Check out today's top analyst calls from around Wall Street, compiled by The Fly.
EVERCORE CUTS SPOTIFY TO UNDERPERFORM: Evercore ISI analyst Kevin Rippey downgraded Spotify (SPOT) to Underperform from In Line and lowered his price target on the shares to $110 from $125, stating that the recent rally in the stock "reflects an overly optimistic view" on the company's gross margin path and potential label negotiation outcomes. He does not see a way for Spotify to generate the gross profits "demanded by Street estimates" in the medium-term, Rippey said. The risk "is real" that publisher rates go higher per the existing Copyright Royalty Board ruling and SensorTower data shows that competition at the country level is far more intense than suggested by global aggregates, the analyst added.
JEFFERIES UPGRADES DEERE, AGCO: Jefferies analyst Stephen Volkmann upgraded Deere (DE) to Buy from Hold, citing what he sees as a tightened global crop supply demand balance following five years of depressed Large ag fundamentals. He thinks positive momentum in farmer net income support double-digit large equipment growth through 2020, said Volkmann, who also noted that his $12.00 earnings forecast, which is ahead of consensus at $11.65, has "some additional upside bias." He raised his price target on Deere shares to $190 from $150.
Volkmann also upgraded Agco (AGCO) to Buy from Hold, citing his view that shifting farm fundamentals support double-digit growth in both North America and South America for 2020. While still maintaining a conservative margin outlook, he thinks there is further upside from potentially higher margins as volumes build, added Volkmann, who raised his price target on Agco shares to $90 from $70.
STEPHENS CUTS INTERNATIONAL PAPER TO EQUAL WEIGHT: Stephens analyst Mark Connelly downgraded International Paper (IP) to Equal Weight from Overweight, noting that RISI decided to cut the price of containerboard $10 "just three days after investors breathed a sigh of relief on encouraging supply-demand fundamentals." The $10 price cut triggers contract cuts as supply and demand were showing clear indications of moving back into balance thanks to supply discipline from International and WestRock (WRK), said Connelly, who sees damage being done to investor confidence by the "increasing unpredictability" of containerboard pricing. He also thinks continued new capacity announcements will keep up a high need for economic downtime, added the analyst, who keeps a $60 price target on International Paper shares.
MORGAN STANLEY CUTS OCCIDENTAL, OASIS TO EQUAL WEIGHT: Morgan Stanley downgraded Occidental Petroleum (OXY) to Equal Weight from Overweight. Analyst Devin McDermott believes covering the 2020 dividend at current oil prices will require meaningful capital expenditure cuts, even though the Anadarko (APC) deal looks accretive to cash flow. Oil price volatility presents a key risk given that the company's pro forma leverage is among the highest of any company he covers, said McDermott, who cut his price target on Occidental shares to $55 from $69.
McDermott also downgraded Oasis Petroleum (OAS) to Equal Weight from Overweight and cut his price target on the shares to $6 from $7 in part due to the broad pullback in the group, which leaves the "vast majority" of stocks in the sector trading at low multiples relative to history, and in part due to his view that expectations for what Oasis could receive if it pursues a midstream monetization could "prove optimistic."
ROTH CUTS SHOPIFY TO NEUTRAL: Roth Capital analyst Darren Aftahi downgraded Shopify (SHOP) to Neutral from Buy, stating that he remains positive on its underlying business prospects following the company's Unite conference and investor day but not on the stock's valuation, which has increased in the wake of the event. However, he raised his price target on Shopify shares to $300 from $275, citing Shopify's newly announced fulfillment network, continued international expansion and localization and its new product features.
