Check out today's top analyst calls from around Wall Street, compiled by The Fly.
OPPENHEIMER INITIATES AMARIN AT UNDERPERFORM: Oppenheimer analyst Leland Gershell initiated coverage of Amarin (AMRN) with an Underperform rating and $7 price target. Amarin's current valuation reflects expectations that, following near-term label expansion of sole omega-3 product Vascepa, the company's sales will inflect and grow to $2B-plus by 2024 and its operating margins will meaningfully improve, Gershell said. The analyst, however, forecasts Amarin's sales growth to "underwhelm" and that "heavy selling costs" will impede its profitability. Furthermore, a 12-month stream of late-stage competitor data starting next month will increasingly weigh on shares as these products will offer superior profiles, adds Gershell. In addition, the analyst thinks the likelihood of Amarin getting acquired will only shrink with time. He views Amarin's valuation as "rich" and the M&A thesis as "stale." The sell-equivalent rating is a notable split from other bullish analysts.
CITI PREFERS AMARIN TO MEDICINES CO: Amarin shares this week have declined 5% while The Medicines Co. (MDCO) stock is up 35%, Citi analyst Joel Beatty noted. This has brought The Medicines Co.'s enterprise value to $7.5B, exceeding Amarin's enterprise value of $7.4B, the analyst pointed out. However, he does not see anything fundamental having changed that would support this "drastic of a change in the relative valuation of the two companies." Thus, while Beatty kept a Neutral rating on both stocks, he prefers owning Amarin over The Medicines Co. at this time. The Medicines Co. now looks expensive relative to Amarin, he contended. Further, the analyst said that Bloomberg's report this week of Novartis (NVS) having expressed interest in The Medicines Co. does not provide new evidence that the company is attractive from a valuation standpoint to potential acquirers.
MULTIPLE FIRMS DOWNGRADE BERRY PETROLEUM: Berry Petroleum (BRY) was downgraded to Market Perform from Outperform at BMO Capital and Wells Fargo, to Underweight from Sector Weight at KeyBanc, and to Hold from Buy at Tudor Pickering.
BMO Capital analyst Phillip Jungwirth downgraded Berry Petroleum to Market Perform from Outperform with a price target of $10, down from $13. The analyst cites regulatory overhang for the downgrade after the California Department of Conservation's Division of Oil, Gas, and Geothermal Resources announced that effective January 1, 2020, it will halt approvals of new oil wells that use high-pressure steam. Berry noted the moratorium won't impact 2019 and that it would only potentially impact future diatomite wells, Jungwirth tells investors. The analyst, however, thinks increased regulatory uncertainty will be an overhang to the share price and valuation multiples.
Wells Fargo analyst Gordon Douthat cut Berry Petroleum to Market Perform from Outperform with a price target of $9, down from $13. The new initiatives announced by California's Department of Conservation cast doubt on Berry's ability to budget, forecast, and execute a stable operational plan going forward, Douthat tells investors in a research note. The analyst's downgrade reflects greater risk to Berry's future production and cash flow generation potential.
KeyBanc analyst Leo Mariani downgraded Berry Petroleum to Underweight from Sector Weight with a $6.50 price target. The new rules and regulations passed in California yesterday could potentially result in the loss of production volumes for Berry in the near future, Mariani tells investors in a research note. California announced a halt on new permits for high-pressure steam injection wells and is assessing the safety of existing wells using high-pressure steam above the fracture pressure of formations. The analyst believes the new regulations are "highly likely" to impact Berry Petroleum's valuation and cause its cash flow multiple to "derate" until there is more clarity around the financial impact.
GOLDMAN BOOSTS TRADEWEB, CUTS CBOE: Goldman Sachs analyst Alexander Blostein upgraded Tradeweb Markets (TW) to Buy from Neutral with a price target of $53, up from $52. The company's "solid" organic revenue growth and expanding operating margins should drive 15% earnings growth in 2020 and 2021, Blostein said. This differentiates Tradeweb versus most other Exchanges, where sales trends are decelerating, margin expansion is becoming increasingly harder to achieve and valuations remain expensive, contended the analyst. He sees continued market share gains for Tradeweb Markets and 22% upside in the shares.
Blostein downgraded Cboe Global Markets (CBOE) to Neutral from Buy with an unchanged price target of $127 and removed the shares from his firm's Americas Conviction List. Cboe's proprietary products volumes have been "muted," as revenues peaked in the first half of 2018 and have failed to regain ground, Blostein said. The analyst sees "mixed trends" in the company's sales growth outlook capping further price-to-earnings multiple expansion. Further, with the stock approaching his $127 target, Blostein said Cboe's valuation has largely normalized, in line with historical levels.
BOFA SAYS TIME TO BUY CANOPY GROWTH: BofA Merrill Lynch analyst Christopher Carey upgraded Canopy Growth (CGC) to Buy from Neutral with a price target of $19. The analyst noted that the stock has fallen 38% since his downgrade two months ago which pointed to the slowdown in orders and relatively high consensus estimates. Following that decline, Carey stated that the bad news has been priced into a "more reasonable" valuation as estimates have come in to become achievable or "even beatable" and inventories have turned leaner.
RAYMOND JAMES BOOSTS INTELSAT TO OUTPERFORM: Raymond James analyst Richard Prentiss upgraded Intelsat (I) to Outperform from Market Perform with a $12 price target. In a research note to investors, Prentiss said he believes the ~75% pullback over the past 10 days was first related to speculation, and then the confirmation on Monday morning, that the FCC would run a public vs. private auction for 280 MHz. Given the recent dramatic pullback, Prentiss said he feels the risk /reward is now more interesting.
Amarin
-2.56 (-11.26%)
Berry Corporation
-1.77 (-19.89%)
Tradeweb Markets
+1.38 (+3.19%)
Cboe Global Markets
-0.68 (-0.55%)
Canopy Growth
+2.11 (+13.77%)
Intelsat
+1.3 (+21.38%)