Tesla downgrade at Argus and upgrade at UBS also among notable calls
BUY NVIDIA: Needham analyst Rajvindra Gill upgraded Nvidia (NVDA) to Buy from Hold with a $270 price target. During these uncertain times, investors will "flock to companies with superior balance sheets and robust free cash flow," Gill told investors in a research note, adding that Nvidia fits the bill. Further, the analyst believes GPUs for medical applications will ramp in light of the COVID-19 pandemic. With Nvidia shares down about 35% from their peak, the stock trades at a multi-year price-to-earnings valuation low, he contended.
INTEL UPGRADED ON NEAR-TERM DEVELOPMENTS: Goldman Sachs analyst Toshiya Hari upgraded Intel (INTC) to Neutral from Sell with a price target of $54, down from $55. Despite headwinds related to COVID-19, Intel has multiple near-term positive developments, including potential resilience in the high-end client CPU markets given a growing number of people working from home, that could largely offset the headwinds from weaker consumption and enterprise spending, Hari told investors in a research note. However, the analyst does not recommend buying the shares given Intel's structural challenges from increased competition, growing capital intensity and pressure on margins.
TESLA RATING CHANGES: Argus analyst William Selesky downgraded Tesla (TSLA) to Hold from Buy while also cutting his 2020 delivery estimate by 19% to 409K and lowering his fiscal year 2020 earnings per share view for the company to $5.65 from $8.01. The analyst noted that during the pandemic, consumers will focus on basic concerns like food, safety, and employment while deferring large discretionary purchases, even though he maintains a positive view on Tesla's long-term prospects. Further, he believes that a price range of $350-$400 per share could offer an attractive buying opportunity for long term investors.
Meanwhile, UBS analyst Patrick Hummel upgraded Tesla to Neutral and BMW (BMWYY) to Buy while cutting Ford (F) to Neutral as part of a broader research note on global automakers. The analyst stated that the spreading lockdowns will lead to production declines of 9%-10% in 2020, with the first half being materially worse. As such, Hummel sees automakers' balance sheets and liquidity as key, arguing that BMW and Volkswagen (VWAGY) are the OEMs with the strongest positions whereas Fiat Chrysler (FCAU), Ford, General Motors (GM), and Renault (RNLSY) would likely fall into net debt territory. The analyst also likes Tesla based on its "relatively high demand visibility and its sustained tech leadership," though its net debt position could also raise concerns.
MOVING TO THE SIDELINES ON AMC: Credit Suisse analyst Meghan Durkin downgraded AMC Entertainment (AMC) to Neutral from Outperform with a price target of $4, down from $12. The analyst sees liquidity risk posed by prolonged theater closures. While AMC can weather the expected fourteen weeks of closures, the company's heavy debt burden carries a high risk of going illiquid if this crisis lasts longer than expected, or if consumers don't return to theaters as quickly as expected, Durkin contended.
PIPER CUTS APPLE'S TARGET: Piper Sandler analyst Harsh Kumar lowered the firm's price target on Apple (AAPL) to $260 from $343, while reiterating an Overweight rating on the shares after taking over coverage of the name from Michael Olson. Given the global uncertainty, the analyst reduced Apple's estimates to account for the impact of the coronavirus on the company's product revenue. Demand softness has moved from China to the United States and Western Europe, Olson contended. The analyst, however, believes Apple's diversified revenue stream should provide benefits in both the near and long-term, and he sees 5G driving a major product cycle refresh across the company's product line.