Qualcomm initiation at Wells Fargo also among notable calls
Check out today's top analyst calls from around Wall Street, compiled by The Fly.
'SIGNIFICANT, UNRIVALED' RISK: MoffettNathanson analyst Michael Nathanson downgraded Disney (DIS) to Neutral from Buy with a price target of $112, down from $120. The analyst pointed out that while Disney has "advantaged assets to win" in the new world created by COVID-19, the uncertainty of the present situation creates "significant and unrivaled earnings risk for the foreseeable future." The economic impact of social distancing is most severe for the two divisions, Theme Parks and Studio Entertainment, that have driven Disney's free cash flow in the recent term, the analyst added. Further, Nathanson believes the acceleration in cord-cutting, coupled with ESPN's high fixed cost base, could further negatively impact Disney's Media Networks. All in, the analyst expects to see further pressure on the company's earnings, limiting the stock's performance for the near-to-medium term.
FRESH BEEF CONCERNS: Northcoast analyst Jim Sanderson downgraded Wendy's (WEN) to Neutral from Buy. While his recent checks suggest that same-store sales are returning to pre-COVID-19 levels and that Wendy's is navigating the COVID-19 crisis well, he is concerned that disruptions in the beef supply-chain could impair Wendy's near-term performance. Wendy's relies on fresh beef supplies, unlike many of its quick-serve competitors, and COVID-19 could limit the supply of fresh beef available for "several weeks or even months," Sanderson contended.
SELL QUALCOMM: Wells Fargo analyst Gary Mobley initiated coverage of Qualcomm (QCOM) with an Underweight rating and $70 price target. Mobley thinks Qualcomm will continue to be a victim of the company's own success, with the need for anti-competitive regulatory compliance and an industry-wide reluctance to rely too heavily on its MSM processors and related RF front-end solutions could constrain Qualcomm's ability to take the market share necessary to grow in a stagnant and mature smartphone market. Additionally, the analyst contended that an anti-U.S. sentiment in China and Huawei's own influence in the development of 5G standards may create a tepid environment for Qualcomm as it attempts to address the world's largest mobile handset market.
MOVING TO THE SIDELINES: Bernstein analyst Lance Wilkes downgraded Cigna (CI) to Market Perform from Outperform with a $223 price target. The analyst cited increased business risks from COVID-19 and recession. He believes risks to Cigna have increased including recession risks to the company's core employer MCO business, and election policy risks to PBM and employer growth.
TRAVEL DEMAND UNCERTAINTY, ADDITIONAL DEBT: Barclays analyst Brandon Oglenski downgraded the North American Airlines sector to Neutral from Positive saying the future is uncertain on travel demand but definite on "plenty of additional debt." Shares of airlines "face an uphill battle," Oglenski told investors in a research note. In addition to not knowing when revenue will return for an industry burning an estimated $20B of cash this quarter, "sizable" debt balances and "yet unknown" structural cost burdens "loom large," the analyst contended. Oglenski cut price targets across the sector and downgraded American Airlines (AAL) Underweight from Equal Weight and Delta Air Lines (DAL) to Equal Weight from Overweight.
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