Check out today's top analyst calls from around Wall Street, compiled by The Fly.
SELL AMERICAN, BUY SOUTHWEST: Jefferies analyst Sheila Kahyaoglu initiated coverage of American Airlines (AAL) with an Underperform rating and $10 price target. Kahyaoglu believes American is the best positioned airline to take advantage of the recovery of the three mainline peers with a younger fleet than peers with an average age of just 11.9 years, international exposure tied to South America and Central America with 20% of flights tied to Mexico and the Caribbean, and a strong competitive position pre-pandemic as the only operator on about 39% of routes. However, the analyst noted that high leverage compared to peers is a near-term overhang on the stock.
On the flip side, Kahyaoglu started coverage of Southwest (LUV) with a Buy rating and $55 price target. The analyst pointed out that Southwest entered the pandemic with the best balance sheet and said he expects the airline to maintain a net cash position as debt offerings lag the cash position. Further, Kahyaoglu sees the potential for Southwest to expand its domestic market share to 24% in 2023, with each 2 points of domestic market share worth $1.8BB to 2023 revenues.
The analyst also initiated coverage of United Airlines (UAL) with a Hold rating and $45 price target. Kahyaoglu noted that United has the oldest fleet of its peer group at 15.6 years compared to the average U.S. airline of about 10.8 years, which should provide some headwind to being able to outperform on the recovery given lower cost efficiency. The analyst estimates that United's average age of the fleet could rise to 18.3 by the end of 2023.
Lastly, Kahyaoglu started coverage of Delta Air Lines (DAL) with a Hold rating and $40 price target. While the analyst believes Delta was best positioned prior to the pandemic, she thinks its portfolio now puts it at risk for a delayed recovery, as about 50% of revenue comes from business travel with 44% tied to international travel, both of which are expected to recover over an extended period. Additionally, the analyst said that adding to risk is the age of the fleet at 14.9 years versus the U.S. airline average of 10.8 years, with older aircraft tending to be more expensive to operate.
MOVING TO THE SIDELINES: BMO Capital analyst George Farmer downgraded Moderna (MRNA) to Market Perform from Outperform with a $109 price target. The analyst sees limited upside following Monday's rally on the positive Phase 3 Covid-19 vaccine outcome. A near-term best-case scenario is mostly reflected in the shares, including mRNA-1237 Emergency Use Authorization from the Food and Drug Administration before year-end and full approval in mid-2021, Farmer told investors in a research note. The analyst recommended taking some profits in Moderna.
BUY DRAFTKINGS: Loop Capital analyst Daniel Adam initiated coverage of DraftKings (DKNG) with a Buy rating and $100 price target. The analyst sees online sports betting and iGaming as the company's most significant drivers, estimating that the "true total addressable market" for these is over $30B - "significantly greater" than the $20B being modeled by other analysts. Adam expects DraftKings to emerge as the "undisputed share leader and biggest beneficiary" of the "rapidly growing" domestic online gaming industry.
Adam also started coverage of Penn National (PENN) with a Hold rating and $60 price target. The analyst noted that the company's key drivers are in online sports betting and a recovery in regional gaming revenue to pre-COVID levels. Adam is bullish on the former, but added that it may be too soon to call Penn National an "unequivocal winner" in the space.
MACAU RECOVERY PACE: HSBC analyst Charlene Liu downgraded Las Vegas Sands (LVS) to Hold from Buy with a price target of $53, up from $50.50. She thinks the market may be overly optimistic about the pace of recovery in Macau, adding that a gradual resumption of travel remains the key driver in that gaming market.
BRAND 'FINALLY STARTING TO TURN': Wells Fargo analyst Tom Nikic upgraded Under Armour (UAA) to Overweight from Equal Weight with a price target of $23, up from $15. The analyst believes investors will more aggressively rotate out of COVID "winners" that have outperformed in 2020, while shifting their focus to names that fit a 2021 "recovery" thesis. Nikic also noted that in recent years, he has seen several big turnarounds by athletic brands and thinks Under Armour is poised to be the next. After years of struggles, he believes the brand is finally starting to turn, and thinks investors will look toward this stock given its lagged athletic peers significantly year-to-date.
The analyst also
American Airlines
-0.35 (-2.74%)
Southwest
-0.7 (-1.54%)
Delta Air Lines
-0.69 (-1.82%)
United Airlines
-0.96 (-2.34%)
Moderna
-1.03 (-1.05%)
DraftKings
+1.36 (+3.18%)
Penn Entertainment
-0.2 (-0.31%)
Las Vegas Sands
-0.87 (-1.49%)
Under Armour
-0.17 (-1.08%)
Under Armour
-0.13 (-0.94%)
Capri Holdings
+0.11 (+0.36%)
VF Corp.
-0.43 (-0.52%)
Boot Barn
+0.45 (+1.15%)
Urban Outfitters
-1.62 (-5.78%)