Here are the biggest calls on Wall Street Tuesday:
Morgan Stanley lowering price target on Tesla to $260 from $283
"For what many investors believe to be a high growth tech firm, TSLA has made notable moves to cut costs/prices & stimulate orders... We see TSLA hitting an air pocket in demand that is coming earlier than we expected... We reduce our Model 3 forecast & ATPs across the range, hitting ests & our target..."
Edward Jones downgrading Boeing to 'hold' from 'buy'
"We are downgrading shares of Boeing to a Hold from a Buy... Two recent accidents have raised some concerns about a specific model of the 737 Max... We know that Boeing is focused on safety and is working with the appropriate agencies to identify the issues... In our opinion, the accidents may result in additional expense and some delay in orders, which, from a business perspective, could pressure financial results... Longer-term, we believe the outlook is balanced by the backlog of other planes (such as the 787), recent defense program wins, and the expansion of the services business... Overall, we believe shares are appropriately valued for longterm investors..."
Read more about the downgrade here.
J.P. Morgan adding Eli Lilly to the analyst 'focus list'
"Following a period of restriction, we are moving to an Overweight rating and a December 2019 price target of $140 from a Not Rated designation (OW rating and YE19 PT of $128 prior to restriction) and adding the company to the analyst Focus List (growth)... Overall, we continue to see Lilly as the best positioned of our large-cap names based on a combination of healthy core product growth (Trulicity, Taltz, Jardiance, etc), a growing portfolio of new launches and next-generation pipeline assets (tirzepatide, Emgality, Loxo-292, tanezumab, etc), a significant margin expansion story (high 20's margins that we see moving to the mid/high 30's over time), and several sources of upside to near- and long-term numbers. Along these lines, we expect the company to generate 6-8% topline growth and mid-teens annual EPS growth through much of the decade.. Lilly represents a top pick in our coverage..."
HSBC downgrading Coca-Cola to 'hold' from 'buy'
"New risks are rising... Brewers are increasingly integrating beer and soft drinks to compete better... Sugar taxes are also starting to take as much cash out of a bottler as Coke. PET taxes and regulation may drain even more... Retailers are adding pressure... A red flag. In 2018, Coca-Cola FEMSA put the Philippines back to KO, walked away from an expansion opportunity in Asia, and increased its dividend guidance... For bottlers in LatAm, the growth outlook is bleak without: (1) a functional beer strategy in Brazil and in other key markets; (2) better non-carb margins; and (3) stronger marketing... The list of KO-owned broken bottlers is growing, and there seems to be a shortage of buyers. Finally, more external management may be needed... Cracking the code on evening occasions may need external help... A culture change from an era of slowness, entitlement and waste toward speed is hard if most key posts are internal hires... We have five critical questions that need answers: see page 14. Downgrade to Hold on valuation... New flat EPS guidance implies a 22x PE, 20% above the 25-year MSCI global consumer staples average. We cut our DCF-driven TP to USD 50 (10% implied upside) from USD64 on lower earnings..."
BMO downgrading Monster Beverage to 'market perform' from 'outperform'
"We are downgrading MNST to Market Perform as current valuation, both absolute (29x NTM P/E) and relative to peers (815 bps premium vs. beverage peers), may be as good as it gets given cloudier growth outlook and dwindling likelihood of the long-hoped-for buyout by KO... While we are comfortable with MNST's near-term +hsd-ldd% topline/EPS growth outlook, we see limited ability to meaningfully exceed expectations and justify an even higher valuation multiple, given unfavorable sales/product mix and emerging competition at home as well as disappointing margin progression abroad..."
KBW downgrading Credit Suisse to 'underperform' from 'market perform'
"We downgrade to Underperform from Market Perform... We believe market conditions no longer support the leverage, credit-intensive model adopted by Credit Suisse... The group plans to operate a CET1 buffer, 100bps below the European banks sector (CS >12%).. We believe the move lower (again) could be viewed as front running potential regulatory dilution in order to support its capital return policy, an undue risk given its high beta model... Our analysis of the relationship between core business risk and revenue progression supports our view that earnings will not sustain free cash flow generation... We lower our 2019-21 EPS 9% and price target from CHF13.5 to CHF11.00, reflecting reduced earnings expectations and increasing litigation risk profile..."