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Larry Culp, CEO, General Electric
Scott Mlyn | CNBC
Here are the biggest calls on Wall Street on Monday:
UBS downgraded GE to ‘neutral’ from ‘buy’
UBS downgraded the stock citing valuation, a decline in interest rates, and ongoing power market weakness.
“We are downgrading GE to Neutral, as a notable decline in interest rates and ongoing power market weakness drive our more balanced valuation upside/downside (1:1). After the stock’s ca. 20% rel. outperformance YTD and the alleviation of bottomless cash pit scenarios dominating the narrative, we believe that we can start to look increasingly at the multi-year turnaround/transformation. “
Read more about this call here.
Barclays initiated Slack Technologies as ‘overweight’
Barclays initiated Slack with an overweight saying it liked the company’s revenue growth prospects, despite what it calls a “demanding” valuation for the enterprising message system provider.
“Slack already trades at a demanding valuation (24x CY20E Sales), but investors should value Slack on a revenue base that is closer to a normalized growth number. Our high growth SaaS / Collaboration comps trade on a 22x Sales multiple with an average revenue growth of 31% in CY20. We estimate that Slack gets to this level of growth by CY22. Hence, we assign this multiple to CY22 Revenue and discount it back to arrive at our $45 price target. “
Bank of America downgraded Molson Coors to ‘underperform’ from ‘buy’
Bank of America double downgraded the stock saying it was concerned the beer maker would have to increase spending to stabilize market share for core brands and accelerate investments in premium segments.
“TAP has integrated the MillerCoors and Miller International acquisitions well from a cost and cash flow perspective while sales have lagged. In the post-acquisition time frame, growth in the US beer industry (and more broadly food and beverage) has, in our view, become more expensive. This has caused many companies to step back profit ambitions to rekindle growth. “
Bank of America upgraded Deere to ‘buy’ from ‘neutral’
Bank of America upgraded Deere and said the ag outlook into 2020 looks “increasingly strong.”
“Ultimately, Deere is an ag story but construction still accounts for over 30% of revenue. Deere dealer retail sales for NA construction equipment were up double-digit in June on a trailing three month basis, and our survey work suggests that dealer inventories are still balanced. Meanwhile, the ag outlook into FY20 looks increasingly strong on surging grain prices, at a time when industrial earnings growth could be a scarce commodity in 2020. “
Longbow downgraded Marriott to ‘neutral’ from ‘buy’
Longbow downgraded the stock primarily on valuation.
“The shares of MAR and HLT are up approximately 15% and 30%, respectively, since we initiated coverage on the hotel/lodging space on 9-7-18. YTD, MAR and HLT are up approximately 30% and 40%, respectively, which we believe now accurately reflects our positive view on the short-term and especially long-term fundamentals for both names. “
Citi downgraded Tiffany to ‘neutral’ from ‘buy’
Citi downgraded Tiffany based on concerns about near-term dynamics despite what the firm sees as good long-term moves by management.
“While we believe mgmt has done the right things for the brand (which positions them for success longer term), we are less comfortable with the near-term dynamics. Guidance implies a big improvement in 2H results vs 1H and we believe there is risk that the 2H turnaround does not go according to plan.”
Citi downgraded L Brands to ‘neutral’ from ‘buy’
Citi downgraded L Brands on its view that its Victoria’s Secret brand may not see a turnaround.
“Our former (positive) view on the stock was based on our belief that a turnaround at VS could be successful if the brand adopted a more inclusive approach. However, with mgmt slow to implement meaningful change, and cultural norms shifting away from them, it may be too little too late for VS (to execute a turnaround the way we hoped).”
Piper Jaffray upgraded Crocs to ‘overweight’ from ‘neutral’
Piper upgraded the stock based on the belief that the shoe maker has been seeing solid traffic.
“We are upgrading shares of CROX from Neutral to OW following improving checks in the summer season & BTS. We believe Crocs’ outlets have been a seeing solid traffic during the summer season & pricing appears to be better vs. the April/May season. “
Goldman Sachs downgraded Quest Diagnostics to ‘sell’ from ‘neutral’
Goldman downgraded the clinical lab company and said it saw a “flat-to-low single digit” organic growth environment.
“Despite the fact that DGX valuation remains below historical levels (on a relative basis vs. the S&P 500), we believe the company remains in a flat- to LSD- organic-growth environment which will constrain operating profit and FCF growth through our forecast period. “
Credit Suisse lowered its target price on Boeing to $427 from $435
Credit Suisse lowered its price target on Boeing and said it still expected the Max to be recertified “at some point.”
“Barring an unforeseen catastrophe, we believe the MAX will be recertified at some point (though timing remains uncertain), which should presage a return to normal production and delivery rates. Though the timeline has been extended, normalized free cash should plateau around $32-37 per share in the 2022 timeframe. Accordingly, long term investors may be rewarded for their patience, though we are increasingly concerned that a macro slowdown may derail plans to hike to rate 57 in 2021/22.”
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