Check out today's top analyst calls from around Wall Street, compiled by The Fly.
GRUBHUB UPGRADED AT BOFA: BofA Merrill Lynch analyst Nat Schindler upgraded GrubHub (GRUB) to Buy from Neutral as thinks the bad news about investing for growth is in the stock and believes early 2019 should be the company's margin low point. However, its accelerating core metrics are "just beginning," Schindler told investors. He raised his FY19/20 revenue forecasts slightly as he thinks marketing spending will drive accelerating organic order growth and he raised his price target on GrubHub shares to $108 from $98.
Roth Capital analyst Darren Aftahi also upgraded GrubHub to Buy from Hold and raised his price target for the shares to $95 from $92. The analyst believes GrubHub's increased marketing spend is likely to "materialize into better growth, thus yielding improving unit economics long-term." The shares reflect the "majority of these risks" while upside could exist to adjusted EBITDA, especially in second half of fiscal 2019 and into 2020, he said. In late morning trading, shares of GrubHub are higher by 2.4% to $84.17.
NXP SEMI CUT TO NEUTRAL AT MIZUHO: Mizuho analyst Vijay Rakesh downgraded NXP Semiconductors (NXPI) to Neutral from Buy with an unchanged price target of $95. With the stock up 40% from the December lows, high China auto inventory and Europe's Worldwide Harmonised Light Vehicle Test Procedure "could present challenges and limit upside," Rakesh told investors in a research note. Further, the analyst sees little upside to NXP's consensus estimates and pointed out the stock is close to his price target. Shares of NXP Semiconductors are lower by 3.8% to $87.28 in late morning trading.
SYNAPTICS CUT TO NEUTRAL AT JPMORGAN: JPMorgan analyst Paul Coster downgraded Synaptics (SYNA) to Neutral from Overweight and lowered his price target for the shares to $50 from $55. The company reported "solid" fiscal Q2 results, driven by further improvement in gross margins, but issued "slightly disappointing" Q3 guidance owing to soft demand in the handset market, Coster told investors in a research note. Despite viewing the shares as undervalued, the analyst moves to the sidelines to reflect a lack of visibility, both with respect to product cycles and the broader trade-tensions with China. Despite the downgrade, shares of Synaptics are higher by 2.2% to $41.77 in late morning trading.
KNOWLES CUT TO HOLD AT LAKE STREET: Lake Street analyst Jaeson Schmidt downgraded Knowles (KN) to Hold with an unchanged price target of $17. While the company can be the dominant player in the market and think its share at Apple (AAPL) is set to remain stable in the future, increasing uncertainty on the health of the global smartphone market could create headwinds to the stock's multiple, Schmidt told investors in a research note. He sees "limited room for meaningful multiple expansion" following Knowles' Q4 results. Despite the downgrade, shares of Knowles are higher by 2.5% to $16.06 in late morning trading.
GOLDMAN SAYS DRAM, NAND PRICING CONTINUES TO DETERIORATE: Recent industry discussions suggest that memory fundamentals "remain very soft, and prices continue to decline," Goldman Sachs analyst Mark Delaney said. His industry contacts suggest DRAM pricing could be down 20%-25% and NAND pricing could be down in the 20% range quarter-over-quarter in Q1 of 2019. This is in contrast to the significant rally in the memory and hard-disk-drive stocks year-to-date "even on weak fundamentals," contended the analyst. Shares of both Western Digital (WDC) and Micron Technology (MU) are up 24% year-to-date. Investors historically have not been rewarded by being too early buying memory stocks, cautioned Delaney. He now believes earnings scenarios that investors considered unlikely six months ago "when memory started to roll are rising in probability." As an example, the $3.00-$4.00 earnings per share downside scenario that he published in his Micron downgrade note last September is now the analyst's base case. Delaney said memory and HDD stocks could give back some of the recent stock gains "if memory fundamentals are weak and investor expectations for the slope/timing of a recovery moderate." The analyst lowered his estimates for both Western Digital and Micron and kept Neutral ratings on both stocks.
