First Solar upgrade and Vizio coverage initiations also among notable calls
Check out today's top analyst calls from around Wall Street, compiled by The Fly.
MOVING TO THE SIDELINES: BMO Capital analyst James Fotheringham downgraded Discover Financial Services (DFS) to Market Perform from Outperform with an unchanged price target of $105. The analyst cited "exclusively" valuation for the downgrade. The shares have doubled over the past year and are now at or above historical averages, Fotheringham told investors in a research note. The analyst also noted that he is not making a call on the upcoming quarter.
ENOUGH RISK: Susquehanna analyst Christopher Rolland downgraded Qualcomm (QCOM) to Neutral from Positive with a price target of $155, down from $175. The analyst argued that as valuation multiples and lead times expand in concert, enough risk has accumulated to compel the downgrade.
BUY FIRST SOLAR: Citi analyst J.B. Lowe upgraded First Solar (FSLR) to Buy from Neutral with a price target of $100, up from $88, and opened a "90-day catalyst" on the shares. The analyst sees potential for "multiple positive catalysts" over the next several months from U.S. tax policy, U.S. trade policy and higher estimate revisions relative to production and margin outperformance. Any of the catalysts would cause First Solar shares to outperform, resulting in an attractive risk/reward proposition, Lowe told investors in a research note. If the Section 201 tariffs are extended in their current form, 2023 consensus EBITDA estimates could move 20% higher, he added.
TV VIEWING SHIFT: JPMorgan analyst Cory Carpenter initiated coverage of Vizio (VZIO) with an Overweight rating and $30 price target, representing 25% upside potential. The analyst believes SmartCast positions Vizio well to benefit from the shift of TV viewing and ad dollars from linear to streaming. The company offers investors an attractive way to get exposure to the connected TV ad market, which is projected to grow from $9B in 2020 to $27.5B in 2025, Carpenter told investors in a research note.
Needham analyst Laura Martin also started coverage of Vizio with a Buy rating and $30 price target. The company represents a pure play way to play CTV ad growth, coupled with platform economics upside, the analyst told investors in a research note. Martin added that what she "likes most" about the company is that Roku (ROKU) created a template that Vizio can follow to rapidly accelerate its ROIC by adding 65% gross margin Platform+ revenue to Vizio's 5% gross margin Smart TV sales.
Additionally, Piper Sandler analyst Thomas Champion initiated coverage of Vizio with an Overweight rating and $29 price target. Vizio is a "defensible" hardware business transitioning to a higher-growth streaming and connected TV business, Champion contended. The analyst believes Platform+ should raise the margin profile of the business while attaching Vizio to the connected TV advertising total addressable market "with its many structural tailwinds."
Also bullish on the stock, Roth Capital analyst Scott Searle started coverage of Vizio with a Buy rating and $29 price target. In combination with its "robust" SmartCast streaming platform, Vizio is driving increasing engagement and monetization for advertising, subscription and other valued added services, the analyst contended. Further, Searle notes that SmartCast remains in the early days of adoption and monetization which is expected to generate a 50%-plus CAGR through 2023.
ACCIDENT FREQUENCY TO INCREASE: Raymond James analyst C. Gregory Peters downgraded Progressive (PGR) to Outperform from Strong Buy with a $115 price target. The company reported March results ahead of our estimate due in part to higher-than-expected net premiums earned and better than expected combined ratio in personal lines agency, Peters told investors in a research note. However, as the benefits from COVID begin to lapse, the analyst expects lower margins and accident frequency to increase.
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