Check out today's top analyst calls from around Wall Street, compiled by The Fly.
DEUTSCHE CUTS CATERPILLAR TO HOLD: Deutsche Bank analyst Chad Dillard downgraded Caterpillar (CAT) to Hold from Buy and lowered his price target for the shares to $128 from $152. The biggest risk to the bull case for Caterpillar is if its backlog growth turns negative, "and it is becoming increasingly clear that it will within this next quarter," Dillard told investors in a research note. Negative backlog growth historically precedes a negative earnings revision cycle by three months, the analyst pointed out. He noted that consensus estimates during these cycles typically get cut by 45% and the shares fall by 40% from the peak. Synchronized global growth "has collapsed," the China Land Cycle is "rolling over" and will continue to weaken, Europe is slowing more than expected and the U.S. is "oversaturated with construction equipment," according to Dillard.
INTELSAT BOOSTED TO OVERWEIGHT AT JPMORGAN: JPMorgan analyst Philip Cusick upgraded Intelsat (I) to Overweight from Neutral with an unchanged price target of $27. The stock has declined 28% year-to-date and 38% since February 27 when a "slew of headlines all but halted" the C-Band Alliance's momentum in D.C., Cusick noted. However, after being overly-optimistic in the fall, the market is now "underpricing the likelihood" of Intelsat and the C-Band Alliance eventually selling spectrum and "reaping substantial proceeds," said the analyst. Cusick believes the alliance still has the support of key decision makers at the Federal Communications Commission and that some version of a market-based approach is the most likely path to get C-Band spectrum into the hands of wireless carriers in the next five years. In late morning trading, shares of Intelsat are higher by just under 6%.
E.L.F. BEAUTY UPGRADED TO BUY AT JEFFERIES: Jefferies analyst Stephanie Wissink upgraded e.l.f. Beauty (ELF) to Buy from Hold and raised her price target for the shares to $14 from $10. The analyst said she believes the company's improved merchandising focus will drive a "meaningful reversal" in sales trends. Further, she sees the presence of activists and a new CFO as other potential catalysts. Shares of e.l.f. Beauty are higher by 8.7% to $11.36 in late morning trading.
DUNKIN' CUT TO MARKET PERFORM AT BMO: BMO Capital analyst Andrew Strelzik downgraded Dunkin' Brands (DNKN) to Market Perform with a price target of $75, saying that while he remains positive on the company's underlying fundamentals over the long term, he sees risk/reward at current levels as "less persuasive." The analyst believes that the company is "taking appropriate steps" to re-position its brand for solid same-store sales growth over the next several years, and contended that the progress is becoming evident "through updated brand presentation elements, successful new product launches, greater value orientation, and streamlined operations."
NOMURA CAUTIOUS ON SEMICONDUCTORS, PREFERS AMD IN GROUP: Nomura Instinet analyst David Wong rolled out coverage on four names in the U.S. Semiconductors. The analyst has a positive view on long-term semiconductor growth, but cyclical concerns make him cautious in the near term. He models long-term semiconductor annual sales growth of 7%-9% from 2020 to 2025, driven by new technologies, including artificial intelligence, autonomous driving, 5G communications, Internet of Things, and the continued buildout of global datacenter infrastructure. However, the cyclical downturn, which began in the second half of 2018, could "present headwinds" for chip companies through 2019 and possibly in 2020, Wong tells investors in a research note. He foresees continuing year-over-year declines for the chip industry through 2019, with 2019 down about 10%. Nonetheless, the analyst initiated coverage of AMD (AMD) and Intel (INTC) with Buy ratings and price targets of $33 and $65, respectively. AMD's "solid positions" in both the x86 microprocessor and standalone graphics processor markets "make it stand out," says Wong. He believes the company has an opportunity to gain share with the launch of its new microprocessor and GPU families, driving sales growth through 2019, 2020, and beyond. Further, Wong thinks Intel's "dominance" in microprocessors, and in particular its leadership in artificial intelligence and autonomous driving, will drive above-average long-term growth for the company. The analyst also initiated Nvidia (NVDA) and Xilinx (XLNX) with Neutral ratings. He thinks both stocks' valuations already reflect the companies' positives.
