T-Mobile downgrade and Quest Diagnostics upgrade also among notable calls
Check out today's top analyst calls from around Wall Street, compiled by The Fly.
'STRONG' DIGITAL DEMAND: Wells Fargo analyst Brian Fitzgerald upgraded eBay (EBAY) to Equal Weight from Underweight with a price target of $50, up from $32. A review of omni-channel retailer commentary and eBay's upward second quarter guidance revision last week indicate "continued strength, if not acceleration," in digital commerce from March into April and May, despite brick-and-mortar retailers beginning to reopen across much of the country, Fitzgerald told investors in a research note. The analyst believes "strong digital demand" appears likely to persist over at least the near to midterm. Accelerating growth of digital demand likely outweighs enhanced fulfillment capabilities among omni-channel players, Fitzgerald added. The analyst, however, remains cautious on eBay's "longer-range growth potential."
'MAJOR CONTROVERSIES' AHEAD: Bernstein analyst Aaron Gal downgraded Biogen (BIIB) to Market Perform from Outperform with a price target of $297, down from $360. The analyst noted that Biogen has "two major controversies ahead" with aducanumab's potential approval in Alzheimer's and Tecfidera intellectual property challenges. Gal is positive on the odds of aducanumab approval and, "until now," viewed the odds of Tecfidera patent invalidation at 30%. However, after reading the post-trial arguments, the analyst’s view of intellectual property risk shifts to 70% with timing of the decision appearing close. And with aducanumab not yet submitted, the analyst is moving to the sidelines.
MOVING TO THE SIDELINES: Guggenheim analyst Michael McCormack downgraded T-Mobile (TMUS) to Neutral from Buy, citing valuation with the shares up about 33% year-to-date. He sees the "New T-Mobile" being fully valued with the shares trading above his prior $95 price target, which he has removed. While there will be network and other synergies on the cost side and from the increased spectrum capacity, there are also integration risks and added complexity from executive changes, McCormack contended.
'POTENTIAL NEAR-TERM UPSIDES': Wells Fargo analyst Dan Leonard upgraded Quest Diagnostics (DGX) to Equal Weight from Underweight with a price target of $120, up from $90. The company's "potential near-term upsides" from COVID-19 testing offset the structural challenges in the clinical lab industry, Leonard told investors in a research note. After working on the COVID testing opportunity over the past two months and mapping out the testing total addressable market, the analyst increasingly believes the risk skews to the upside for near-term numbers at Quest. Leonard now expects $2B in COVID testing sales for the company in 2020, up from a prior assumption of less than $1B.
HIGHER MENTAL HEALTH DEMAND: Barclays analyst Steven Valiquette upgraded Universal Health Services (UHS) to Overweight from Equal Weight with a price target of $138, up from $114. The COVID-19 pandemic has created "accelerated demand" for mental health services, Valiquette contended. Acute hospital traffic indicators now show greater separation within the peer group, with Universal Health and HCA Healthcare (HCA) "leading the pace of the recovery," the analyst added. Valiquette expects behavioral health services will likely be above pre-pandemic levels in 2021.
FACEBOOK TARGET UPPED TO $250: Goldman Sachs analyst Heather Bellini raised the firm's price target on Facebook to $250 from $220 to reflect increasing conviction that Facebook will be able to tap into a "much larger" total addressable market, driven by its increased e-commerce initiatives. The company on May 19 announced Facebook Shops, a service that helps small businesses set up digital storefronts on Facebook and Instagram, Bellini noted. She sees Shops and Checkout as likely increasing the number of advertisers and spend per advertiser. Bellini keeps a Buy rating on the shares.
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