Check out today's top analyst calls from around Wall Street, compiled by The Fly.
WEAKNESS IN SPOT PRICING: BMO Capital analyst Ambrish Srivastava downgraded Micron Technology (MU) to Market Perform from Outperform with a price target of $55, down from $60. Spot pricing for DRAM started to roll over the last few months, and research suggests the weakness in spot pricing is likely going to extend into contract pricing soon, Srivastava told investors in a research note. The analyst believes pricing for DRAM is going to be down quarter-over-quarter for at least for the next two-to-three quarters and also sees weakness extending to the NAND flash market as well. Consensus estimates are not reflective of the weaker pricing environment, says Srivastava, who sees a more balanced risk/reward profile in shares of Micron as a result.
MOVING TO THE SIDELINES: Oppenheimer analyst Dominick Gabriele downgraded MasterCard (MA) to Perform from Outperform after assuming coverage of the name. The analyst believes Visa (V) is positioned to recapture market share/accelerate purchase volume growth in Europe. While Visa and MasterCard are seeing some of the most elevated P/E multiples since pre-crisis, the drift in investor base toward value and slowing growth could result in multiple contraction/stabilization for both outside of revenue/earnings per share acceleration.
INCREASED IMPORT ACTIVITY: KeyBanc analyst Todd Fowler upgraded J.B. Hunt (JBHT) to Overweight from Sector Weight with a $135 price target. The analyst's "Ship-to-Shore" data projects a notable sequential uptick in June container import volumes at the Port of Los Angeles. This should translate into improved truckload and intermodal volumes through late summer, Fowler told investors in a research note. Further, the analyst argued that recent retail sales strength should support re-stocking activity as non-essential business activity resumes. Indications of increased import activity make him incrementally more constructive on intermodal.
COVID-RELATED DEMAND: JPMorgan analyst Patrick Baumann upgraded Fastenal (FAST) to Neutral from Underweight with a price target of $34, up from $31. Stronger than expected May sales for the industrial distributors reinforce recent company commentary that April was the bottom, contended. The analyst admits his downgrade of Fastenal to Underweight was wrong, highlighting the magnitude of demand for COVID-related products and the company's ability to source them to the market helped buffer an otherwise challenging environment for the rest of the business. Baumann, however, continues to see Fastenal's relative multiple as "stretched."
TOO HIGH CONSENSUS ESTIMATES: Deutsche Bank analyst Seldon Clarke downgraded Mohawk Industries (MHK) to Sell from Hold with a price target of $77, down from $85. The analyst believes consensus earnings estimates are nearly 30% too high in 2021 and imply over $120M of fixed cost reduction versus 2019 levels. With a cost structure that is 28% fixed, true decrementals on current revenue forecasts should be closer to 35% versus the current consensus of 25%, the analyst said. Further, with flooring likely being the "most challenged" of any major building product category over the next 6-12 months, Clarke expects Mohawk's sales growth to lag the majority of its building product peers.
