Check out today's top analyst calls from around Wall Street, compiled by The Fly.
NEEDHAM CUTS FACEBOOK TO HOLD: Needham analyst Laura Martin downgraded Facebook (FB) to Hold from Buy citing three factors that she sees creating a "negative network effect," namely its strategic pivot toward privacy and encrypted messages, the growing risks of regulation and "horrific" events like those recently in New Zealand that hurt Facebook's brand and are difficult to block from the service at a 100% level. She is concerned that strategic pivot, regulatory and headline risks will negatively impact Facebook's valuation more than investors currently believe due to the negative flywheel effect of these factors influencing the exit of more executives, Martin said. Since she believes people are a key competitive advantage of "FAANG" companies, Martin is concerned about accelerating value destruction until senior executive turnover ends, she noted in her downgrade.
GOLDMAN UPGRADES OKTA TO BUY: Goldman Sachs analyst Heather Bellini upgraded Okta (OKTA) to Buy from Neutral and raised her price target for the shares to $94 from $80. The company's "strong" results since its April 2017 initial public offering continue to demonstrate the growing role that identity is playing in the wider enterprise information technology ecosystem, Bellini told investors in a research note. She said Okta remains the leader in Identity and Access Management within the enterprise, and continues to benefit from its role as an independent, third party management platform for identity and user authentication that works across cloud environments. Her "Blue Sky scenario" has Okta beating 2020 consensus estimates by 38%. Bellini coupled the upgrade with a downgrade of SolarWinds (SWI) to Neutral from Buy, noting that stock is up 36% year-to-date, and following the outperformance relative to the S&P 500 Index, there are opportunities for greater upside elsewhere in Software.
CHIPOTLE PRICE TARGET RAISED TO $725 AT PIPER: Piper Jaffray analyst Nicole Miller Regan raised her price target for Chipotle Mexican Grill (CMG) to $725 from $661 after analyzing a hypothetical transformation of the company's international business into a "franchised growth vehicle." The analyst believes in the long-term case for franchising but also acknowledges the company has not publicly identified this as an initiative and, as such, expects "much work remains to be accomplished." However, such a transformation could help to "unlock incremental profitability" of $2 to $5 in earnings power per share, drive upside to global growth, and potentially set up Chipotle shares for "some measure of multiple expansion as the company becomes incrementally asset-light, over time," Regan said. Chipotle remains her "top recovery investment recommendation." The analyst has a "high-degree of conviction" that its current strategic initiatives can continue to generate improving fundamentals. Regan kept an Overweight rating on the name.
BARCLAYS UPGRADES DOLLAR GENERAL TO OVERWEIGHT: Barclays analyst Karen Short upgraded Dollar General (DG) to Overweight from Equal Weight and raised her price target for the shares to $125 from $102. The company is doing what all "best-in-class" retailers do, it is investing from a position of strength to enhance its competitive edge, even if it means near-term guidance disappoints, Short told investors in a research note. As such, the analyst believes last week's post-earnings selloff in shares of Dollar General has created an attractive entry point. The company offers long-term growth and "rare defensive characteristics," said Short.
CITI CUTS PVH CORP. TO NEUTRAL: Citi analyst Paul Lejuez assumed coverage of PVH Corp. (PVH) from Kate McShane and downgraded the shares to Neutral from Buy. He lowered his price target to $120 from $140. While PVH has two brands with good global growth potential in Tommy Hilfiger and Calvin Klein, the company overall is still heavily dependent on the North America wholesale and outlet channels. The analyst is concerned that exposure to wholesale/outlet channels will weigh on sales and profits in the coming years, limiting the stock's upside.
