Check out today's top analyst calls from around Wall Street, compiled by The Fly.
VALUATION 'A BIT STRETCHED': Gordon Haskett analyst Chuck Grom downgraded Walmart (WMT) to Accumulate from Buy with a price target of $140, up from $130. While still a fan of Walmart's story and a believer that the pandemic has only strengthened its model, Grom thinks that valuation is "getting a bit stretched." Similar to Costco (COST) and Target (TGT), who have recently flagged significantly higher operating costs due to the pandemic, Grom believes Walmart's recent top line strength will "more or less" be offset by margin pressures.
SELL UPS: BMO Capital analyst Fadi Chamoun downgraded UPS (UPS) to Underperform from Market Perform with a price target of $85, down from $95. The analyst believes that the coronavirus driven global recession is likely to accelerate the pace of growth in residential deliveries, shift volume mix toward larger customers, and potentially drive unfavorable changes in global trade patterns. While cyclical headwinds will eventually ease, there is a structural component to the current compression of UPS's operating margins, which will mute its earnings, free cash flow, and return on invested capital recovery, the analyst added.
FOODSERVICE RISK: Piper Sandler analyst Michael Lavery downgraded both Tyson Foods (TSN) and Hormel (HRL) to Neutral from Overweight. While Tyson has a meal-oriented portfolio that can benefit from stronger retail sales growth and take share from restaurants, it is likely to face headwinds from its foodservice exposure, which represents 40% of sales, current plant closures, and higher costs due to COVID-19, Lavery contended. Regarding Hormel, the analyst continues to believe it is a high-quality company with a strong long-term outlook, but sees little upside at current valuation levels. Lavery lowered his price target for Tyson Foods to $66 from $100, and Hormel's target to $47 from $48.
BUY ROKU: Benchmark analyst Daniel Kurnos initiated coverage of Roku (ROKU) with a Buy rating and $153 price target. While the analyst acknowledged that the current share price potentially offers less short-term upside, he argued that Roku will be a long-term winner after the COVID-19 crisis. Roku should be more insulated from broader advertising pressure in the near-term and be a significant beneficiary once cost per impressions recover, he contended. Further, Kurnos believes Roku will also continue to benefit from subscription-video-on-demand channel growth and has "a nascent, greenfield opportunity" in international markets that could become material to revenue as early as 2021.
TAILWINDS COMPENSATE CHURN RISK: Northland analyst Tyler Wood upgraded Stamps.com (STMP) to Outperform from Market Perform with a price target of $200, up from $120. The closing of physical retail stores is causing a surge of demand for tools enabling e-commerce fulfillment, Wood told investors in a research note. The analyst suspects Stamps.com is "pressing the gas pedal and will generate impressive customer growth in the coming quarters." These tailwinds more than compensate for near-term churn risk, Wood contended.
Walmart
-4.01 (-3.13%)
Costco
-2.92 (-0.96%)
Target
-0.97 (-0.87%)
UPS
+0.22 (+0.23%)
Tyson Foods
+0.57 (+0.91%)
Hormel Foods
-1.41 (-2.95%)
Roku
+1.17 (+0.98%)
Stamps.com
+4.96 (+3.20%)