Check out today's top analyst calls from around Wall Street, compiled by The Fly.
HOME DEPOT CUT TO NEUTRAL AT GUGGENHEIM: Guggenheim downgraded Home Depot (HD) to Neutral from Buy as analyst Steven Forbes said he finds it hard to see a path to EBIT margin expansion in 2020 given the company's planned investment spending. Given the recent, and planned, increase in capital expenditures, he would expect rising depreciation and amortization expense to represent an incremental EBIT margin headwind in 2020, added Forbes. He also voiced broader concerns around underlying demand for goods versus services, which leaves "a more balanced risk/reward scenario" for the stock given it is trading at a valuation relative to the S&P 500 that has not been seen since the early post-recession recovery years, Forbes stated. He removed his prior $230 price target on Home Depot shares.
SPLUNK BOOSTED TO OVERWEIGHT AT JPMORGAN: JPMorgan analyst Mark Murphy upgraded Splunk (SPLK) to Overweight from Neutral with an unchanged price target of $130. The analyst expects a bookings growth rebound in the second half of 2019 and has a favorable view of the company's transition to a recurring/renewable model. The shares, having declined 19% from their highs in late July, are now attractive, Murphy said. The analyst views consensus estimates "as largely de-risked at this point," and sees potential for multiple expansion as investors start to view Splunk as a recurring/renewable revenue business at scale. Further, his latest Chief Investment Officer survey "cited a solid uptick" in Splunk spending intentions.
SNAP RAISED TO NEUTRAL AT SUSQUEHANNA: Susquehanna analyst Shyam Patil upgraded Snap (SNAP) to Neutral from Negative and boosted his price target for the shares to $18 from $12. The analyst's recent advertising channel checks have suggested that Snap's "solid" growth has continued in Q3 with expectations for continued progress in Q4. The checks also show that Facebook's (FB) Instagram Stories "has lowered barriers" for SNAP Stories adoption, Patil noted. The analyst, who also expect Snap's net addition momentum to continue in the second half of 2019, said the stock's valuation is keeping him from getting even more constructive.
ZYNGA THE BEST IDEA IN VIDEO GAMES, SAYS STEPHENS: Stephens analyst Jeff Cohen changed his Best Idea in video games to Zynga (ZNGA) from Electronic Arts (EA), stating that the former is well positioned for the next 6-18 months, which he believes will be a period of consolidation in the mobile gaming market. Zynga has a proven ability to successfully execute M&A and Cohen believes the potential for deals, along with its current portfolio, create a "very compelling risk/reward," he said. Cohen kept an Overweight rating and $8.25 price target on Zynga shares.
BURLINGTON, TJX UPGRADED TO NEUTRAL AT UBS: UBS analyst Jay Sole upgraded Burlington Stores (BURL) to Neutral from Sell and raised his price target for the shares to $200 from $121. Tariffs are likely a net positive for Burlington, and the company accelerated its rate of share gain versus department stores in Q2, reversing a trend which had persisted for over a year, Sole said. The analyst, who raised his fiscal 2019 and 2020 earnings by estimates 7% and 23%, respectively, expects Burlington's price-to-earnings ratio to remain in the mid-to-high 20 times range.
Sole also upgraded TJX (TJX) to Neutral from Sell and raised his price target for the shares to $58 from $41. Tariffs will likely drive incremental market share gains for the company, while UBS Evidence Lab market research shows consumers continue to prioritize TJX's value-for-money offering over other retailers' strategies, Sole said. The analyst, who raised his fiscal 2019 and 2020 earnings by estimates 3% and 12%, respectively, believes share gains will likely mean that TJX should be able to maintain its premium valuation.
Home Depot
-2.33 (-1.01%)
Bought by CSCO
+2.16 (+1.88%)
Snap
+0.63 (+4.00%)
Zynga
+0.13 (+2.22%)
Electronic Arts
-1.03 (-1.04%)
Burlington Stores
+4.7 (+2.44%)
TJX
+0.39 (+0.70%)