Fifth Third was upgraded at Morgan Stanley and also added to Wedbush's Best Ideas List
Check out today's top analyst calls from around Wall Street, compiled by The Fly.
CRUISE LINE STOCKS UPGRADED: Barclays analyst Felicia Hendrix upgraded to Overweight from Equal Weight the shares of Carnival (CCL), Norwegian Cruise Line (NCLH) and Royal Caribbean (RCL) with increased price targets of $31, $26 and $68, respectively. The analyst, who admits the call may be early, believes the risk/rewards in the Cruise Line space are the most attractive in the U.S. Leisure sector. An "inflection point" is nearing and investors who have previously written off cruise stocks should begin to revisit their models, Hendrix tells investors in a research note. The analyst sees a catalyst for the industry in the next few days when the Centers for Disease Control and Prevention will address the September 30 no-sail date. While chances are high that the CDC extends the date again into Q4, the comments from the agency will likely be positive and could signal a near-term return to cruise, which could be a catalyst for the shares, contends Hendrix.
FIFTH THIRD UPGRADED, ADDED TO BEST IDEAS: Morgan Stanley analyst Ken Zerbe upgraded Fifth Third Bancorp (FITB) to Overweight from Equal Weight with a price target of $30, up from $24. The market is not properly valuing Fifth Third's new expense initiatives, outlook for "much lower" provision expense, and "aggressive" capital return program post the pandemic, Zerbe tells investors in a research note. The analyst sees better profitability and faster earnings growth going forward as well as 53% upside potential in the shares.
Meanwhile, Wedbush analyst Peter Winter added Fifth Third to the firm's Best Ideas List, as the analyst believes it is one of the best positioned banks to handle this unprecedented environment in several ways. Winter says Fifth Third is well positioned from a credit perspective, as they ran-off ~$7B in loans, including reducing leverage lending exposure by 50% since 2015, with balances now below $4B and disciplined on CRE, by maintaining the lowest level of CRE loans as a percentage of total capital. The analyst maintains an Outperform rating and $26 price target. REDFIN, ZILLOW INITIATIONS: Piper Sandler analyst Tom Champion initiated coverage of Redfin (RDFN) with an Overweight rating and $56 price target. The analyst believes the company's digital, discount model is "ideally suited to the market." Additionally, with home sales improving dramatically in July, the industry looks set up for a strong second half of 2020, Champion tells investors in a research note.
The analyst also initiated coverage of Zillow Group (ZG) with an Overweight rating and $112 price target. Zillow appears to be executing on its path towards a "real estate transactions engine" and its execution has been solid even during the pandemic, Champion tells investors in a research note. Plus, the analyst believes the core business is gaining momentum while an improving real estate market "serves as a tailwind." CALLON RATED UNDERWEIGHT AT WELLS: Wells Fargo analyst Thomas Hughes initiated coverage of Callon Petroleum (CPE) with an Underweight rating and $4 price target. Hughes believes 2Q20 liquidity of ~$260M, YE20E/YE21E leverage of 4.8x/4.7x, and relatively minimal free cash flow guidance of ~$150M from 3Q20-4Q21 creates three major hurdles Callon must address before taking any positive stance on its equity. Barring major commodity price improvements, the analyst thinks he current capital structure will necessitate some form of restructuring.
AVANGRID CUT TO UNDERPERFORM: BofA analyst Julien Dumoulin-Smith downgraded Avangrid (AGR) to Underperform from Neutral with a price target of $46, down from $47. The stock has remained "resilient" despite the "persistent" sell-off in utilities and given the "sharp discount" of regional peers such as Con Edison (ED), the analyst tells investors in a research note. The backdrop for Avangrid heading into its November Analyst Day looks cautious, but continued "healthy" consensus earnings EPS expectations suggest "clear risks" across all future years heading into the event, Dumoulin-Smith states.
Keywords: analyst, analyst calls, upgrades, downgrades, initiations, research, wall street