Check out today's top analyst calls from around Wall Street, compiled by The Fly.
JPMORGAN, EVERCORE UPGRADE QUALCOMM AFTER SETTLEMENT: JPMorgan analyst Samik Chatterjee upgraded Qualcomm (QCOM) to Overweight from Neutral and raised his price target for the shares to $88 from $54. The settlement with Apple (AAPL) appears to be "overwhelmingly positive for Qualcomm despite the absence of details at this time," Chatterjee tells investors in a research note. The agreement includes a six-year patent licensing agreement and a multi-year chipset agreement, estimated by Qualcomm to drive earnings accretion of $2 per share, the analyst points out. Further, he believes the agreement opens up the opportunity for Qualcomm to resume chipset supply to Apple. Chatterjee says his upgrade of Qualcomm reflects a combination of upside driven by 5G leadership and dissipation of downside risks from litigations following the agreement with Apple.
Additionally, Evercore ISI upgraded Qualcomm to Outperform from In Line and raised its price target to $90 from $60 following the company's settlement news. Analyst C.J. Muse expects Qualcomm's earnings power to move "considerably higher" with incremental earnings of $2 from Apple and sees normalized earnings of $6.50-$7.00 into FY21 when including Huawei payments and buybacks. Muse said shares are "finally investible again" now that the litigation is over combined with a clear path for the 5G ramp.
MORGAN STANLEY BOOSTS DOMINO'S TO OVERWEIGHT: Morgan Stanley analyst John Glass upgraded Domino's Pizza (DPZ) to Overweight from Equal Weight, stating that he thinks the stock's current price reflects 2%-3% blended global same store sales growth over the next two years, which he views as too bearish based on its track record as a "best in class operator." Based on third party data on Domino's Q1 app downloads, Glass sees evidence that the market's concerns over decelerating U.S. comps may be overdone, he added. Following recent weakness, Domino's shares now trade at parity with Yum! Brands (YUM), which Glass calls "a high quality but slower growing peer" and not much of a premium to Dunkin' Brands (DNKN), which he calls "a far slower growing business." He raised his price target on Domino's shares to $283 from $268.
UBS CUTS PAYPAL TO NEUTRAL: UBS analyst Eric Wasserstrom downgraded PayPal Holdings (PYPL) to Neutral from Buy while raising his price target for the shares to $120 from $101. The analyst's analysis of PayPal's core operations indicates "limited beat-and-raise potential" over the next two years. Further, his "bull scenario" for Venmo monetization would only add 2% to his current 2020 earnings estimates. While Venmo maintains a leading competitive position in people-to-people payments, this competitive position will translate into "limited" revenue and net income contribution over the next two years, Wasserstrom told investors in a research note. In addition, the analyst sees limited valuation upside in shares of PayPal at current levels.
BANK OF AMERICA CUT TO HOLD AT JEFFERIES: Jefferies analyst Kenneth Usdin downgraded Bank of America (BAC) to Hold from Buy with an unchanged price target of $32. After reducing his 2020 estimates by 3% following the company's Q1 results, the analyst does not see enough upside to warrant a Buy rating. The Q1 results showed "incremental challenges in numerous revenue areas," including net interest income and fees, Usdin told investors in a research note. He prefers putting new money into shares of Citi (C).
CANNABIS STOCKS INITIATED AT BOFA: BofA/Merrill analyst Christopher Carey initiated five cannabis stocks, naming HEXO Corp (HEXO) its "top pick in cannabis" and starting it with a Buy rating and $10 price target. The analyst also started Aurora Cannabis (ACB) and Canopy Growth (CGC) with Buy ratings, and Cronos Group (CRON) with an Underperform rating. Carey said HEXO offers a compelling relative valuation, an innovation-forward organization, potential additional partnerships, and a de-risked cannabis supply. The analyst noted that Aurora Cannabis has a low cost production model, can protect margins in an oversupplied market, and the ability to serve a global market. Aurora also has long-time consumer investor, Nelson Peltz, as a Strategic Advisor which should accelerate partnership transactions. Carey believes that Canopy Growth is positioned to be a long-term leader in the global cannabis sector. Carey initiated Cronos Group with an Underperform and $13 price target saying he not "comfortable" with valuation and screens the most expensive in his universe.
