Guggenheim's upgrade of Seattle Genetics also among notable calls
Check out today's top analyst calls from around Wall Street, compiled by The Fly.
GILEAD GETS 3 DOWNGRADES AFTER EARNINGS: JPMorgan analyst Cory Kasimov downgraded Gilead Sciences (GILD) to Neutral from Overweight with an unchanged price target of $84. After rallying 84% year-to-date, the shares have reached the price target, Kasimov tells investors in a research note. The analyst says that while an approval of remdesivir for COVID-19 is imminent, he does not feel like "we have any other levers to pull in our model at this time." Remdesivir is unlikely to result in tangible long-term cash flows for Gilead, says Kasimov, who estimates $5B in sales over the next three years is only worth a "mere" $1 per share in discounted cash flow.
Raymond James analyst Steven Seedhouse downgraded Gilead Sciences to Market Perform from Outperform without a price target following the company's Q1 results. In a research note to investors, Seedhouse cites Gilead's recent outperformance based on remdesivir, seemingly de minimis activity in COVID-19 and an unclear path by which to profit off remdesivir for the downgrade. The analyst says he continues to like Gilead's core business but isn't willing to break his model to fit the COVID trade.
SunTrust analyst Robyn Karnauskas downgraded Gilead to Sell from Hold with an unchanged $70 price target. The analyst believes it will be difficult for the company to generate profit with remdesivir given its plans to make the drug "affordable" to countries and give away its doses for free right now. Shares were also downgraded to Neutral from Overweight at JPMorgan and to Market Perform from Outperform at Raymond James.
Meanwhile, Piper Sandler analyst Tyler Van Buren keeps his Overweight rating and $90 price target on Gilead (GILD) after its Q1 results came in slightly better than expected, adding that the recent remdesivir data should yield an emergency use authorization. Van Buren adds that according to the company, the data gathered thus far "change the landscape" for COVID-19 drug development as remdesivir "works for hospitalized patients at the very least." The analyst further cites the company planning to donate 1.5M vials of remdesivir - the entirety of the supply - through early summer, and subsequently charging for the drug thereafter to ensure that it remains a "sustainable business."
DOW DOWNGRADED AT CITI, CREDIT SUISSE: Citi analyst P.J. Juvekar downgraded Dow Inc. (DOW) to Neutral from Buy with an unchanged price target of $38. Dow idling 10% of its Americas capacity makes sense, but the move signals that the "shale normalcy" as oil has fallen is here to stay near term, Juvekar tells investors in a research note. The analyst sees downside risk to the company's global integrated margins and sees limited upside after the recent rally in the shares.
Credit Suisse analyst Christopher Parkinson also downgraded Dow Inc. to Neutral from Outperform with a price target of $34, down from $39. While investors are focusing on COVID-19 headwinds for 2020, Dow's 2021 and 2022 estimates "are unlikely to move higher anytime soon," Parkinson tells investors in a research note. After an initial "snap back" post COVID-19, the company's demand will experience a prolonged recovery and both idled/new supply are there to accommodate, says the analyst. BEYOND MEAT DOWNGRADED AT WELLS FARGO: Wells Fargo analyst John Baumgartner downgraded Beyond Meat (BYND) to Underweight from Equal Weight with a $72 price target. In a research note to investors, Baumgartner says his cautious stance is driven by expectations for much softer foodservice demand in 2020 and sharply eroding economic conditions that risk demand for premium-priced plant-based meat at retail. The analyst thinks the COVID-19 fall-out could delay the adoption curve of PBM by 12 months or more, and thinks Beyond Meat could have less flexibility for expense reduction given the importance of marketing and R&D for sustaining longer term growth.
GUGGENHEIM UPS SEATTLE GENETICS ON 40% SALES GROWTH POTENTIAL: Guggenheim analyst Michael Schmidt upgraded Seattle Genetics (SGEN) to Buy from Neutral with a $175 price target. The analyst has increased conviction in the commercial potential of recently launched Tukysa in HER2+ cancers and Padcev in urothelial cancers. Despite a strong initial launch quarter for Padcev, the Street still underestimates the overall commercial potential of "these clinically validated agent with clear visibility and pathway to address larger market opportunities," Schmidt tells investors in a research note. Seattle Genetics now markets three commercial products, says the analyst, who forecasts annual sales growth of 40% through 2025, which he believes makes it a "uniquely positioned growth story in Biotech."
LYFT COVERAGE RESUMED AT CITI: Citi analyst Itay Michaeli resumed coverage of Lyft (LYFT) with a Buy rating and price target of $49, down from $75. Though the analyst expects 2020 to prove challenging amid the current COVID-19 crisis, he maintains a positive long-term view of fundamentals, "as evidenced by momentum achieved throughout 2019." Relative to Uber Technologies (UBER), Michaeli likes Lyft's pure-play exposure to North America rides over the longer term, and sees opportunities for Lyft to pursue strategic autonomous vehicle partnerships now that the Magna venture has ended.
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