Check out today's top analyst calls from around Wall Street, compiled by The Fly.
SELL ABBOTT: Goldman Sachs analyst Amit Hazan downgraded Abbott Laboratories (ABT) to Sell from Neutral with a price target of $84, up from $79. The analyst argued that the stock has overreacted to the company's COVID-19 testing opportunity. Despite taking an early lead with multiple viral and antibody emergency use authorizations in the U.S. and a "sizable" test production outlook, competitors have steadily diminished Abbott's early advantage with their own approvals on high throughput systems, the analyst said. Hazan sees 10% downside in the shares and remains skeptical that the demand for antibody testing will reach a material level for Abbott revenues given the much lower price point for those tests.
BUY ULTA: Piper Sandler analyst Erinn Murphy upgraded Ulta Beauty (ULTA) to Overweight from Neutral with a price target of $275, up from $202. While the company's first quarter results were worse relative to lowered expectations, the analyst sees "green shoots" for skincare and haircare on the other side of COVID-19. Further, Ulta Beauty's digital ecosystem should fuel higher average spend per customer, Murphy contended. With department stores ceding market share, the analyst believes Ulta should be a primary beneficiary.
Meanwhile, Murphy also upgraded Estee Lauder (EL) to Overweight from Neutral with a price target of $238, up from $158. Skincare is Estee Lauder's strongest profit pool, representing 48% of sales and well-over 60% of profits, and on the other side of COVID-19, utilization will permanently be higher, the analyst contended.
OMNI-CHANNEL ROLLOUT ACCELERATION: JPMorgan analyst Rajat Gupta initiated coverage of CarMax (KMX) with an Overweight rating and $105 price target. While the COVID-19 pandemic is set to weigh on earnings near-term, the analyst believes ultimately it should accelerate the company's omni-channel rollout, resulting in higher throughput in the attractive used vehicle retail market. Further, Gupta argued that CarMax's revenue growth post-pandemic is likely to convert at a higher incremental margin, given both a move toward more on-line sales and its leaner cost structure.
LACK OF CATALYSTS: CIBC analyst John Zamparo downgraded Canopy Growth (CGC) to Neutral from Outperformer with a price target of C$26, down from C$35. Zamparo doesn't doubt Canopy's successful future, saying it has a strong management team and balance sheet, and its partnership with Constellation (STZ) is valuable, but believes it lacks positive catalysts in the near-term, and expects more attractive entry points following execution. The analyst contended that Canopy's strategy is sound, but thinks it will take time, and sees current valuation limiting upside.
Meanwhile, Stifel analyst W. Andrew Carter also downgraded Canopy Growth to Sell from Buy with a price target of C$18, down from C$23. Despite the stock's 21% decline following the fourth quarter earnings release, the valuation has yet to fully reflect Canopy's challenges ahead, Carter told investors in a research note. The analyst noted that company withdrew near-term financial targets while positioning fiscal 2021 as a "transition year," reflecting not only the uncertainty of COVID-19 but also "necessary re-wiring for the organization." Carter believes Canopy Growth's "course correction" will be difficult, its expenses will remain elevated, and "catalysts for driving enthusiasm will be slow to develop necessitating a further re-rating for the shares."
NEXT UPCYCLE POSITIONING: JPMorgan analyst Arun Jayaram upgraded Hess Corp. (HES) to Overweight from Neutral with a price target of $53, up from $37. The analyst believes Hess will be well positioned in the next upcycle as the company is poised to deliver "significant" incremental high-margin oil barrels at a time when there will be limited competition from other long-cycle barrels and U.S. shale producers will be less incentivized to grow at the same rates in previous times. Jayaram models 15% annual oil growth between 2019 and 2025 for Hess compared to the "flattish profile" of its diversified exploration and production peer group.
Abbott
-2.47 (-2.59%)
Ulta Beauty
+4.01 (+1.64%)
Estee Lauder
+2.16 (+1.09%)
CarMax
+2.93 (+3.33%)
Canopy Growth
-0.965 (-5.55%)
Constellation Brands
+3.25 (+1.88%)
Hess Corp.
+0.5 (+1.05%)