Check out today's top analyst calls from around Wall Street, compiled by The Fly.
APPLE PRICE TARGET RAISED TO $520: Morgan Stanley analyst Katy Huberty raised the firm's price target on Apple (AAPL) to $520 from $431 and keeps an Overweight rating on the shares. While she is still valuing Apple using a sum-of-the-parts based valuation to "best capture the strength of Apple's ecosystem," Huberty said she has adjusted her comps to better reflect the market valuation of a range of hardware businesses blended with software and Internet peers with similar end-market exposure or business models. On an enterprise value to free cash flow basis, the stock trades at a 2% discount to tech platforms and 10% discount to consumer platforms, according to Huberty, who argues that this indicates Apple shares are not as expensive as peers and have "further room to run." Huberty points to the fact that Apple has generated 6% year-over-year revenue growth and 12% year-over-year EPS growth over the last four quarters despite iPhone revenue declining 1% year-over-year in that time as evidence of a lower reliance on the iPhone to drive growth and as proof of the strength of Apple's broad ecosystem of products and services.
PINTEREST DOWNGRADED AT CITI: Citi analyst Jason Bazinet downgraded Pinterest (PINS) to Neutral from Buy with a price target of $35, up from $25. Sell side analysts have materially raised 2022 revenue estimates for Facebook, Snap and Pinterest to near or above pre-COVID-19 levels, Bazinet tells investors in a research note. Year-to-date, shares of Pinterest are up 85%, Snap is up 30%, Facebook is up 30% and Twitter is up 20%, the analyst points out. However, Bazinet believes the Street is paying higher multiples today for similar growth rates. As such, prevailing valuations "don't leave much room for downward estimate revisions," he says.
DEERE UPGRADED AT BOFA: BofA analyst Ross Gilardi upgraded Deere (DE) to Buy from Neutral with a $234 price target after the company more than doubled consensus EPS forecasts for this quarter and raised its earnings and cash flow outlook for FY20. In his post-earnings upgrade, Gilardi tells investors that the company is "finally delivering the type of margin performance in Ag & Turf that had been elusive" while at a low point in the grain cycle. The analyst, who sees earnings momentum "clearly building" into next year, thinks Deere's precision agriculture leadership should help drive sustained multiple expansion, he tells investors.
TESLA 'BULL CASE TARGET' RAISED TO $3,500: The production and demand trajectory in China for Tesla (TSLA) "remains robust and stronger than expected" for Q3 with "clear momentum" heading into year end, Wedbush analyst Daniel Ives tells investors in a research note. The pent-up demand in the China electric vehicle market for Model 3's and recent price cuts are creating a "perfect storm of demand" for the company, contends the analyst. Ives believes Model 3 demand out of China appears to be on a run rate to hit 150,000 unit deliveries in the "first year out of the gates" for the Giga 3 factory. He estimates the China growth story is worth "at least" $400 per share in a bull case to Tesla. With the China growth story, Tesla could now have $35 of earnings per share power by 2025/2026, versus a prior estimate of $20-$25, says Ives. As a result, the analyst increased his "bull case target" for Tesla shares to $3,500 from $2,500. Nonetheless, Ives keeps a Neutral rating on Tesla with a $1,900 price target.
SPROUT SOCIAL INITIATED: Needham analyst Scott Berg initiated coverage of Sprout Social (SPT) with a Buy rating and $40 price target. The analyst expects marketing on social media to surge to 19.7% of U.S. marketing spending from 11.4% over the next five years. Sprout Social is an "excellent way to invest in the explosive growth of the large, lightly penetrated," $25B total addressable social media market, Berg tells investors in a research note. He believes the stock trades at an attractive entry point for growth investors.
