Check out today's top analyst calls from around Wall Street, compiled by The Fly.
COVID-19 IMPACT ON STARBUCKS: BofA analyst Gregory Francfort downgraded Starbucks (SBUX) to Neutral from Buy with a price target of $73, up from $68. The analyst believes the risks are not fully priced into the shares, and expects significant economic pressure on the consumer following as the restaurant industry reopens from the COVID-19 closures. With unemployment up substantially, more discretionary purchases will be scaled back, Francfort contended.
Meanwhile, Citi analyst Wendy Nicholson assumed coverage of Starbucks with a Buy rating and $82 price target, down from $105. There is no question that COVID-19 has meaningfully pressured Starbucks' business on a global basis in recent months, but it will bounce back "in a big way over time," Nicholson argued.
MOVING TO THE SIDELINES ON UPS: UBS analyst Thomas Wadewitz downgraded UPS (UPS) to Neutral from Buy with a price target of $98, down from $107. The analyst expects the impact of COVID-19 to drive a sharp reduction in business-to-business volumes, with the most notable decline in UPS's highest margin customer group of small and mid-sized businesses. Given the operating leverage inherent in UPS's global package network, the decline in shipping is likely to drive a "significant reduction" in earnings estimates which is likely to be a "meaningful headwind" to share upside, Wadewitz told investors in a research note.
SELL AMC: MKM Partners analyst Eric Handler downgraded AMC Entertainment (AMC) to Sell from Neutral with a price target of $1, down from $7.50. The analyst contended that movie theaters will be closed until at least August and also believes that the company lacks the liquidity to stay afloat during that time, anticipating a decision to file for bankruptcy. Handler further cited AMC's decision to stop paying rents to landlords effective April as well as the company's relatively high leverage that will make reorganization inevitable.
LEISURE NAMES: Following the COVID-19 crisis, Wolfe Research analyst Jared Shojaian expects leisure travel and drive travel to outperform business and air travel. Thus, the analyst upgraded
- Wyndham Destinations (WYND) to Outperform from Peer Perform with a $37 price target;
- Las Vegas Sands (LVS) to Outperform from Peer Perform with a $57 price target;
- Choice Hotels (CHH) to Peer Perform from Underperform.
On the flip side, Shojaian noted that business travel, international travel and air travel in general appear as if they will be challenged for some time, leading him to downgrade
- Marriott (MAR) to Peer Perform from Outperform;
- Hilton (HLT) to Peer Perform from Outperform.
Argus analyst John Staszak also downgraded Hilton to Hold from Buy as he believes the impact of COVID-19 and prior capacity increases will “weigh heavily” on lodging demand in the near-term and the industry will likely pause over the next 12 months before starting a new upturn.
BUY NUTRIEN, PAIR TRADE WITH MOSAIC: Citi analyst P.J. Juvekar upgraded Nutrien (NTR) to Buy from Neutral with a price target of $45, up from $31. Even if nutrient prices fall post the U.S. spring, Nutrien is well insulated due to its "steady" retail earnings and "strong" balance sheet, Juvekar told investors in a research note. The analyst also recommended an Agriculture pair trade of overweight Nutrien, underweight Mosaic (MOS). In Intermediate Chemicals, Juvekar recommended an overweight Celanese (CE), underweight Trinseo (TSE) pair trade.
