Netflix coverage initiation and Peloton target increase also among notable calls
Check out today's top analyst calls from around Wall Street, compiled by The Fly.
BUY ALPHABET, FACEBOOK, NETFLIX: KeyBanc analyst Justin Patterson initiated coverage of several names in the internet and digital media space, including:
Alphabet (GOOGL) with an Overweight rating and $1,955 price target as he believes advertising can support the company's annual revenue growth of over 10%, while the success of its Cloud business is becoming more evident;
Facebook (FB) with an Overweight rating and $330 price target, saying advertising market recovery can sustain revenue growth of over 20%, while new initiatives such as the company's Shopping business could drive "material upside." Patterson further cited Facebook's international expansion and transactional video-on-demand as catalysts;
Netflix (NFLX) with an Overweight rating and $590 price target as he sees the company as the winner in the over-the-top video and believes that it is positioned for long-term free cash flow growth. Patterson further cited the pricing power of Netflix, with cord-cutting having accelerated and consumer adoption increasing during the pandemic;
Twitter (TWTR) with a Sector Weight rating. While the analyst is encouraged about the company's positive revision potential from new ad units and audience growth, he recommends that investors await a "more attractive" entry point for the stock;
Snap (SNAP) with an Overweight rating and $29 price target on improved product and advertising efforts, and accelerated average-revenue-per-user growth relative to expectations;
Roku (ROKU) with an Overweight rating and $228 price target as he sees growth in the company's ad-supported channels and new ads driving faster revenue growth than estimated by consensus. Patterson further cited Roku's international expansion and the recovery of the advertising market as the potential catalysts for the company;
Spotify (SPOT) with a Sector Weight rating as he believes the stock's re-rating was warranted by an expanding audio total addressable market, though the next set of catalysts - namely, prices increases and ad monetization - appear to be "distant." The analyst recommends that investors await a more compelling entry point;
Pinterest (PINS) with an Overweight rating and $44 price target as he believes the company is benefiting from digital acceleration and should generate over 30% in annual revenue growth thanks to its AdTech initiatives and market share gains;
Yelp (YELP) with a Sector Weight rating, saying that while the company has made progress on monetization and expense efficiencies, these are being offset by limited visibility related to the impact of COVID-19 on its core markets;
SURGE IN DEMAND: Argus analyst Jim Kelleher raised the firm's price target on Peloton (PTON) to $100 from $55, while keeping a Buy rating on the shares following last week's better-than-expected fourth quarter results and "strong" revenue guidance for fiscal year 2021. Kelleher pointed out that Peloton is benefiting from a surge in demand as a result of the COVID-19 pandemic and subsequent shelter-in-place orders, but sees consumers returning to brick-and-mortar gyms only gradually once the mandates start to expire. The analyst expects Peloton to benefit from network efficiencies, especially with respect to the streaming content that draws consumers to the platform.
'CORNERSTONE ACQUISITION': Maxim analyst Jason McCarthy upgraded Gilead (GILD) to Buy from Hold with an $88 price target following the announcement that the company will acquire Immunomedics (IMMU) for $21B in a deal that is scheduled to close in fourth quarter. McCarthy told investors that this could be a "cornerstone acquisition" for Gilead's expanding oncology portfolio and that Trodelvy could be a platform product, expanding into multiple indications and earlier stage treatment, including as a combination with some of Gilead's other oncology assets.
'RESILIENT' C2C TRANSACTION TRENDS: Bank of America analyst Jason Kupferberg upgraded Western Union (WU) to Buy from Neutral with an unchanged $26 price target. The analyst believes that the 300bps of underperformance by the stock has not been justified given the "resilient" C2C transaction trends relative to the assumptions at the start of the pandemic. At 11.3-times his expected forward earnings multiple, Western Union shares trade at a 45% discount to the S&P, Kupferberg told investors in a research note.
IMPROVING DEMAND TRENDS: BTIG analyst Camilo Lyon upgraded VF Corp. (VFC) to Buy from Neutral with an $88 price target. Concerns around excess inventory in The North Face and Timberland "are well on their way to being resolved," Lyon told investors in a research note. Further, the analyst sees catalysts for improving demand trends heading into the fall/winter season. VF has well positioned brands in Vans and North Face that should "leverage strong category tailwinds aided by unrelenting innovation," Lyon contended. The analyst believes a "significant uptick" in web traffic points to an improved sales trajectory in the company's fiscal second quarter.