Hersey double upgrade at Piper Sandler also among notable calls
Check out today's top analyst calls from around Wall Street, compiled by The Fly.
BUY APPLE: Deutsche Bank analyst Jeriel Ong upgraded Apple (AAPL) to Buy from Hold with a price target of $270, down from $295. Following the recent market correction, investors are likely to return to four drivers of the stock - iPhone, AirPods, Services, and gross margin mix shift - when the market stabilizes, Ong told investors in a research note. While there are risks, including retail closures, supply chain disruptions and overall macro impacts to purchasing, the analyst believes they are more near-term than long-term in nature. Ong sees a scenario where Apple earns $15 in 2021 earnings per share "as a solid base case." As such, the analyst is now "tilting bullish" on the shares.
BUY INTEL: Argus analyst Jim Kelleher upgraded Intel (INTC) to Buy from Hold with a $65 price target. Despite the expected loss of business over the medium-term, the analyst sees the company's market remaining in reasonably good shape assuming that COVID-19 pandemic subsides in the coming months. Kellehr added that the decline in Intel's stock price has been excessive relative to his expected sales and profits for 2020, and he sees shares discounted relative to semiconductor peers on a variety of measures, including price-to-earnings, price to sales, and Enterprise Value to EBITDA.
STRONG CONSUMER DEMAND: Piper Sandler analyst Michael Lavery double upgraded Hershey (HSY) to Overweight from Underweight with a price target of $138, up from $134. Hershey looks well positioned to benefit from strong consumer demand and retail traffic, which should offset any lost sales from its flagship stores, foodservice and travel retail, Lavery told investors in a research note. Further, the analyst does not see material risk to the company's Easter candy sales from COVID-19. They could even outperform as Easter "provides many consumers a needed dose of normalcy," Lavery noted. The analyst expects 2% organic revenue growth and 6%-7% average earnings growth over the next two years from Hershey.
'SOLID RECESSION PLAY': Stephens analyst James Rutherford upgraded McDonald's (MCD) to Overweight from Equal Weight with a price target of $165, down from $210. He views McDonald's as "a solid recession play" and his prior, lower rating was only due to valuation, Rutherford tells investors. While he admits that "restaurants will have a bad year of sales and earnings in 2020," Rutherford believes investors should remember that only a small portion of the present value of any business is derived from near-term free cash flows and he sees restaurant demand returning when the health crisis passes.
MOVING TO THE SIDELINES ON UNDER ARMOUR: Goldman Sachs analyst Alexandra Walvis downgraded Under Armour (UA) to Neutral from Buy with a price target of $9, down from $21. Under Armour's low operating margins, largely inflexible cost structure and inventory buying model, and limited brand momentum leave the company less well positioned versus other athletic peers in the current tough environment, Walvis told investors in a research note. The analyst, who continues to expect athletic and casual apparel to gain market share, sees elevated near-term execution risk to the shares.
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