- Goldman Sachs downgraded Boston Beer to sell from neutral
- Bank of America upgraded Anheuser-Busch InBev to neutral from Underperform
- Deutsche Bank downgraded Constellation Brands to hold from buy
- Morgan Stanley upgraded Bed, Bath, & Beyond to equal-weight from underweight
- RBC upgraded Viacom to outperform from sector perform
- Wells Fargo downgraded Intel to market perform from outperform
- J.P. Morgan added Lennar to the analyst focus list
- UBS lowered their price target on Boeing to $500 from $525
- Stifel raised their price target Chipotle to $700 from $500
- Susquehanna upgraded Northrop Grumman to positive from neutral
Here are the biggest calls on Wall Street on Friday:
Goldman Sachs sees intensifying competition for the beer marker throughout the rest of 2019.
"While SAM has seen its overall sales growth accelerate on the back of it FMB and cider innovations in 2018, we downgrade SAM to Sell and see headwinds in 2019 as competition intensiﬁes and the company is unlikely to repeat its innovation success again this year. We favor STZ (Buy) within our Alcoholic Beverage coverage as its core beer portfolio remains on a solid footing and there is potential upside to sales if its FMB innovations (i.e. Corona Refresca) proves to be more successful."
Bank of America said they are expecting a solid Q1 from the beer maker.
"We upgrade AB InBev to Neutral from Underperform and increase our PO to EUR82/sh (USD91/sh) from EUR60/share (USD68/sh), as we reduce our WACC to 7.8% from 8.6%, following the recent sharp decline in LT bond yields. The narrative has changed on ABI's equity story, and we believe the shares will remain supported near-term, as the Street's concerns around its leverage subside and short-term earnings momentum improves – we expect a solid Q1 ahead. The potential IPO of its Asia business reported in the press could also act as a catalyst, if it's confirmed. However, we expect limited upside to the shares, as our 2019-20 EPS remain -2-10% below the Street, as we see increased margin pressures starting in H2. ABI also trades at high EV/EBITDA at 13x (vs. peers at 11-12x), for limited growth."
Deutsche Bank downgraded STZ on valuation and said they see a more "balanced risk/reward" for the beer, wine, and spirits maker.
"In short, the story (in our view) has been successfully "refreshed" after months of confusion over wine dilution/Canopy impacts, and lingering concerns over poten-tial beer fundamental erosion. However, as a result, we see far more balanced risk/reward from here. We raise our target price to $194 (largely on account of the earlier wine transaction, as well as a lower go-forward tax rate), but are downgrading the stock to Hold as we see current valuation now more fully pricing in our base case fundamentals—not-ing that our $194 target price is based on assumptions implying nearly 20x FY21 EPS, nearly 15x FY21 EBITDA, and a <5% FY22 FCF yield (full multiples for what remains today primarily a US beer business—cannabis, wine & spirits, and M&A optionality notwithstanding)."
Morgan Stanley said that they still question the company in the long term but upgraded the stock based on risk from activists.
"Upgrading to Equal-weight as activist intervention poses a risk to our negative thesis. We still question BBBY's L-T prospects. For now, the potential for sweeping mgmt. change including a new well regarded CEO creates possible upside and may untether stock perf. from underlying results in the N-T."
RBC liked Viacom's DirecTV deal and sees increasing momentum surrounding merger talks.
"Viacom's DirecTV deal was less contentious than thought, and we think crystallizes its improved standing. More importantly we think it paves the way towards merger talks. We see >30% implied upside on a CBS merger and advise investors to hedge exchange ratio risk by owning both. Better Viacom + likely deal = new $36 target."
Wells Fargo said they see increased competition from AMD and tough comps from the chipmaker in 2019.
"Our call is: (1) valuation-driven, (2) reflects a more cautious view on current semi demand data points going into 1Q19 earnings, coupled with Intel's tough comps thru 2019, (3) driven by our belief that investor sentiment could become more tempered amid increasing visibility into AMD share gain momentum (expect Rome launch late-2Q19; continued Ryzen-based PC ship ramp), and (4) our analysis of Intel's increasing depreciation expense; GM% headwind. Shares of Intel are +19% YTD vs. SOX at +27% and S&P 500 +15% YTD; now trading at 7.8x EV/EBITDA on our C2020 estimate vs. a 5-yr. NTM median EV/EBITDA multiple at 6.97x. With a more cautious view on current estimate upside, we would need to justify a 9.1x EV/EBITDA multiple on our C2021 estimates to support a 20%+ upside from current levels."
J.P. Morgan said that the homebuilder's relative valuation is attractive.
"As a result, we reiterate our Overweight rating – and add LEN to our Analyst Focus List – based on our view that, trading at only roughly 8x our FY20E EPS, the stock's valuation does not fully reflect the company's enhanced earnings power and market position following the CAA acquisition, while additionally, we point to several levers over the next 1-2 years which should drive meaningful improvement to ROE."
UBS said the company will see continued headwinds leading up to the company's earnings on April 24th.
"We expect the next few weeks could be a bit more choppy than the last few weeks as the company will report earnings on April 24th and potentially need to make risk-mitigating production decisions (which would drive negative revisions). The next piece of good news for the stock is the acceptance of the proposed solution Boeing is offering to the MCAS reliability and safety, though we moved our expectation for the receipt of that until after 1Q earnings."
Stifel raised their price target and said their survey shows that most think CMG will top the street's Q1 earnings estimate.
"Investors expect CMG to out-perform in the near term. Survey respondents expect Chipotle to top the Street's 1Q19 earnings estimate (Stifel $3.33; Street $2.93, albeit the product of a wide range: $2.32-$3.48). We raised our 2019 and 2020 EPS estimate to $13.00 (from $12.20) and $16.00 (from $14.00) to reflect higher SRS projections based on our view the momentum in 4Q18 has likely built in early 2019. The company exited 4Q18 with SRS in the HSD range driven by a new advertising campaign and increased digital usage (online ordering, pick-up, and delivery). Many of the factors benefiting December SRS performance should have been amplified in 1Q19, with greater YoY spend to support another new advertising campaign and expansion of digital ordering + delivery. We project SRS up 9% in 1Q and 7% for FY19. As a result of our increased EPS estimates, we raised our 12-month price target to $700."
Susquehanna said the aerospace and technology defense company is an "attractive EPS growth story."
"Upgrading NOC to Positive as EPS growth, cash flow, and orders are all heading in the right direction. The stock is down 4% over the past month and 25% from its April 2018 high. The entire Aerospace and Defense sector has underperformed the S&P 500 since the Ethiopian Airlines crash on March 10. We have 16% upside to our $315 price target, based on 2020 EPS and EV/EBITDA multiples of 16.3x and 10.5x, respectively, which are slightly below their five-year averages of 16.8x and 11.2x. We see an attractive EPS growth story (~18% in 2020 and ~7% in 2021), supported by a $53.5bn backlog and robust 2019/2020 DoD budgets. A growing top line, coupled with margin expansion opportunities, lower capex, higher D&A, and lower working capital, should help drive a 2018-2021 free cash flow CAGR of 14.8%."