Check out today's top analyst calls from around Wall Street, compiled by The Fly.
CRISIS BOOST REFLECTED IN STOCK: BTIG analyst Mark Palmer downgraded PayPal (PYPL) to Neutral from Buy. Palmer noted that shares have more than doubled from the lows reached in March after the COVID-19 pandemic took hold, and are currently trading at more than 40% above the highs reached in February prior to the outbreak. While he believes PayPal is a "clear beneficiary" of the changes in consumer behavior arising from the stay at home orders in response to the pandemic, Palmer also thinks the shares, trading at 35 times consensus fiscal 2022 adjusted earnings estimates, largely reflect the boost provided by the crisis. He sees more limited upside in the near-term and would look for a better entry point before re-engaging with the stock.
POSITIONED TO OUTPERFORM PEERS' RETURNS: Davidson analyst David Konrad upgraded Morgan Stanley (MS) to Buy from Neutral with a price target of $58, up from $43. The analyst believes the company is positioned to outperform its peers' returns thanks to the higher overall market levels, active retail investors and strong capital markets activity. While Konrad had cut Morgan Stanley's rating in February following the E-Trade (ETFC) announcement related to concerns of TBV dilution, he now believes that the valuation gap to peers will narrow given his expectations of outperformance with regard to credit costs during the COVID crisis.
MOVING TO THE SIDELINES: Barclays analyst Felicia Hendrix downgraded Norwegian Cruise Line (NCLH) to Equal Weight from Overweight with an unchanged price target of $21, and cut Royal Caribbean’s (RCL) rating also to Equal Weight from Overweight with a price target of $50, down from $55. The analyst believes cruise stocks will remain "range bound at best," or potentially move lower in the near to mid-term, as investors have to look out further to justify normalized earnings. With cruise companies facing substantially increased financial leverage, an unclear path to returning to full operations and the potential for delays or disruptions, Hendrix thinks the Lodging and Gaming sectors face a more favorable risk/reward than Cruises do.
BUY VMWARE: Stifel analyst Brad Reback upgraded VMware (VMW) to Buy from Hold with a price target of $196, up from $166, following the Wall Street Journal’s report saying that Dell Technologies (DELL) is exploring options for its 81% stake in the company. The analyst noted that he has "long believed" that Dell would ultimately buy the remaining 19% that it does not own to gain full control over VMWare's "substantial" free cash flows, and he still expects this option to be the "ultimate outcome." Reback added that a spin of VMWare makes little long-term sense considering the "secular headwinds" faced by Dell's core hardware business.
SELL CHEESECAKE: JPMorgan analyst John Ivankoe downgraded Cheesecake Factory (CAKE) to Underweight from Neutral with a price target of $23, up from $19. The analyst argued that while many restaurants are doing over 50% of previous sales volume as off-premise, Cheesecake is doing less than 40%. Destination-oriented locations, especially surrounded by closed retail, becomes less appealing in this environment, the analyst added. Ivankoe believes Cheesecake Factory's "cafe" style energy, which was once a key attribute, is now a negative.
Meanwhile, the analyst upgraded Texas Roadhouse (TXRH) to Neutral from Underweight with a price target of $55, up from $44. The company should benefit from its lower off-premise leverage in a dining rooms re-opening environment, Ivankoe contended.
PayPal
-2.77 (-1.60%)
Morgan Stanley
-0.8 (-1.67%)
E-Trade
-0.81 (-1.64%)
Norwegian Cruise Line
-1.71 (-9.48%)
Royal Caribbean
-4.95 (-9.10%)
Acquired by AVGO
+5.465 (+3.66%)
Dell Technologies
+3.535 (+7.21%)
Cheesecake Factory
-2.19 (-9.02%)
Texas Roadhouse
-1.6 (-2.94%)