Check out today's top analyst calls from around Wall Street, compiled by The Fly.
COVID-19 'PROLONGED' IMPACT: Cowen analyst Doug Creutz downgraded Disney (DIS) to Market Perform from Outperform with a price target of $97, down from $101. The analyst believes that the accelerating spread of COVID-19 in the U.S. will have a "prolonged" impact on Disney's parks and film businesses. Total daily cases are now in the 60,000 range per day in the U.S., double the interim peak reached in early April, the analyst noted, adding that Florida and California, states important to Disney's parks, are being particularly impacted.
MOVING TO SIDELINES ON VALUATION: UBS analyst Eric Sheridan downgraded Peloton Interactive (PTON) to Neutral from Buy with a price target of $58, up from $48. The analyst raised forward revenue estimates for both connected fitness product and subscription revenues as his industry checks point to better than expected trends for Peloton as COVID-19 stay at home measures continue to drive higher consumer adoption of at-home fitness. However, with the shares up 120% year-to-date and currently trading at 4.4 times estimated fiscal 2022 sales, Sheridan downgrades Peloton on valuation.
MID-TERM OPPORTUNITY PRICED IN: Deutsche Bank analyst Emmanuel Rosner initiated coverage of Nikola (NKLA) with a Hold rating and $54 price target. Investors have "a rare pure way to invest in zero-emission commercial trucks" with Nikola shares, although the stock's valuation now reflects much of the mid-term opportunity, without necessarily discounting the risks, Rosner said. He estimates Nikola could sell over 15,000 trucks in 2025 and generate revenue of $4.6B with EBITDA of $546M. While Nikola trades at an EV/sales multiple "about-in line" with Tesla (TSLA) and NIO Inc. (NIO), the company hasn't produced any truck so far and its factory isn't built yet, giving it "large execution risk," the analyst added.
INCREASING ODDS OF VMWARE SPINOFF: Morgan Stanley analyst Katy Huberty upgraded Dell Technologies (DELL) to Overweight from Equal Weight with a price target of $68, up from $50, after the company and VMware (VMW) each issued statements that they are considering a spinoff by Dell of its VMWare stake. Such a spinoff, which would not take place before September 2021, would be preceded by a cash dividend to all VMWare shareholders, of which Dell would receive 81% based on its ownership, the analyst noted. Her updated price target reflects a 50% or greater likelihood of this scenario playing out, explained Huberty, who said Dell will now offer a combination of market share gains, de-levering potential, and a simplified ownership structure.
INCREASE IN DEMAND: Wedbush analyst James Hardiman upgraded Harley-Davidson (HOG) to Outperform from Neutral with a price target of $36, up from $27. The analyst believes that the company's potential demand drivers and margin opportunities are now "extremely compelling." While slow to materialize, the "outdoor play" has found Harley-Davidson in terms of increased demand, the analyst said. Further, Hardiman believes the company has been taking advantage of the pandemic by cleaning up "some of its biggest deficiencies," including an overabundance of used bike availability and a cost structure more appropriate for 2015 demand levels than those of 2020. He sees Harley's April unit sales down 40%, May sales down low double-digits, and June sales up low double-digits. More dealer contacts are complaining of insufficient inventories than at any time during the past 14 years, Hardiman added.
