Nvidia upgrade and Coinbase coverage initiation also among notable calls
Check out today's top analyst calls from around Wall Street, compiled by The Fly. SELL INTEL, BUY NVIDIA: Raymond James analyst Chris Caso downgraded Intel (INTC) to Underperform from Market Perform, reflecting the risk that Intel won't reach its goals under new leadership, and also the pain they will likely endure in pursuit of that goal in terms of capex, lost market share, and a shifting landscape in datacenter that will make the industry less dependent on Intel. Caso is concerned that demand in the PC market, on which Intel remains highly dependent, has been significantly pulled forward due to the pandemic, and expects an eventual mean reversion, which may occur just as Intel needs to ramp investment. The analyst is also "skeptical" about the foundry business.
Meanwhile, Caso upgraded Nvidia (NVDA) to Strong Buy from Outperform with a price target of $750, up from $700. In the short-term, Caso thinks results will be more dependent on supply than demand given widespread shortages, and thinks improvement in enterprise, driven by a return to the office as well as the A10 launch, could drive better Datacenter growth in the second half of the year. In the long-term, Caso believes Nvidia's success in AI has earned the company "a permanent seat at the table" in both hyperscale and enterprise compute.
The analyst also initiated coverage of AMD (AMD) with an Outperform rating and $100 price target. As he sees it as a secular winner due to a durable technical advantage versus Intel. Caso believes the stock's pullback has been driven by improved sentiment that Intel will solve their manufacturing challenges, but thinks it is unlikely that Intel ever regains a transistor advantage versus AMD.
MOMENTUM IN PARCEL MARKETS: Barclays analyst Brandon Oglenski upgraded UPS (UPS) to Equal Weight from Underweight with a price target of $180, up from $155. The analyst cited momentum in parcel markets as well as the stock's relative valuation and $5.5B liability bailout. While his top pick in transports remains FedEx (FDX), Oglenski pointed out that he cannot overlook continued market momentum in parcel fundamentals as well as the recent Central States pension bailout.
INCREASED ADOPTION OF BITCOIN: BTIG analyst Mark Palmer initiated coverage of Coinbase (COIN) with a Buy rating and $500 price target. Coinbase is positioned to be a primary beneficiary of the increased adoption of bitcoin and other digital assets as it continues to scale in the U.S. and internationally, Palmer told investors in a research note. The analyst believes the company has "several avenues through which it could build upon its first-mover advantage as an on-ramp for mainstream crypto investors" by diversifying its revenue stream away from transaction fees and leveraging its "increasingly robust" platform for institutional investors.
'OUTSIZED GROWTH' CYCLE: Goldman Sachs analyst Jason English upgraded Hershey (HSY) to Buy from Neutral with a price target of $181, up from $171. The analyst believes 2020 was the beginning of a three-plus year cycle of "outsized growth" for Hershey as the confection industry "leverages its unique pricing power" to expand revenue and profits at a time when input costs are "non-daunting." Mars appears to be leading and Hershey should follow over time, continuing the industry practice of unified price moves, English contended. This results in a "top tier growth algorithm that contrasts with a muted growth outlook for many U.S.-centric Staples peers" and should drive sustained stock price outperformance for English, the analyst added.
MOVING TO THE SIDELINES: Northland analyst Nehal Chokshi downgraded VMware (VMW) to Market Perform from Outperform with an unchanged price target of $169 following the announced spinoff from Dell Technologies (DELL). Chokshi cited reduced flexibility and introduction of incremental risks to business. The spin proposal reduces VMware financial flexibility, risk of declining long-term alignment with primary GTM growth engine of Dell and potentially creates a flood of VMware share supply end of 2021, he contended. While the analyst notes that improved equity and governance structure "theoretically" should improve partner ecosystem, he also believes it is "unlikely on a practical basis."