Investing

Here are the biggest analyst calls of the day: Caterpillar, AMD, Intel, Dunkin' Brands & more

Key Points
  • Deutsche Bank downgraded Caterpillar to hold from buy
  • Nomura Instinet initiated Advanced Micro Devices as buy
  • Nomura Instinet initiated Intel as buy
  • DA Davidson upgraded Urban Outfitters to buy from neutral
  • BTIG initiated Grubhub as buy
  • UBS downgraded Raytheon to neutral from buy
  • BMO downgraded Dunkin' Brands to market perform from outperform

Here are the biggest calls on Wall Street on Wednesday:

Deutsche Bank downgraded Caterpillar to 'hold' from 'buy'

Deutsche Bank downgraded the maker of earth movers and construction equipment saying there is a fear of "negative back-log growth."

"The biggest risk to the bull case for CAT is if its backlog growth turns negative and it is becoming increasingly clear that it will within this next quarter. Negative back-log growth historically precedes a negative earnings revision cycle by 3 months. During these cycles, street estimates get typically get cut by 45% and shares fall by 40% from the peak. Synchronized global growth has collapsed, the China Land Cycle is rolling over (and will continue to weaken despite the single positive data point this week), Europe is slowing more than expected and the US is oversaturated with construction equipment. Each of these factors alone are powerful drivers of CAT's earnings, but together this synchronized slowdown will not only usher in a negative earnings revision cycle, but also make 2019 the cyclical peak. Street num-bers for 2019 and 2020 are 5% and 20% too high, but the current share price does not reflect this reality. While we acknowledge mgmt. has done a tremendous job improving cross-cycle earnings power and the balance sheet optionality is impress-ive, we fear these positives are already priced in and the oncoming down-cycle is too powerful to overcome. As such, we view the risk/reward as balanced and down-grade CAT from Buy to Hold and update our price target to $128."

Read more about this call here.

Nomura Instinet initiated Advanced Micro Devices as 'buy'

Nomura said the semiconductor company should see "high revenue growth," and growing profitability.

"We are initiating coverage of Advanced Micro Devices, Inc. with a buy rating and $33 target price, based on approximately 29x our 2021 GAAP EPS estimate of $1.12. We think that AMD's high revenue growth and rapidly improving profitability justify what we consider to be an elevated multiple on an EPS estimate that may still be a fair amount below the company's earnings power."

Nomura Instinet initiated Intel as 'buy'

Nomura said the chip maker is a leader in "high-growth markets," and the company has the potential to see EPS growth go above top-line growth.

"We are initiating coverage on Intel Corporation with a Buy rating and a $65 target price, based on 13.5x our 2020 GAAP EPS estimate of $4.85. We think this multiple is appropriate, given our projection of 8-10% long-term sales growth for Intel, with margin expansion and share count reductions potentially driving EPS growth above top-line growth."

DA Davidson upgraded Urban Outfitters to 'buy' from 'neutral'

DA Davidson sees the company's fundamentals getting stronger.

"We note strengthening fundamentals ahead for URBN using our Davidson Proprietary Data. Accordingly, we are raising our rating on URBN from Neutral to BUY and increasing our price target from $30 to $36 given improving divisional growth, a more focused assortment, international expansion opportunities, and effective leadership at the forefront. We believe the Street is overly-focused on the near-term trees of tall comps in 1QCY19 and 2QCY19, losing sight of the forest of opportunity for URBN in the next few years. Over the last several years, management has been methodically laying the foundation for a best-inclass brand apparel company that could thrive under the shifting retail paradigm."

BTIG initiated Grubhub as 'buy'

BTIG said the web commerce platform for ordering and delivering take-out food has made recent investments which should continue to allow it to grow.

"We are initiating coverage of Grubhub with a Buy rating and $95 price target as we believe recent investments will yield more chain restaurant partnerships, attract higher-profit independent operators and drive meaningful growth in EBITDA per order in 2H19. We believe Grubhub is well positioned to capitalize on the booming off-premise trend which is driving nearly all the growth in the restaurant sector. We expect chain restaurant operators to begin to migrate away from exclusive delivery partnerships to multiple partner deals, allowing Grubhub to quickly leverage its investments in customer awareness and delivery."

UBS downgraded Raytheon to 'neutral' from 'buy'

UBS said the company which specializes in defense,civil government and cybersecurity solutions has a valuation which is not as compelling at this time.

"Shares of RTN have outperformed the large-cap defense avg by about 900bps YTD on the back of better 4Q cash performance and an industry leading top-line outlook. Relative valuation (FCF yield adjusted for pension) for 2019/20 is no longer compelling with 150bps below avg FCF yield for 2019 and 20 bps below average for 2020. With valuation now less compelling and some incremental risks on the horizon, we are moving our rating to Neutral from Buy."

BMO downgraded Dunkin' Brands to 'market perform' from 'outperform'

BMO said they downgraded the stock mainly due to current valuation.

"We are downgrading DNKN to Market Perform from Outperform. Our overarching view on DNKN remains unchanged; however, our case for investing in DNKN is less persuasive at current valuation as we believe the risk/reward has become more balanced. Our price target remains $75, although we adjusted 2019 quarterly EPS cadence to refine timing of lease accounting impacts."