATINGS: In a surprise move, the Saudis over the weekend moved to punish Russia and U.S. oil producers, exacerbating faltering demand from the coronavirus outbreak, Baird analyst Ethan Bellamy tells investors in a research note. Rather than defending oil prices, Saudi Arabia plans to ramp production to 10 MMbpd to win back market share, the analyst points out, adding that as a result, he raised hurdle rates and cut applied valuation multiples. The analyst sees 16%-26% downside from current levels of the Alerian Midstream Energy Index. Bellamy downgraded:
Antero Midstream (AM) to Neutral from Outperform;
EnLink Midstream (ENLC) to Neutral from Outperform;
Energy Transfer LP (ET) to Neutral from Outperform;
Oneok (OKE) to Neutral from Outperform;
Plains All American (PAA) to Neutral from Outperform;
Plains GP Holdings (PAGP) to Neutral from Outperform;
Tellurian (TELL) to Neutral from Outperform;
Targa Resources (TRGP) to Neutral from Outperform.
CREDIT SUISSE MOVES TO SIDELINES ON AB INBEV: Credit Suisse analyst Sanjeet Aujla downgraded AB InBev (BUD) to Neutral from Outperform with a price target of EUR 58, down from EUR 87. The company's slower pace of deleveraging makes the stock too dependent on an "increasingly volatile" macro environment and overshadows its medium-term story, Aujla tells investors in a research note. The analyst cut AB InBev's earnings estimates by 20% to reflect the company's financial leverage and higher tax rate.
OPPENHEIMER UPS GRUBHUB ON COVID-19 TAILWINDS: Oppenheimer analyst Jason Helfstein upgraded GrubHub (GRUB) to Perform from Underperform as he believes the impact from COVID-19 will provide a net tailwind. Given more people working from home and the potential to shy away from crowded restaurants, food delivery companies should benefit from an uptick in order frequency, assuming there are no city-wide quarantines, he contends. The analyst also sees the possibility of sustained industry-wide online delivery share gains after the impact of the virus subsides. Separately, Helfstein believes industry consolidation and capital discipline will be evolving themes for investors, which is bullish for valuations. However, he does remain concerned about GrubHub's long-term KPIs and industry position and thinks the current valuation, in line with peers, is a fair one.