Check out today's top analyst calls from around Wall Street, compiled by The Fly.
HP ENTERPRISE CALL LEAVES MORE QUESTIONS THAN ANSWERS: Citi analyst Jim Suva raised the firm's price target on HP Enterprise (HPE) to $8 from $7 and keeps a Sell rating on the shares. The company last night "significantly missed" consensus estimates and while earnings conference calls generally help provide investors with some clarity into the remainder of the year, HP Enterprise's call will leave investors with more questions than answers, Suva tells investors in a research note. Management gave no outlook or framework like peers and cited supply chain challenges to meet demand yet the company's internal inventory increased, says the analyst. Morgan Stanley analyst Katy Huberty said HP Enterprise's $1B cost-reduction plan, salary cuts and lack of visibility into backlog conversion and future order trends suggest the company is not yet at a bottom and the trough "is still on the come." She continues to model worse than normal seasonality through FY20 as companies trim IT budgets and prioritize areas where HP Enterprise has less exposure, added Huberty, who noted that she is maintaining her below-consensus revenue forecasts and cutting her FY20 and FY21 earnings view following the company's report.
Meanwhile, Raymond James analyst Simon Leopold downgraded HP Enterprise to Market Perform from Outperform following its Q2 results. Leopold is "sympathetic" to the challenges companies face when trying to forecast results in light of the COVID-19 crisis, but the unexpected restructuring efforts degrade his confidence. The analyst says he struggles to justify sufficient appreciation potential to maintain a constructive rating.
ROKU CUT ON WORRIES ABOUT TCL PARTNERSHIP: Stephens analyst Kyle Evans downgraded Roku (ROKU) to Equal Weight from Overweight with a price target of $105, down from $155, citing his continued concerns with the duration and magnitude of what he believes is Roku overearning versus its "most important Smart TV OEM by a significant margin," TCL. While the companies have a very strong partnership from a market share perspective, it "is tilted heavily towards Roku when it comes to financials" and he doesn't think it can get much better from here for Roku, Evans says, adding that he tends to "get worried when things look as good as they can get."
AURORA CANNABIS CUT TO SELL AT JEFFERIES: Jefferies analyst Owen Bennett downgraded Aurora Cannabis (ACB) to Underperform, a sell-equivalent rating, from Hold despite what he views as "a relatively positive" third quarter report, as he also believes the move higher in the stock following the report is "neither justified nor sustainable." Celebrating a hiatus on further shareholder dilution is "short-sighted," as it is "inevitably returning again when the balance sheet is addressed," according to Bennett, who also believes that near-term sales and gross margin headwinds are not fully appreciated. However, he is updating his estimates and raised his price target on the stock to C$14, up from C$12.
ANALYSTS BOOST NVIDIA TARGETS AFTER EARNINGS: Piper Sandler analyst Harsh Kumar raised the firm's price target on Nvidia (NVDA) to $390 from $350 and said he continues like the business trends and Nvidia's execution. Nomura Instinet analyst David Wong raised the firm's price target on Nvidia to $260 from $230, saying Nvidia showed impressive sequential data center growth and while gaming sales were down quarter-over-quarter, they showed more resilience to the global health and economic issues than expected, Wong tells investors in a research note. Citi analyst Atif Malik raised the firm's price target on Nvidia to $392 from $315, saying his long-term secular view of 40%-plus GPU data center growth driven by cloud and multiple artificial intelligence waves remains intact.
Wedbush analyst Matt Bryson raised the firm's price target on Nvidia to $420 from $340, saying he continues to believe a combination of leadership in both AI and gaming silicon will allow Nvidia to enjoy outpaced growth for the foreseeable future, particularly with Ampere positioned to potentially accelerate datacenter growth by allowing the company to penetrate new markets such as Big Data Analytics and Edge AI. SunTrust analyst William Stein raised the firm's price target on Nvidia to $384 from $327 after its Q1 earnings beat and Q2 guidance. While the "event path" becomes more fragile for the company in the second half of the year, the analyst intends to "look through any potential volatility" as Nvidia's investments continue to distinguish it from any "peers" in parallel compute and AI space. Bernstein analyst Stacy Rasgon raised the firm's price target on Nvidia to $415 from $360, saying that while the shares remain expensive, there are few true growth stories in semiconductors these days, and even fewer with Nvidia's current execution.
PIPER EXPANDS SOFTWARE COVERAGE: Piper Sandler analyst Arvind Ramnani last night launched coverage of 10 Software names saying the proliferation of technology, digitization, and automation will "dramatically change the future of work." The analyst expects companies to accelerate digital spend, prioritize employee engagement through technology, automate and streamline work flows, and enhance employee education, particularly digital skills. The companies that enable these changes "will likely be on the sunny side of the post-COVID environment," Ramnani writes in a research note. The analyst started with Overweight ratings shares of Q2 Holdings (QTWO), Blue Prism Group (BPRMF), Pluralsight (PS), 2U (TWOU), Globant (GLOB) and Epam Systems (EPAM). Ramnani put Neutral ratings on Ceridian (CDAY), Paycom (PAYC), Paylocity (PCTY) and Accenture (ACN).
