L Brands and Quest Diagnostics upgrades also among notable calls
Check out today's top analyst calls from around Wall Street, compiled by The Fly.
AMD RATING CHANGES AFTER RESULTS: Craig-Hallum analyst Christian Schwab downgraded AMD (AMD) to Hold from Buy with a price target of $66, up from $60. The analyst noted that AMD is executing well, especially in the current environment, reporting a strong quarter and raising its outlook for the rest of the year with strong multi-year growth expected to continue. He also pointed out that the company experienced its strongest client processor sales in 12 years during the quarter driven by its 11th straight quarter of market share gains as well as a PC market tailwind from work/school from home. However, while Schwab fully recognizes the positive competitive implications for AMD from Intel's (INTC) recent announcement that the competitor is struggling to achieve acceptable yields at 7nm and is delaying its node transition 6 months, with shares trading at about $74 in the after hours, up 30% in just the last week and 90% from March lows, the analyst is stepping to the sidelines and will look for a better entry point.
Meanwhile, Susquehanna analyst Christopher Rolland upgraded AMD to Positive from Neutral with a price target of $85, up from $64, after the company posted better than expected results and guidance, driven by upside across most product lines. The analyst believes share shifts appear to be accelerating for AMD and that the "competitive gap" with Intel is widening. AMD's outperformance across all product lines and continued long-term share gains from Intel's 7nm "faceplant" warrants an upgrade to Positive, Rolland contended.
'TOO HARD TO IGNORE' RISK/REWARD: JPMorgan analyst Matthew Boss upgraded L Brands (LB) to Overweight from Neutral with a price target of $32, up from $14. The analyst noted that the top and bottom-line "inflection" in the second quarter, second half of 2020 gross profit dollars returning to growth, $400M in cost savings through fiscal 2020, 250 Victoria's Secret store closures and a commitment to establish Bath & Body Works as pure-play public company creates a risk/reward profile that is "too hard to ignore." Boss sees the Bath & Body Works concept being bolstered multiple years post COVID-19 with accelerating health, beauty, and home trends.
MATERIAL UPSIDE POTENTIAL: KeyBanc analyst Donald Hooker upgraded Quest Diagnostics (DGX) to Overweight from Sector Weight with a $144 price target. The analyst sees "material upside potential" to near-term consensus expectations. Quest is now generating $1.00 of incremental earnings per share per month from running COVID-19 lab tests, including "temporarily favorable" COVID-19 pricing associated with the "Public Health Emergency," Hooker contends. The analyst thinks the Public Health Emergency could last well into 2021 and that Quest will generate 20% operating margins in 2020 and 2021.
DEUTSCHE SAYS BUY T-MOBILE, RBC MOVES TO SIDELINES: Deutsche Bank analyst Bryan Kraft initiated coverage of T-Mobile (TMUS) with a Buy rating and $140 price target. The analyst sees a "massive" EBITDA and free cash flow growth opportunity for T-Mobile driven by merger synergies, improved scale, an "industry-leading" spectrum position, and a turnaround of the legacy Sprint operations.
Meanwhile, RBC Capital analyst Jonathan Atkin downgraded T-Mobile to Sector Perform from Outperform with an unchanged $110 price target. The analyst believes that the valuation on the stock is "relatively full" considering his price target given the company's acquisition integration spending pressures on medium-term cash flows, execution uncertainties, and potential impact from promotional offerings.
FOOD AT HOME TRENDS: Piper Sandler analyst Michael Lavery upgraded Kraft Heinz (KHC) to Overweight from Neutral with a price target of $39, up from $30. The analyst expects greater food at home trends to drive a "sustainable lift" at least into 2021. Kraft Heinz is well-positioned with a largely meal-oriented portfolio with modest foodservice exposure, Lavery told investors in a research note. The company's foodservice exposure is skewed to quick service restaurants which are performing relatively well, the analyst added.
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