Check out today's top analyst calls from around Wall Street, compiled by The Fly.
BUY APPLE: Atlantic Equities analyst Ianjit Bhatti reinstated Apple (AAPL) at Overweight with a $150 price target. The firm's previous analyst covering the name, James Cordwell, had an Underweight rating on Apple shares. Bhatti believes that Apple's product business should be valued in line with other premium and luxury consumer stocks. The iPhone SE 2 should drive smartphone market share gains from Android phones in the $400-$599 price bracket, while the greater segmentation for the new iPhone 12 line-up will enable Apple to grow average selling prices compared to the prior generation of the high-end phones, the analyst contended.
MOVING TO THE SIDELINES: Wedbush analyst Peter Winter downgraded KeyCorp (KEY) to Neutral from Outperform with an unchanged price target of $14. The analyst also removed the shares from the firm's Best Ideas List. Part of the investment thesis has played out as KeyCorp has closed the valuation gap and its credit quality has held in relative to peers, Winter told investors in a research note. Further, the analyst said he believes positive operating leverage in 2021 will be difficult given the "weak" economic recovery. KeyCorp will also encounter revenue headwinds as its swap portfolio begins to run-off and the new announcement to exit $4.6B in indirect auto loans, Winter contended.
The analyst also upgraded Huntington Bancshares (HBAN) to Outperform from Neutral with a price target of $12.50, up from $10.50, as he believes the company has several levers to outperform the group and is trading at only 8.8-times his 2021 EPS, lowest P/E among his regional bank median of 10.0-times.
DELAYS OF PREMIUM MOVIES CONTINUE: Barrington analyst James Goss downgraded Cinemark Holdings (CNK) to Market Perform from Outperform without a price target. Cinemark has the "financial wherewithal to survive a dragged-out period of reopening," but the continuing delays of premium movies into 2021 or even 2022, aside from some content moving direct to streaming, appears to be extending the time frame over which these improved metrics can be realized, Goss told investors in a research note. As such, the analyst moves to the sidelines pending "better underlying figures to come into better focus."
ANALYSTS DIVERGE ON FIRST SOLAR: Roth Capital analyst Philip Shen upgraded First Solar (FSLR) to Buy from Neutral with a price target of $100, up from $65, as policy drivers support greater demand and higher ASPs. Heading into third quarter results, the analyst sees the narrative around First Solar serving as a go-to company for customers seeking security of supply and reduced reliance on the Chinese supply chain gaining further momentum. Further, Shen sees two upside catalysts near-term, namely a 201 extension and, supply chain reconfiguration given forced labor risk.
Meanwhile, Credit Suisse analyst Michael Weinstein downgraded First Solar to Underperform from Neutral with a price target of $64, up from $54. The analyst noted that First Solar currently trades closer to prior peak multiple last seen in 2017/2018 before Section 201 tariffs were implemented, and above average historic multiples since of 8-10 times for First Solar and peers. While a new set of tariffs are possible, the price currently implies either a 14% Section 201 tariff exemption for First Solar in perpetuity, or about 60% Section 201 tariff for the next four years, even after current tariffs expire in February 2022, Weinstein contended. The analyst believes both scenarios seem "highly unlikely" given the limited history of Section 201 and the supply chain's demonstrated ability to relocate globally in response to anti-dumping and Section 301.
Weinstein also downgraded SunPower (SPWR) to Neutral from Outperform with a price target of $16, up from $12.
GUIDANCE CUT: JPMorgan analyst Stacy Pollard downgraded SAP (SAP) to Neutral from Overweight with a price target of EUR 120, down from EUR 160. The analyst also removed the shares from the firm's Analyst Focus List. SAP missed third quarter revenue and operating profit by 5% and 2% respectively, and more importantly, reduced both its fiscal 2020 outlook and mid-term ambitions, Pollard told investors in a research note. Demand has been more muted than expected and the company thinks weakness is likely to last through at least the first half of 2021.
Exane BNP Paribas analyst Stefan Slowinski also downgraded SAP to Neutral from Outperform with a $130 price target after the company missed on its third quarter results and lowered its fiscal year 2020 outlook. While the analyst expected a margin downgrade, he did not expect 400-500bps. Slowinski thinks SAP is making the right decision to accelerate its working with hyperscalers and its cloud transition, but believes this will likely keep earnings per share growth in check for two years.
