Check out today's top analyst calls from around Wall Street, compiled by The Fly.
SELL MICRON: Bernstein analyst Mark Li initiated coverage of Micron (MU) with an Underperform rating and $58 price target as he started coverage on the Global Memory sector. He sees Memory having "a positive structural view," but finds the sector's cyclicality "too painful to ignore." Li, who also began coverage of Samsung Electronics (SSNLF) and SK hynix with Underperform ratings, said he likes Micron most among the three companies with Micron ahead of the others and "now the technology leader" after launching 1anm and 176L into the market this year. However, a downcycle has just begun, he doesn't think it will end until late 2022 and though the stocks have corrected there is "likely more to come."
'DISRUPTIVE FORCE': Baird analyst Mark Altschwager initiated coverage of Warby Parker (WRBY) with an Outperform rating and $68 price target. Over the past decade Warby has established itself as a "disruptive force" in the $31B vision care market, Altschwager told investors in a research note. The analyst believes that while the market has ascribed premium valuation to the business, the stock's risk/reward is attractive for "this open-ended growth story." Cowen and Goldman Sachs also started Warby Parker with Buy-equivalent ratings, while Evercore ISI and Morgan Stanley initiated coverage of the name on the sidelines.
MORE UPSIDE IN NORWEGIAN: Citi analyst James Ainley downgraded Carnival (CCL) to Neutral from Buy with a price target of $24.50, down from $34. The analyst also downgraded Carnival plc (CUK) to Neutral with a price target of EUR 17.50, down from EUR 24. While he continues to believe in a recovery for the cruise industry, Ainley's comparative analysis of the pricing environment, ship pipeline, earnings quality, returns and valuation suggests that Norwegian Cruise Line (NCLH) will deliver more attractive returns to shareholders relative to Carnival. Carnival has delivered slower revenue and earnings growth over the last 10 years and its decision to exit older, less efficient vessels and smaller pipeline will limit its revenue recovery versus Norwegian, the analyst contended.
Meanwhile, Ainley initiated coverage of Norwegian Cruise Line with a Buy rating and $39 price target as he sees "momentum building" in the re-opening of the cruise industry. While near-term uncertainties persist, the analyst believes industry pricing, especially for premium lines, looks robust for next summer. His analysis of web traffic and pricing data points to strength in the more premium segments where Norwegian "has the strongest representation."
DECREASING FINANCIAL STABILITY: Wedbush analyst Seth Basham downgraded Casper Sleep (CSPR) to Neutral from Outperform with a price target of $4, down from $10.50. The analyst noted that on Friday, Casper filed an 8-K indicating that it had received a limited waiver and amendment regarding certain covenants in its debt agreement. Specifically, the lender has agreed to waive the requirement for the company to maintain at least $32M in cash for the period beginning October 18, 2021, and ending on December 31, 2021, as long as the company notifies the borrower five business days before the company reduces its cash on hand below $15M. Basham has recently lowered his estimates for Casper Sleep and now sees more downside than upside risk to forecasts and worse financial stability.
MARKET SHARE LOSSES CONTINUE: RBC Capital analyst Mike Dahl downgraded Whirlpool (WHR) to Underperform from Sector Perform with a price target of $190, down from $208. The company's market share losses continue in North America and its margins look set to weaken in the fourth quarter with further pressures coming in fiscal 2022, Dahl told investors in a research note. Further, he believes the industry volume growth is likely to subside, which will likely mark a peak in earnings despite more optimistic long-term targets from Whirlpool management that he sees as "overly optimistic."
