Additionally, L Brands was double upgraded to Overweight at Barclays
Check out today's top analyst calls from around Wall Street, compiled by The Fly.
MORGAN STANLEY UPGRADES GE: Morgan Stanley analyst Joshua Pokrzywinski upgraded General Electric (GE) to Overweight from Equal Weight with a price target of $14, up from $11, telling investors that he sees its Aviation unit as a "best-in-class franchise" and that he believes the risk from the continued grounding of the Boeing (BA) 737 MAX appears limited. Meanwhile, risks from Power, pension, and Long-Term Care are declining, said Pokrzywinski. In total, he sees upside for GE's free cash flow in 2021 given his conviction in the Aviation franchise as the MAX disruption subsides and his view that the cash trajectory for the Power unit is improving.
MORGAN STANLEY BOOSTS MICRON, WESTERN DIGITAL TO OVERWEIGHT: Morgan Stanley analyst Joseph Moore upgraded Micron (MU) to Overweight from Equal Weight with a price target of $73, up from $56, and upgraded Western Digital (WDC) to Overweight from Equal Weight with a price target of $88, up from $64. While he did not expect memory fundamentals to bottom this quickly, his checks make it clearer that customers are "building real conviction" that memory will tighten over the course of 2020, Moore told investors. Memory prices started to stabilize six months ago, but the "notable difference" in mentality from memory buyers that he sees has belatedly convinced Moore that the pricing strength can persist, he added.
Additionally, Cowen analyst Karl Ackerman's field work across the memory supply chain indicates entry level configurations of DRAM and NAND are 50% and 100% higher, respectively, for premium tier 5G handsets launching this year from Samsung (SSNLF), Huawei, and Apple (AAPL). This is causing supply tightness and should put upward pressure on average selling price contracts, Ackerman noted. The analyst sees Micron Technology and Silicon Motion as the largest beneficiaries, though he noted that Western Digital is also well positioned.
BARCLAYS DOUBLE UPGRADES L BRANDS: Barclays analyst Adrienne Yih double upgraded L Brands (LB) to Overweight from Underweight with a price target of $30, up from $15. The analyst believes there is "meaningful upside" to the shares if either management or activist Barington announce measures to improve the business and unlock inherent asset value. Fundamental changes could include real estate rationalization, inventory reduction, cost reduction, or redirection of brand positioning, Yih said. Structural changes could include separation into two companies, a take-private transaction of Victoria's Secret, or leadership and/or board changes, added the analyst. With activist involvement since March 2019, Yih believes "value-enhancing strategies could come soon."
UBS RESUMES TESLA AT SELL, EXANE CUTS TO NEUTRAL: UBS analyst Patrick Hummel resumed coverage of Tesla (TSLA) with a Sell rating but raised his price target to $410 from $160. The analyst said his more bullish fundamental view acknowledges the company's technology and cost lead in hardware and software, adding that Tesla is positioned to achieve 10% operating margin and $3B-$5B in annual free cash flow from 2022 onward. Hummel noted, however, that the current valuation on Tesla already discounts 1.6M cars sold in 2025, which would be up from 367.5K in 2019, and ignores the risks in execution and U.S. demand. The analyst believes that Tesla share price is likely "over-shooting".
Additionally, Exane BNP Paribas analyst Stuart Pearson downgraded Tesla to Neutral from Outperform with a $555 price target.
ANALYST DIVERGE ON CORTEVA: Bernstein analyst Jonas Oxgaard upgraded Corteva (CTVA) to Outperform from Market Perform with a $39 price target. Assuming a normal spring planting, the analyst now believes it is time for Corteva to show growth. Oxgaard is confident that the company has the ability to execute in 2020, and he expects that investor sentiment will improve as confidence in management is restored.
However, Loop Capital analyst Chris Kapsch downgraded Corteva to Sell from Hold with a price target of $23, down from $25. The analyst noted that based on the fundamentals for the company and the Ag end-market generally, it is difficult to be constructive on the stock, stating that the possibility of a trade truce with China appears to be already factored into the Ag commodity prices.
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