Check out today's top analyst calls from around Wall Street, compiled by The Fly.
MULTIPLE FIRMS DOWNGRADE BOEING AFTER 'TEXTGATE': Credit Suisse analyst Robert Spingarn downgraded Boeing (BA) to Neutral from Outperform with a price target of $323, down from $416. Reuters on Friday reported on messages between two Boeing test pilots in 2016, which shows that the company seems to have known about the 737 Max Maneuvering Characteristics Augmentation System's erroneous tendencies prior to certification, Spingarn told investors in a research note. "We can no longer defend the shares in light of the latest discoveries, discoveries which significantly increase the risk profile for investors," said the analyst. Spingarn believes the pathway to return to service for 737 Max "could be obstructed as the messages may shatter the fragile trust" between regulators and Boeing. The analyst, while admitting he can't opine on legal issues, also pointed out that the company is under criminal and civil investigations.
UBS analyst Myles Walton downgraded Boeing to Neutral from Buy with a price target of $375, down from $470. The analyst said his working thesis has been that the failures on the 737 MAX development by the company centered on fault intolerant design compounded by poor assumptions of pilot response. However, source material provided to Congress and the Federal Aviation Administration on Friday "heightens the potential of incomplete disclosure," Walton told investors in a research note. These new materials have altered the analyst's view of Boeing shares.
Baird analyst Peter Arment downgraded Boeing to Neutral from Outperform and cut his price target on the shares to $342 from $445 as he sees increased production risks following what he is calling "Textgate" involving two Boeing test pilot's messages regarding MCAS tendencies in the simulator. The text messages that have come to light will create further headline risk for the certification efforts with the FAA and likely with other regulators, such as in Europe, and he also initially expects a "poor reception" with the flying public, Arment tells investors. The analyst also cut his 2020-2022 free cash flow and EPS estimates for Boeing.
UBS CUTS IBM TO NEUTRAL: UBS analyst Munjal Shah downgraded IBM (IBM) to Neutral from Buy with a price target of $140, down from $170. The analyst believes it will be difficult for the company to achieve sustainable mid-single digit revenue growth. In 2020, pressure in the legacy businesses should somewhat offset the growth from year one of the mainframe cycle and Red Hat acquisition, Shah told investors in a research note. The following year "should be even more challenging" with greater revenue pressure due to a tough year two mainframe compare and lower incremental Red Hat contribution, added the analyst. Further, currency remains a headwind and a lack of share buybacks will limit earnings growth outside of deleveraging, said Shah.
BOFA DOUBLE UPGRADES HP ENTERPRISE: BofA/Merrill analyst Wamsi Mohan upgraded HP Enterprise (HPE) two notches to Buy from Underperform with a $19 price target, saying the company's underlying trends are improving. The analyst cited the company's improved free cash flows, the focus of the management on more stable growth, and continued capital returns. Mohan is also positive on having less of HP Enterprise revenue tied to tier-1 server sales along with its stronger growth of Intelligent Edge/Aruba product and services offerings.
RBC BOOSTS PINTEREST TO OUTPERFORM: RBC Capital analyst Mark Mahaney upgraded Pinterest (PINS) to Outperform from Sector Perform with a price target of $35, up from $30. The analyst noted that the expiration of the company's IPO lock-up could serve as a catalyst for the stock, adding that he also sees strong user trends and the evidence of innovation in its ads platform with room to ramp up its monetization efforts.
PELOTON INITIATED ACROSS THE STREET: Peloton (PTON) was initiated with an Overweight rating at JPMorgan, KeyBanc, and Barclays, an Outperform rating at William Blair, Raymond James, Oppenheimer, JMP Securities, Evercore ISI, Cowen, and Telsey Advisory, and a Buy rating at UBS, SunTrust, Canaccord, Needham, Stifel, and Goldman Sachs.
Raymond James analyst Justin Patterson initiated coverage of Peloton with an Outperform rating and $32 price target. In a research note to investors, Patterson cited the company as being in the early innings of market expansion, its attractive unit economics, durable competitive moat and compelling valuation for the rating. The analyst said he believes the current EV/S multiple of 3.8x CY20E understates growth profile and recurring revenue streams, making shares inexpensive.
Goldman Sachs analyst Heath Terry initiated coverage of Peloton with a Buy rating and $37 price target, saying the large and emerging addressable market opportunity, growing competitive moats, and conservative investor expectations create attractive risk reward.
