Check out today's top analyst calls from around Wall Street, compiled by The Fly.
GUGGEHNHEIM CUTS APPLE TO NEUTRAL: Guggenheim analyst Robert Cihra downgraded Apple (AAPL) to Neutral from Buy and removed his prior $245 price target for the shares. The average selling price of the iPhone has increased a "dramatic" $220, or 40%, over the past 10 years, reflecting its "growing value to both consumer and business markets," Cihra said. The analyst pointed out, however, that nearly half of that increase came in FY18 alone. This makes a "period of digestion now likely," Cihra cautioned. The analyst believes Apple's growth via average selling price is now "widely known." The iPhone's nearly 60% contribution to revenue and profits is "looking like a headwind again," said Cihra. Following early supply chain cuts, exemplified by Corning's (GLW) "softer" Q4 gorilla glass guidance back in October and this week's warnings from 3D sensing laser supplier Lumentum (LITE) and LCD supplier Japan Display, the analyst now estimates iPhone units will decline 5% year-over-year in fiscal 2019. He cut his FY19 earnings per share estimate for Apple to $12.97 from $13.41 and revenue estimate to $273B from $281B. In late morning trading, Apple shares were down 1.4%.
JPMORGAN DOWNGRADES KELLOGG: JPMorgan analyst Ken Goldman downgraded Kellogg (K) to Neutral from Overweight and lowered his price target for the shares to $66 from $73. The analyst also removed the stock from his firm's Analyst Focus List. He said that while nothing at the company's investor day "necessarily disappointed" him, he also did not gain "much comfort that the bottom-line turnaround would be swift." Maintaining an Overweight rating in the face of flat EBIT growth in both 2018 and 2019 "requires a bit more patience than we have at the moment," Goldman noted. With that said, the analyst did raise the likelihood that Kellogg gets taken out at a 25% premium to 15% from 5% in his scenario analysis. This is not because of anything specific to Kellogg, but rather because Kraft Heinz (KHC) seems close to buying something in consumer staples, said the analyst. Goldman sees a number of companies as potential targets, including General Mills (GIS), Kellogg, an overseas food producer, or a consumer staples company outside food. In late morning trading, Kellogg shares were down 1.5%.
CITI REVERSES RECENT AMARIN DOWNGRADE, UPGRADES TO BUY: Citi analyst Joel Beatty upgraded Amarin (AMRN) to Buy from Neutral with an unchanged price target of $28. The analyst previously downgraded the shares to Neutral on November 2, citing limited upside to his price target and increased investor expectations. Beatty, however, believes the 30% pullback in Amarin shares over the past two days following the detailed Reduce-IT trial results creates an attractive entry point. The results "paint an attractive drug profile" for Vascepa, Beatty noted. He continues to predict the drug's peak sales will hit the multi-billions. In late morning trading, Amarin shares have dropped over 5.7%.
TENNECO CUT TO UNDERWEIGHT AT MORGAN STANLEY: Morgan Stanley analyst Armintas Sinkevicius downgraded Tenneco (TEN) to Underweight from Equal Weight given its elevated leverage and limited free cash flow conversion in what he views as an increasingly uncertain environment for auto suppliers. He believes the stock is unlikely to be viewed more favorably by the market until the spin of the Aftermarket & Ride Performance business in late 2019, "at best." Sinkevicius lowered his price target on Tenneco shares to $30 from $40. On the group in general, the analyst noted that Q3 results were disappointing compared to consensus estimates and he believes there will be limited support for the stocks until there is more clarity around China and until guidance for 2019 is "de-risked."
CITI SAYS ACADIA SELLOFF OVERDONE: Citi analyst Ralph Giacobbe views Tuesday's selloff in Acadia Healthcare (ACHC) shares as overdone. The analyst attributed the 14% pullback to headlines suggesting Universal Health (UHS) would not be a potential acquirer of the company due to potential regulatory issues. Giacobbe, however, puts "much more credence" to a private equity buyer over Universal Health. The analyst sees Acadia's Q3 results as supporting a takeover bid given the "strong" U.S. performance offset by weaker U.K., which he notes could ultimately be divested by private equity or Acadia itself. To reflect pressures in the U.K., he lowered his price target for Acadia Healthcare shares to $43 from $46. Giacobbe kept a Buy rating on the name. In late morning trading, Acadia shares jumped over 4.5%.
