Pentair downgrade also among today's notable calls
Check out today's top analyst calls from around Wall Street, compiled by The Fly.
U.S. STEEL UPGRADE: UBS analyst Andreas Bokkenheuser upgraded U.S. Steel (X) to Neutral from Sell with a price target of $30, up from $15. While the current steel price rally is not the result of a "super cycle," and it is more supply-constraint than demand-strength driven, "it still has some legs," Bokkenheuser tells investors in a research note. As such, UBS consequently raise its U.S. steel price deck, warranting an upgrade of US Steel to Neutral, says the analyst.
'MULTIYEAR TRANSFORMATION': BofA analyst Erika Najarian upgraded Wells Fargo (WFC) to Buy from Neutral with a price target of $60, up from $47. The stock's 50% year-to-date rally is "eye-popping," but Wells remains the only bank in its peer group still trading below recent pre-pandemic highs, noted Najarian, who views the stock as more than an expense cutting story amid the bank's "multiyear transformation." While many big bank peers have either cyclical or self-help catalysts, Wells has both, argues Najarian, who adds that she thinks a "normalized" ROTCE in the mid-teens is achievable.
PENTAIR DOWNGRADE: Morgan Stanley analyst Joshua Pokrzywinski downgraded Pentair (PNR) to Underweight from Equal Weight with a price target of $63, down from $69. The analyst also downgraded his sector view on U.S. multi-industry to In-Line. Pokrzywinski is turning more selective on the group saying earnings revisions and valuations have become less supportive for early-cycle names. For Pentair, he sees fewer upside surprises from its residential exposure from here or earnings revisions that would justify a premium valuation. Pokrzywinski prefers mid-cycle capex and long-term themes in automation, electrification and building modernization, with his top picks being Johnson Controls (JCI), Rockwell Automation (ROK) and Eaton (ETN).
'STILL ELEVATED' GLOBAL THREATS: Stifel analyst Joseph DeNardi upgraded Northrop Grumman (NOC) to Buy from Hold with a price target of $475, up from $350. He has historically viewed Northrop as a high-quality defense business, but his Hold rating in recent years has been driven largely by the view that Northrop had a degree of execution or budget risk that was greater than pure-play defense peers. However, given the degree of relative underperformance of defense stocks and historically low relative valuations, he now sees a much stronger case for defense stock ownership as he thinks geopolitical tensions are rising and could accelerate as COVID dynamics normalize. Amid the "underappreciated" and "still-elevated" threat environment, DeNardi views Northrop as having a favorable alignment with areas of strategic longer-term importance, he added.
MORGAN STANLEY REMAINS OVERWEIGHT COCA-COLA: Morgan Stanley analyst Dara Mohsenian raised the firm's price target on Coca-Cola (KO) to $64 from $60 and keeps an Overweight rating on the shares. He expresses "a high degree of conviction" that Coke will see a sales recovery through 2022 that tops the consensus forecast as consensus assumes the company recovers only about 35% of 2020 lost dollar sales in 2021/22, which to him "seems way too low." He also believes investors are underestimating the positive potential changes under Coke's restructuring, in terms of cost cuts but also in terms of execution, Mohsenian added.
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