Check out today's top analyst calls from around Wall Street, compiled by The Fly.
OPCO UPGRADES TWITTER TO OUTPERFORM: Oppenheimer analyst Jason Helfstein upgraded Twitter (TWTR) to Outperform from Perform, telling investors in a research note that he believes within the scope of Social Media, Twitter shares offer reasonable value with reduced execution risk. Helfstein is optimistic that ad pricing has stabilized and expenses should grow slower than revenue in 2019. He kept a $37 price target on the shares.
DA DAVIDSON UPGRADES GRUBHUB TO BUY: DA Davidson analyst Tom Forte upgraded GrubHub (GRUB) to Buy from Neutral and raised his price target to $120 from $115. The analyst said that the 16.6% pullback in the company's stock price the past two days creates an "attractive entry point for investors." Forte cited his "tremendous confidence" in GrubHub management to ramp up investment spending to "maximize" the company's ability to build its share in the online restaurant delivery market. The analyst also believes that the concerns around long-term margin degradation as a result of more participation from lower-margin first-party restaurants are priced into the current valuation.
PIPER CUTS GILEAD TO NEUTRAL: Piper Jaffray analyst Tyler Van Buren downgraded Gilead Sciences (GILD) to Neutral from Overweight and lowered his price target for shares to $75 from $85. The company reported good Q3 results, but its annualized revenue growth between 2018 and 2023 looks to be around 3%, "which isn't exciting," Van Buren said. The broader issue is that "this very large base of revenue requires a pipeline of significant magnitude to achieve attractive growth," according to the analyst. Further, Van Buren does not have a high level of confidence in three key franchises that Gilead is betting on: Yescarta/CART, filgotinib/oral JAK, and nonalcoholic fatty liver disease.
JPMORGAN CUTS SNAP TO UNDERWEIGHT: JPMorgan analyst Doug Anmuth downgraded Snap (SNAP) to Underweight from Neutral and halved his price target for the shares to $6 from $12. The company reported better revenue but its daily active user declines continue, Anmuth said in a post-earnings research note. Daily active users declined sequentially for a second straight quarter, and management guided for further decline in Q4, the analyst points out. He believes it will be challenging for Snap to pull users away from Facebook's (FB) Instagram. Further, it also remains to be seen if the new Android application will deliver a superior user experience, says Anmuth. He expects Facebook and Instagram, with much larger user advertiser bases, "will continue to attract incremental ad dollars in the social media space, making it difficult for Snap to gain meaningful market share."
GORDON HASKETT SAYS GE MAY OWE BILLIONS MORE ON INSURANCE RESERVES: General Electric (GE) could end up owing billions more dollars for its insurance reserves, on top of the $15B in cash already committed, from an accounting change announced in August. Accounting firms and ratings agencies are apparently just beginning to assess the impact of the Financial Accounting Standards Board issued ASU 2018-12, "Targeted Improvements to the Accounting for Long-Duration Contracts," Gordon Haskett analyst John Inch said. The changes are effective starting at the beginning of 2021. Inch points out that GE lowered its discount rate, or the insurer's expected investment yield, from 6.2% to 5.7% in 2017, which was one of the drivers of its $9.5B pre-tax GAAP charge announced in January. However, after talking with ratings agency, the analyst believes a 5.7% rate is too high and will likely have to come down with the new FASB standard. "At this juncture, while the precise degree of mandated decline remains uncertain, the magnitude is expected to be significant," Inch wrote. GE previously disclosed, according to the analyst, that a hypothetical 25 basis point decline in expected investment yield, holding all other assumptions constant, would result in a $1B increase in future policy benefit reserves. Inch has an Underperform rating on General Electric with an $11 price target.
