Check out today's top analyst calls from around Wall Street, compiled by The Fly.
LOOP CAPITAL CUTS INTEL TO SELL: Loop Capital analyst Cody Acree downgraded Intel (INTC) to Sell from Hold while increasing his price target to $59, up from $50. The analyst contended that the company finished 2019 with solid performance and its Q1 guidance calls for "better than normal" seasonality, but he warned that the annual compares upside will "deteriorate quickly", with Intel's own 2020 guidance calling for just 2% growth in revenue. Acree added that the market backdrop for Intel's PC business will shift from a tailwind to a headwind and believes that the benefits of a Windows 10 transition over the past couple of year have played out.
UBS DOWNGRADES COMCAST TO NEUTRAL: UBS analyst John Hodulik downgraded Comcast (CMCSA) to Neutral from Buy with a $49 price target. The analyst expects 2020 to be an "investment year" for the company as increased capital expenditure and investment in Peacock pressure its free cash flows. Hodulik added that while the cable business at Comcast "remains strong", particularly in broadband internet, its programming renewals will see its EBITDA growth decelerate over the next two years. The analyst sees a more balanced risk-reward for Comcast given that the stock is currently valued similarly to pure-play cable peers in spite of its 34% exposure to non-U.S. cable.
EVERCORE, PIPER BOTH DOWNGRADE DISCOVER: Evercore ISI analyst John Pancari downgraded Discover (DFS) to Underperform from In Line with a $75 price target, down from $85, following the company's Q4 report. The company's earnings are likely to be pressured by elevated investments, higher credit costs, and lower buybacks in 2020, said Pancari, who cut his 2020 and 2021 EPS estimates by 7% and 8%, respectively. He noted that Discover shares trade at a premium to peer consumer finance names and said he expects the stock's multiple to compress going forward from here.
Piper Sandler analyst Kevin Barker downgraded Discover Financial Services to Neutral from Overweight with a price target of $86, down from $96, after taking over coverage of the name. The analyst said he expects Discover's profit margins to erode over the next several quarters as credit costs continue to move higher, loan growth slows and operating expenses grow at an outsized pace due to investment spending. He would be more positive on the stock if he saw some positive credit metrics and expense growth peak.
GOLDMAN BOOSTS DAVITA TO BUY: Goldman Sachs analyst Stephen Tanal upgraded DaVita (DVA) to Buy from Neutral with a price target of $97, up from $72. Beginning in 2021, people with end stage renal disease will be able to enroll in any Medicare Advantage plan, marking a rule change that carries implications across the healthcare services ecosystem, Tanal told investors in a research note. The analyst sees higher multiples and upward estimate revisions for DaVita as he estimates Medicare Advantage penetration of all Medicare-eligible patients with ESRD will go to 30% in 2021. He believes this will fall directly to the company's bottom line, which translates to approximately $48M of incremental pre-tax earnings in 2021.
JPMORGAN URGES EXTREME CAUTION ON TESLA: JPMorgan analyst Ryan Brinkman urges "extreme caution" on shares of Tesla (TSLA) following the stock's recent run. The analyst now sees 58% downside risk relative to his unchanged price target of $240. He kept an Underweight rating on Tesla. Better deliveries, better earnings, and on-time start of production in China seem the likeliest catalysts for the recent rally, but a closer look suggests "less enthusiasm may be warranted," Brinkman told investors in a research note. The analyst wonders if the strong close to 2019 could set the company up for a more challenging start to 2020.
TUSA SAYS 737 MAX/GE GUIDANCE NARRATIVE IS WRONG: While the prevailing sell-side narrative as General Electric's (GE) guidance approaches is that the 737 Max production cut is negative, the "simple math" suggests it should have a positive influence, both in 2019 and in 2020, up to $600M in segment profit versus the guidance issued in last March, JPMorgan analyst Stephen Tusa wrote in a research note titled "MAX Math: Should Be A Positive Near Term, Negative Long Term, Opposite Of Prevailing Narrative." The key is the difference between engine production, engine deliveries to Boeing (BA), and Boeing deliveries to customers, "with several moving parts suggesting near term upside," said Tusa. However, this performance is unsustainable and timing related, the "opposite of the narrative of near-term pressure with longer-term upside," he added. Tusa believes the "growing narrative" that Max is a negative today, and anything reported will be "better than feared" with future upside, "is not supported by the math." There is more to the GE story that will need to be watched into and out of earnings, with many of these items positive but timing-related near term, and unsustainable longer term, contended the influential analyst, who keeps an Underweight rating on GE shares.
