Here are the biggest analyst calls of the day: Bank of America, Pinterest, Oracle & more

Key Points
  • BMO upgraded Bank of America to outperform from market perform
  • Macquarie downgraded Oracle to neutral from outperform
  • Wedbush initiated Pinterest as outperform
  • Raymond James downgraded Lennar to market perform outperform
  • Raymond James downgraded KB Home to underperform from market perform
  • Deutsche Bank downgraded Bank of New York Mellon & Charles Schwab to hold from buy
  • Needham initiated Twilio as buy
Bank of America financial center manager, center, shows a customer how to use the ATM with Teller Assist station in Cherry Creek.
Andy Cross | Denver Post | Getty Images

Here are the biggest calls on Wall Street on Tuesday:

BMO upgraded Bank of America to 'outperform' from 'market perform'

BMO said that the bank's valuation and consensus estimates are too low.

"We're upgrading BAC to OP from Mkt; our $37 target implies 34% total return. One third of that upside is expected from upward consensus revisions (higher fees and buybacks, lower provisions and tax rates). The other two-thirds comes from multiple rerating; at 8.5x rolling two-year-forward consensus P/E, BAC trades at a 15% discount to the average multiple observed historically during benign economic conditions. Even in the event of a Fed rate cut, positive EPS revisions (from better fees, tax rates, provisions, and buy-backs) should more than offset any related NIM dilution."

Macquarie downgraded Oracle to 'neutral' from 'outperform' 

Macquarie thinks the business software giant is underinvesting in its future.

"We are downgrading shares of Oracle to Neutral following partner commentary suggesting significantly softening Oracle practices. We think Oracle has sig. value it can unlock esp. in Cloud ERP, and Autonomous DB, and note easy comps for FQ4. However, we see risks to guidance and shares as the ~$10bn Q buyback may wind down in the next 1-2 quarters. D/G to Neutral, TP to $55 from $56."

Wedbush initiated Pinterest as 'outperform'

Wedbush said it thinks Pinterest is different than other social media platforms in its ability to lead to sales of products and services.

"We view Pinterest as fundamentally different than other social media platforms where users typically come to share news and experiences with friends/global community. Pinterest users, or Pinners, often come to the site for discovery and idea generation and are often in various stages of the commercial intent funnel. Pinterest is unique to any other media platform in its visual search and discovery toolset and that advertising actually improves the consumer experience."

Raymond James downgraded Lennar to 'market perform' from 'outperform'

Raymond James said it downgraded the homebuilder because valuations are too "rich" and margin concerns are "mounting."

"We note that our FY19 and FY20 projections ($5.35 and $5.60, respectively) are also slightly below current consensus ($5.40 and $5.90). We suspect Lennar will likely find itself in a position to re-endorse its earlier guidance for 50,000+ home deliveries in FY19 (+11% y/y), but have grown incrementally more concerned about the company's margin outlook this spring. Specifically, we note Lennar ended February with a 49% sequential increase in finished unsold homes (1.7 per community), well above its normal seasonal buildup. We will be closely watching to see how Lennar managed its spring inventory and what levels of incentives were used to clear those homes."

Raymond James downgraded KB Home to 'underperform' from 'market perform'

Raymond James said it downgraded the homebuilder because valuations are too "rich" and margin concerns are "mounting."

"While we are not making any changes to our EPS estimates for KBH ahead of next week's 2Q19 results, we note that our FY19 and FY20 projections ($2.30 and $2.65, respectively) remain noticeably below current consensus ($2.64 and $2.86). Accordingly, we are increasingly concerned that Street expectations, particularly around 2H19 gross margin projections, may still be a bit optimistic for the current selling environment we've seen this spring."

Deutsche Bank downgraded Bank of New York Mellon & Charles Schwab to 'hold' from 'buy'

Deutsche called the stocks "rate sensitive" in its downgrade of the asset managers.

"Most importantly, we are becoming more cautious on several interest-rate sensitive stocks and downgrading 3 stocks from Buy to Hold: BNY Mellon, Northern Trust, and Charles Schwab. With the market more persistently factoring in the likelihood of a Fed easing cycle starting this summer, we now believe, at a minimum, valuations will remain depressed, or at worst, net interest margins and revenue will be significantly pressured so as to eliminate any material EPS growth for 2020. We retain our Buy ratings on our 2 remaining rate sensitive stocks, TD Ameritrade and E*Trade, given better interest rate sensitivity profiles, leverage to customer trading, and at least a modest possibility of a merger scenario between the two over the medium to long-term, as discussed in news reports over time."

Needham initiated Twilio as 'buy'

Needham said the cloud communications platform company has delivered "exceptional" organic growth.

"Its platform enables all manner of digital communications to be embedded into apps, for digital natives such as Uber and AirBnB, and increasingly for enterprises undergoing digital transformations. By leveraging its early market position, a highly efficient developer-led sales model and a growing array of differentiated, higher-level functions on its platform, TWLO has delivered exceptional (60%+) organic growth. As well, the company's recent move up the stack into the application space with its Flex contact center adds another, meaningful growth driver to its business. Net, we foresee continued exceptional growth and initiate coverage with a Buy rating and a PT of $165, equivalent to an EV/Sales multiple of 14x our C2020 estimate."