Check out today's top analyst calls from around Wall Street, compiled by The Fly.
WESTERN DIGITAL CUT TO UNDERPERFORM AT EVERCORE: Evercore ISI analyst C.J. Muse downgraded Western Digital (WDC) to Underperform from In Line and lowered his price target for shares to $30 from $35. In a research note to investors, Muse said that while he maintains his positive secular view for Semi demand long-term, he believes the market is not fully appreciating the negative consequences to the company from NAND weakness, as well as its structural competitive issues. He sees the stock trading lower as estimates move lower and investors come to realize that the dividend is at risk, adding that the current competitive positioning is "not ideal" as he estimates Western Digital's SSD share has roughly halved in the last few years to about 12%. The analyst also downgraded Teradyne (TER) to In Line from Outperform. Shares of Western Digital are down 7.3% to $37.12 in late morning trading.
SNAP UPGRADED TO NEUTRAL AT CITI: Citi analyst Mark May upgraded Snap (SNAP) to Neutral from Sell and raised his price target for the shares to $7 from $6. Snap is down 70% since February 2018 and its current valuation is below Twitter (TWTR) and Facebook's (FB) current and four-year average multiple, May told investors in a research note. Further, the analyst expects Snap will soon fully rollout a new version of its app for Android, which could improve user and engagement growth. In addition, Snap's advertising average revenue per user accelerated in Q3, which bodes well, especially if user growth likewise improves later in 2019, May contended. In late morning trading, shares of Snap are higher by 1.35% to $6.36.
DELTA CUT TO NEUTRAL AT BOFA: BofA/Merrill analyst Andrew Didora downgraded Delta Air Lines (DAL) to Neutral from Buy, and lowered his price target to $51 from $62, as part of his broader research note on Airlines partially titled "more cautious given demand outlook." The analyst noted that his Flight Indicator data analysis suggests a "deceleration in domestic PRASM" in the first half of the year, coupled with other slowing demand indicators that include "weak ISM survey, declining CEO confidence, airline pricing growth off highs, currency headwind, and government shutdown." Didora believes that Delta Air Lines specifically lacks the earnings catalysts evident in other airlines, while its valuation of 7.7-times forward earnings is a premium to the 5.8-times at United Airlines (UAL) and 7.1-times at American Airlines (AAL). The analyst added that he still considers the airline as "best in class", but noted that the near-term headwinds in demand indicators justify a downgrade. Shares of Western Digital are down 2.4% to $47.39 in late morning trading.
POSSIBLE APPLE M&A TARGETS?: Wedbush analyst Daniel Ives believes Apple (AAPL) needs to aggressively cut prices in China on XR and pull forward what he estimates is roughly 15M-20M iPhones that would otherwise sit idle waiting for the next release, or worst case, move to lower priced competition. Additionally, with services the linchpin of the Apple story moving forward, there needs to be serious contemplation within Cupertino around significant content acquisitions to drive services over the coming years, he contended. Ives sees A24, Lionsgate (LGF.A, LGF.B), and Sony Pictures (SNE) among the highest probability M&A targets, Viacom (VIA, VIAB)/CBS(CBS), and MGM Studios among the medium probability M&A targets, and Netflix (NFLX), Disney (DIS), and Gaming platform/video game publishers among the low probability M&A targets. The analyst reiterated an Outperform rating and $200 price target on Apple shares.
ANALYSTS POSITIVE ON GENERAL MOTORS: Citi analyst Itay Michaeli says General Motors' (GM) "unique fundamental position" and path to his prior $76-$134 long-term upside potential share case have "probably never been as visible as they are today." GM's investor day delivered a positive Q4 preannouncement, a "comfortably" greater than consensus 2019 guide, an "important re-messaging" of the pickup truck franchise, "clear focus" on positive free cash flow conversion and "encouraging" updates on Cruise AV and the company's electric vehicle plans, Michaeli said. He kept a Buy rating on shares of GM.
BMO Capital analyst Richard Carlson raised his price target on General Motors to $47 and kept his Outperform rating after its FY19 guidance came in "well above" expectations. The analyst attributes the positive outlook to the company's "strong product lineup, cost-cutting initiatives, and a relatively healthy industry outlook", also raising his FY19 EPS view by 60c to $6.65. Carlson further stated that in his view, the "market isn't fully appreciating the value from GM Cruise or the significant progress management has made in positioning GM for long-term success."
General Motors's investor day on Friday provided further reason to believe that "strong execution upon management's clear and consistent strategy can continue to generate solid earnings growth despite heavy investments in autonomous driving and a more challenging macroeconomic backdrop," JPMorgan analyst Ryan Brinkman said. The analyst reiterated an Overweight rating on the shares with a $53 price target. He continues to see "large upside" to his December 2019 price target.
