Check out today's top analyst calls from around Wall Street, compiled by The Fly.
GOLDMAN SACHS CUTS VMWARE TO SELL, PIVOTAL TO NEUTRAL: Goldman Sachs analyst Heather Bellini downgraded VMware (VMW) to Sell from Neutral with an unchanged price target of $177. While VMware has done an excellent job diversifying its revenue base away from core virtualization, the benefit from the resurgence in on-premise spending is starting to face more normalized comps, Bellini told investors in a research note. The analyst is optimistic on the company's revenue potential from partnerships with platforms such as Amazon Web Services (AMZN), but she believes the stock's current multiple is factoring in "material upside" to revenue and earnings estimates in 2019 and 2020.
The analyst also downgraded Pivotal Software (PVTL) to Neutral from Buy, and lowered her price target for the shares to $24 from $25. The analyst said that while she sees a general trend of workloads migrating to the public cloud, she expects the majority of workloads will still remain on-premise over the next three-to-five years. While this could benefit multi-cloud platforms like Pivotal Container Service, the majority of containers and serverless workloads appear to being deployed more extensively in public cloud environments, Bellini said. The analyst lowered her forecasts for Pivotal Software based on confidence in out year estimates. The company's onramp to container adoption looks longer and as the public cloud is likely to become the preferred approach, Bellini told investors in a research note.
MORGAN STANLEY UPGRADES MYLAN, DOWNGRADES TEVA: Morgan Stanley analyst David Risinger upgraded Mylan (MYL) to Overweight from Equal Weight as he believes the stock "can finally outperform" for the remainder of 2019 following a substantial reset that has the shares trading near the bottom end of their historical range of the past five years and at a historical discount to peers. Due to launches of complex generics and biosimilars, Mylan has an estimated generics revenue growth CAGR of 4% from 2019-2023 that Risinger calls "best-in-class." 2019 guidance includes reinvestment to drive future organic growth, added the analyst, who does warn that "the stock may require some patience, because Q1 expectations still need to come down." Rolling forward his valuation multiple, Risinger lowered his price target on Mylan shares to $35 from $39.
Risinger, however, downgraded Teva (TEVA) to Equal Weight from Overweight, citing his belief that the stock's premium valuation largely prices in expectations for upside in the coming quarters due to cost cutting and conservative Copaxone guidance. However, given the aggressive cost cutting and a lack of pipeline visibility beyond 2019, Risinger thinks long-term revenue growth is unclear and he sees better relative value elsewhere in the space, he told investors. Risinger made no changes to his estimates for Teva but lowered his multiple, driving a decrease in his price target to $17 from $22.
COWEN CUTS TRIPADVISOR TO UNDERPERFORM: Cowen analyst Kevin Kopelman downgraded TripAdvisor (TRIP) to Underperform from Market Perform. The analyst cited a weak start to 2019, expectations for weaker usage, and worries about younger age demos using Google (GOOG). He expects profit growth to slow to single digits by 2020 and thinks the stock's multiple should now be more in line with peers. Kopelman lowered his price target to $40 from $50 on TripAdvisor shares.
JPMORGAN SAYS $6 PRICE TARGET ON GE NOW SEEMS 'GENEROUS': Following Tuesday's conference presentation by General Electric (GE) CEO Larry Culp, JPMorgan analyst Stephen Tusa said he's no longer willing to engage in a debate where the bull case on shares is that Power is "not that bad," the stock can be valued on $1-plus in free cash flow, and General Electric Capital Services is "merely a zero." As long as this sentiment prevails, the stock can't find a bottom, Tusa told investors in a research note titled "Any Questions?" He believes his unchanged price target of $6 "looks generous" after the news and kept a Neutral rating on GE. Tusa is "willing to consider" that zero in industrial free cash flow is not a sustainable level but he believes the stock is not reflecting that as a run rate given the company's current $85B market capitalization. The answer is somewhere in between where the stock is today and zero, said the analyst.
GOLDMAN SACHS UPGRADES VULCAN TO CONVICTION BUY: Goldman Sachs analyst Jerry Revich added Vulcan Materials (VMC) to the Conviction Buy List with a $140 price target citing valuation and reduced expectations following several years of negative estimate revisions to manageable levels. Revich now sees an inflection in pricing, infrastructure investment in Vulcan's footprint, stabilizing residential data points, and for the industry to reclaim margin pressure from higher raw material costs over the course of last year.
Acquired by AVGO
-3.98 (-2.30%)
Pivotal Software
-1.33 (-6.09%)
Symbol now VTRS
+0.11 (+0.40%)
Teva
-0.36 (-2.15%)
TripAdvisor
-1.18 (-2.25%)
GE Aerospace
-0.61 (-6.17%)
Vulcan Materials
+1.68 (+1.48%)
Amazon.com
-12.28 (-0.73%)
Alphabet
-2.45 (-0.21%)