- Atlantic Equities initiated Slack as overweight
- SunTrust upgraded TripAdvisor to buy from hold
- Wedbush upgraded Six Flags to outperform from neutral
- Goldman Sachs upgraded Lamb Weston to buy from neutral
- Bank of America re-instated American Express as buy
- Deutsche Banks raised its price target on Microsoft to $155 from $145
- J.P. Morgan downgraded Energizer Holdings to underweight from neutral
Here are the biggest calls on Wall Street on Wednesday:
Atlantic Equities said it sees a "long runway" for growth for the work messaging company.
"We initiate on Slack with an Overweight recommendation and $37 price target. The adoption of Slack within enterprises is proving as viral as WhatsApp amongst consumers and we see a long runway for growth as messaging fully penetrates the workplace. This in turn is creating the potential for Slack to leverage its integration capabilities and monetise its user base by becoming the main hub used to access all applications, as WeChat has done so successfully in China."
SunTrust said it is bullish on the travel website's, Experience, segment.
"Our Buy thesis centers on our calculations that TRIP's rapidly (+30% annual growth) expanding Experiences segment now represents nearly a third of sales and a solid majority of the stock's intrinsic value, while the multiple on EBITDA appears to us to place far more emphasis on the slow-growing Core. Experiences has now reached critical mass, which coupled with stabilization in Core should help drive accelerating growth in overall top line in FY20/beyond, in our view."
Wedbush said it is bullish on the company's international business amongst other things.
"We are upgrading Six Flags from NEUTRAL to OUTPERFORM and raising our price target from $51 to $62. We believe that a number of potential catalysts line up nicely for Six Flags, most notably (1) Per-Capita spending improvements driven by the Membership 2.0 program, (2) positive news flow from the company's international business, and (3) easy weather comparisons, particularly in 3Q. While none of these are a sure thing, any of them likely results in meaningful upside to SIX shares, particularly given the sell-off of the past year that has resulted in a discounted valuation with respect to the sizable dividend."
Goldman said concerns about an excess of potato capacity are unwarranted for the food processing company.
"We upgrade shares of Lamb Weston to Buy from Neutral with 27% upside to our unchanged $76 12-month price target. With shares signiﬁcantly underperforming both the S&P and Staples YTD (LW -18.6% versus the S&P +15.3% and XLP +16%), we see an attractive valuation risk/reward as concerns around growing industry capacity in 2019-20 are overdone. Given a 1.3bn lbs (~10%) potato processing capacity increase in 2019-20, we still see industry capacity utilization remaining >95% at a low-point, with the industry having consistently run above 100% operating rates in recent years to satisfy steadily growing domestic and export demand by deferring planned maintenance, running overtime, and limiting limited time offerings. In a growing, consolidated domestic industry where incumbent producers, not new entrants, are adding capacity, we do not believe these utilization levels would drive the signiﬁcant pricing/margin degradation that underpins the bearish LW thesis."
Bank of America said it liked the the company's strong brand and noted several positive factors including card fee increases and portfolio growth.
"AXP's distinct business model and brand combines issuing, network, and acquiring in a leading consumer and business-to-business (B2B) Payments franchise that drives 80% of revenue from spending volumes/fees and just 20% from lending. We believe AXP's increasingly revenue-driven P&L algorithm (yielding double-digit EPS growth) is undervalued. We forecast top-line acceleration off 1Q levels during the balance of 2019 (which could be a positive catalyst), due to easier comps, portfolio growth, card fee increases, and easing FX headwinds. Not only does AXP have much less exposure to credit than other card companies (while also enjoying superior credit metrics), but unlike the comps, AXP benefits from lower interest rates, and is also capitalizing on significant growth opportunities in B2B and international markets. In addition, we believe Digital initiatives will continue to drive enviable results in terms of customer acquisition and engagement, as well as operating efficiency."
Deutsche Bank raised its price target after positive investor meetings.
"Bottom line, we left the meeting remaining bullish on Microsoft's fundamentals and the stock. We still believe that the current multiples of 25x FY20e FCF and 23x FY20e EPS are reasonable given the strong growth outlook and the strength of MSFT's cloud story (32% of the mix and growing by 43%). Given the good overall tone, we're raising our PT from $145 to $155, based on a FCF multiple of 26x our FY21 estimate (vs prior 24x). Downside risks include a more muted margin/EPS outlook given the cloud mix shift and investments to drive FY21/FY22 growth."
J.P. Morgan said recent data is pointing to a "tough" topline outlook.
"Specifically, while trends for the organic business appear solid, negative sell-through rates have worsened for the acquired battery business (~14% of sales for the combined company in FY19), now declining at a high-teens rate which we believe may pressure ENR's ability to achieve guidance this fiscal year. While the battery category is a relatively stable business that should see sustainable growth longer term in our view, worsening shelf space losses for Rayovac will likely continue to be a headwind to results until at least 3QFY20 when ENR begins to lap the losses."