Nvidia resumption with an Outperform at Credit Suisse also among notable calls
Check out today's top analyst calls from around Wall Street, compiled by The Fly.
'IMPRESSIVE' APRIL QUARTER: Stifel analyst John Baugh upgraded Lowe's (LOW) to Buy from Hold with a price target of $149, up from $94. The analyst pointed out that the company had an impressive April quarter, with 20.4% comps in the final month and continued strong trends in May driven by online sales. Baugh also highlighted that the company's Lowes.com website has handled the surge in demand, noting that he is surprised not to see a more favorable reaction by the stock to the first quarter results. The analyst further stated that his assumed 21.5-times expected 2020 earnings multiple for Lowe's is still a 15%-20% discount to his valuation for Home Depot (HD).
SELL SQUARE: UBS analyst Eric Wasserstrom downgraded Square (SQ) to Sell from Neutral with a price target of $63, up from $54. The higher price target reflects a stronger outlook for the company's Cash App, but the current valuation already exceeds that level and prices in an accelerated recovery in Seller volumes and revenues, which is an unlikely scenario, the analyst contended. Wasserstrom added that Square's orientation to SMEs and in-store sales implies limited visibility to the pace of its volume recovery.
'BEST SECULAR GROWTH' STOCK: Credit Suisse analyst John Pitzer reinstated coverage of Nvidia (NVDA) with an Outperform rating and $425 price target post the Mellanox acquisition. With the stock up about 50% year-to-date and about 150% over 3 years, the analyst acknowledged that it is difficult to argue Nvidia is an undiscovered story or cheap. However, he continues to see Nvidia as the “best secular growth” stock in Semis with an almost open-ended TAM protected not only by first mover advantage but also by widening/deepening moats in both silicon AND software. Specifically, Nvidia is the linchpin in his "Accelerating Compute TAM" thesis, Pitzer contended.
FAVORABLE RISK/REWARD PROFILE: RBC Capital analyst Michael Eisen initiated coverage of Boeing (BA) with an Outperform rating and $164 price target. While the analyst acknowledges the uncertainty regarding the 737 MAX and broader health of the airline industry, he sees a favorable risk/reward profile at current share levels. Boeing shares have a strong correlation to global commercial passenger traffic, and after dropping 50% year-over-year in 2020, a multiyear period of high double-digit demand growth should follow, Eisen contended. He sees this propelling the stock higher. The analyst also initiated
Raytheon Technology (RTX) with an Outperform rating;
Lockheed Martin (LMT) with a Sector Perform rating;
General Dynamics (GD) with an Outperform rating;
Huntington Ingalls (HII) with an Outperform rating;
Northrop Grumman (NOC) with a Sector Perform rating;
L3Harris Technology (LHX) with an Outperform rating;
Ducommun (DCO) with an Outperform rating;
Cubic (CUB) with a Sector Perform rating;
Aerojet Rocketdyne (AJRD) with a Sector Perform rating;
Mercury Systems (MRCY) with a Sector Perform rating.
UNIQUE VACATION OPPORTUNITY: Credit Suisse analyst Benjamin Chaiken initiated coverage of cruise stocks, saying that while he thinks the near-term implications of COVID-19 are likely to be quite severe, the unique vacation opportunity and value proposition of cruising will be the driving force behind a recovery. The situation surrounding the virus is rapidly changing, but Chaiken thinks recent liquidity enhancing moves taken by the three major companies provide cushion to ride out the storm. With the risk of a liquidity crunch partially priced in, he believes current levels offer an attractive entry point. The analyst prefers Royal Caribbean (RCL), initiated with an Outperform rating and $67 price target, and Norwegian (NCLH), initiated with an Outperform rating and $21 price target, over Carnival (CCL), initiated with a Neutral rating and $12 price target.