Check out today's top analyst calls from around Wall Street, compiled by The Fly.
GOLDMAN UPGRADES FORD TO BUY: Goldman Sachs analyst David Tamberrino upgraded Ford Motor Company (F) to Buy from Neutral and raised his price target for the shares to $12 from $9. While the analyst still expects a "downward earnings trajectory" into 2019 as North America profit remains under pressure, he believes next year will represent "trough earnings" for Ford. The combination of a refreshed product cadence globally as well as cost improvements from strategic initiatives will begin to take hold in 2019, Tamberrino said. The analyst believes Ford "can put itself on a pathway to earnings that are above normalized EPS by 2021." With investor sentiment still skewed toward General Motors (GM) over Ford, incremental announcements regarding plant closures and business decisions around underperforming product lines would likely be viewed positively, added Tamberrino. In addition, he believes Ford's current regular dividend "appears manageable." All in, he sees potential for a total return of approximately 40% over the next year for Ford shares. In late morning trading, Ford shares are higher by over 5%.
JEFFERIES INITIATES APPLE WITH A BUY: Jefferies analyst Timothy O'Shea started Apple (AAPL) with a Buy rating and $265 price target. The analyst believes the iPhone business will drive a "massive, recurring and high margin" Services business. He sees Services possibly representing 25% of Apple's revenue and 40% of gross profit by fiscal 2022. The business along offers a "significant opportunity" for investors and could be worth $111 to $177 per share by that time, O'Shea wrote in a research note.
BOFA CUTS APPLE PRICE TARGET TO $235: BofA Merrill Lynch analyst Wamsi Mohan lowered his iPhone estimates for Apple's December quarter and fiscal 2019 to account for a slowdown in China and broader currency headwinds. The analyst, who expects Apple to beat September quarter expectations when reporting on November 1, dropped his December quarter iPhone unit estimate to 73M from 77M and fiscal 2019 estimate to 214M from 222M. While "weaker end markets create some near-term headwinds," Apple's "strong growth" in Services, "strong" capital return and cash balance "affords optionality," Mohan said. As such, despite reducing his price target for the shares to $235 from $256, the analyst reiterated a Buy rating on Apple.
RBC UPGRADES 'OVERSOLD' AB INBEV TO OUTPERFORM: RBC Capital analyst James Edwardes Jones upgraded AB InBev (BUD) to Outperform form Sector Perform and lowered his price target to EUR 75 from EUR 79. The analyst noted that while the company's Q3 results were "disappointing", he believes that shares were also oversold given that the company's "sales growth looks OK relative to the rest of the consumer staples sector." Jones lowers his FY20 EPS view on AB InBev by 7%, but also notes that 6% of that revision is related to the adverse FX conditions. In late morning trading, AB Inbev shares are higher by almost 3%.
JPMORGAN SPECULATES ON FUTURE TAKEOVER TARGETS AFTER REDHAT DEAL: The volume of acquisitions in Software appears to be picking up with over 70 transactions announced year-to-date, including the recent Red Hat (RHT) takeover by IBM (IBM), JPMorgan analyst Sterling Auty said. The analyst puts the deals announced this year into three buckets: strategic, where the acquirer looks to gain a strong foothold in a new segment, vertical acquiring companies, and valuation, with acquirers going after assets with discounted valuations. Auty sees number of companies fitting those same characteristics across his coverage universe. In the strategic category, the analyst sees Okta (OKTA), Palo Alto Networks (PANW), ServiceNow (NOW), RingCentral (RNG), Aspen Technology (AZPN) and DocuSign (DOCU) as potential acquisition targets. In the vertical industry exposure category, Auty lists Guidewire (GWRE), Veeva (VEEV), Medidata (MDSO), Ellie Mae (ELLI) and Q2 Holdings (QTWO) as potential targets. And in the attractive valuation bucket, the analyst sees FireEye (FEYE), Carbon Black (CBLK), Secureworks (SCWX), Akamai (AKAM) and LogMeln (LOGM) as potential candidates to get acquired.
