Check out today's top analyst calls from around Wall Street, compiled by The Fly.
CITI DOWNGRADES SKYWORKS, CUTS TARGETS ON NVIDIA, QORVO: Citi analyst Atif Malik downgraded Skyworks Solutions (SWKS) to Neutral from Buy and lowered his price target for the shares to $85 from $116. The company is being impacted by broad smartphone weakness, disappointing unit sales of Apple's (AAPL) iPhone XR, and a high Apple concentration, which represented 39% of sales in FY19, Malik said. Further, the analyst thinks 5G radio frequency is a 2020 story versus his prior view of 2019. Malik also lowered his price target for Buy-rated Nvidia (NVDA) to $270 from $300 to reflect recent market multiple compression. In addition, the analyst dropped his price target for Neutral-rated Qorvo (QRVO) to $75 from $86. Weak iPhone XR units, where Qorvo won incremental mid-high band dollar content, will have a negative impact on the company's gross margins in 2019, said Mailk.
BERNSTEIN, JPMORGAN CAUTIOUS ON APPLE: Bernstein analyst A.M. Sacconaghi noted that at Apple's iPhone product announcement in September, Lisa Jackson, an Apple VP, stated that the company needed to "design products to last as long as possible." On the positive side, the analyst pointed out that longer-lasting products could lead to higher customer satisfaction, potentially enable Apple to charge higher prices for its devices, and would help fulfill the company's environmental objectives. On the other hand, he argued that it could materially lower iPhone unit sales each year, undermining company revenues and profits. His analysis suggests that iPhone units could fall by 6% per year for three years if average replacement cycles extend 6 months. Moreover, a longer replacement cycle could have a modest negative secondary effect of reducing the number of used iPhones available for sale in the second-hand market, impacting the growth rate of Apple's total installed base.
JPMorgan analyst Samik Chatterjee trimmed his earnings estimates for Apple as he now forecasts modest year-over-year declines in iPhone shipments for both 2018 and 2019 on account of a weaker macro backdrop in emerging markets. This is driving both softer consumer confidence in certain countries, as well as the headwind of the stronger U.S. dollar making phones more expensive in local currencies, Chatterjee said. Led by the softer backdrop in the emerging markets, the better than expected response to higher-end phones iPhone XS and the iPhone XS MAX "is unable to entirely offset the more tepid than expected consumer response to iPhone XR," wrote Chatterjee. The analyst lowered his 2018 iPhone volume expectations by 2M to 214M, 2019 estimate by 10M to 208M, and 2020 estimate by 10M to 210M. However, his earnings forecast only declines "by a modest" 10c per share in each of fiscal 2019 and 2020. Chatterjee lowered his price target for Apple shares to $266 from $270 and keeps an Overweight rating on the name. The analyst still sees 30%-plus upside from current share levels.
L BRANDS UPGRADED TO OUTPERFORM AT WELLS: Wells Fargo analyst Ike Boruchow upgraded L Brands (LB) to Outperform from Market Perform and raised his price target for the shares to $55 from $30 on compelling 2019 turnaround story. While the analyst is not calling for an imminent inflection in the business, he now sees L Brands as the next retail turnaround story poised for positive shift in the "narrative" as the company appears set to begin embracing change with an "all options on the table" mentality. Specifically, the recent announcements to divest the money losing Bendel business illustrates a new focus on the portfolio, he contends. Moreover, Boruchow sees a meaningful opportunity for a re-rating in shares.
CHEESECAKE FACTORY CUT TO UNDERWEIGHT AT BARCLAYS: Barclays analyst Jeffrey Bernstein downgraded Cheesecake Factory (CAKE) to Underweight from Equal Weight and lowered his price target for the shares to $47 from $51. The analyst sees headwinds persisting following the company's "disappointing" Q3 results and views the valuation as full at current share levels. In late morning trading, shares of Cheesecake Factory were down 3.4%.
GRAFTECH DOUBLE CUT TO SELL AT VERTICAL: Vertical Group analyst Gordon Johnson double downgraded GrafTech International (EAF) to Sell from Buy and lowered his price target for the shares to $9 from $29. Following discussions with graphite electrode industry experts both in China & the US recently, the analyst now sees "material imminent risk" to the entire space. Johnson says 91kt of capacity that will re-enter the U.S. market over the 2018-2019 timeframe, representing supply growth of over 14% versus estimated demand growth of 3%-4%. Further, the analyst's channel checks suggest some of the largest buyers in the U.S. are looking for significant price concessions when contracts renew in the first half of 2019. In late morning trading, shares of GrafTech were down over 9%.
