Check out today's top analyst calls from around Wall Street, compiled by The Fly.
SELL LITHIA MOTORS: Morgan Stanley analyst Adam Jonas downgraded Lithia Motors (LAD) to Underweight from Equal Weight with a price target of $310, up from $294. A "strong" fourth quarter report and excitement around the growth strategy has taken Lithia to just under the $400 per share bull case, Jonas told investors in a research note. While the company's $50 earnings per share goal is realistic, it relies heavily on the acquisition of brick-and-mortar franchise dealers "at a risky time for the industry," the analyst contended. Following the stock's re-rating, Jonas feels investors can gain access to similar themes at more attractive valuations from Asbury Automotive (ABG), Group 1 Automotive (GPI), Penske Automotive (PAG) and CarMax (KMX), all of which are Overweight rated.
VALUATION: Benchmark analyst Mike Hickey downgraded Canopy Growth (CGC) to Hold from Buy with no price target, based on valuation. Despite the lowered rating, Hickey noted that Canopy delivered better-than-expected fiscal third quarter performance and gave a "compelling" medium-term financial outlook. Revenue growth should be significant in Canada over the next several quarters and he continues to see regulatory momentum in the U.S. for cannabis reform, he added.
Canaccord analyst Matt Bottomley also downgraded Canopy Growth to Sell from Hold with a price target of C$32, up from C$25, following the company's fiscal third quarter report. Though Canopy's results were generally in line with his "muted expectations," he cited the "significant valuation appreciation" of close to 100% year-to-date and having more than tripled in value since October 2020 for the lower rating, arguing that the current valuation "runs above fundamental support."
MOVING TO THE SIDELINES: Craig-Hallum analyst Jeff Van Rhee downgraded Akamai (AKAM) to Hold from Buy with a $120 price target. The analyst argued the company faces several challenges over the near- and intermediate-term. The retail and travel verticals continue to lag, and going forward, Akamai expects contract re-negotiations with customers in these impacted verticals to cause notable pressure, he added.
JPMorgan analyst Sterling Auty also downgraded Akamai Technologies to Neutral from Overweight with a price target of $117, down from $125, following the company's fourth quarter results. With the prospects of a "reversion to the mean" on growth and flat operating margins in 2021, the performance of the stock should be more in line with peers, Auty told investors in a research note. The lower capex as percent of revenue should be a benefit to cash flow, and a "reasonable valuation can provide some support to the stock," the analyst added. Auty believes his thesis in Akamai is now complete.
'COMPELLING' INVESTMENT: Wedbush analyst Michael Pachter initiated coverage of Playtika (PLTK) with an Outperform rating and $42 price target. The analyst views Playtika shares as a "compelling" investment given the company's best-in-class revenue and profitability, its unrivaled portfolio of genre-leading games, its differentiated live services infrastructure and proprietary Playtika Boost Platform, and a long runway ahead for additional growth.
'STRATOSPHERIC' MOVE IN STOCK PRICE: UBS analyst Myles Walton downgraded Virgin Galactic (SPCE) to Neutral from Buy with a price target of $52, up from $35. The analyst noted that while he remains "convinced" in the fundamentals of the company's offerings, the rating change is driven by the "stratospheric" move in the stock price of over 300% since the fall.
Lithia & Driveway
-14.18 (-3.63%)
Asbury Automotive
-1.37 (-0.83%)
Group 1 Automotive
-0.88 (-0.56%)
Penske Automotive
+0.19 (+0.29%)
CarMax
+0.74 (+0.59%)
Canopy Growth
+6.28 (+12.80%)
Akamai
-9.77 (-8.28%)
Playtika
+0.145 (+0.42%)
Virgin Galactic
-1.81 (-3.19%)