- Bank of America upgraded Levi Strauss & Co. to buy from neutral
- Morgan Stanley downgraded Paychex to underweight from equal weight
- Deutsche Bank raised its price target on Alphabet to $1,475 from $1,400
- J.P. Morgan upgraded Liberty Formula One to overweight from neutral
- Stephens initiated Caterpillar as underweight
- B. Riley FBR downgraded Urban Outfitters to neutral from buy
- Argus upgraded Pinterest to buy from hold
- J.P. Morgan downgraded Macy's to underweight from neutral
Here are the biggest calls on Wall Street on Thursday:
BofA said Levi's is a "standout" in a "highly disrupted environment."
"In a highly disrupted environment, Levi's stands out as an apparel brand with potential upside to its sales and EPS plan benefitting from strong brand momentum. We believe shares are attractive now that valuation has rebased to 8x F20E EV/EBITDA from the post-IPO peak of 11x. We think the stock is pricing in below-plan growth, and we expect multiple rerating as Levi's continues to beat its sales and EPS targets."
The move downloaded the payroll and benefits solutions provider due to small business employment "weakening" among other things.
"First, small/midsized business employment is weakening. .. .Second, PAYX's revenue is 94% correlated to small business employment and its growth has a clear relationship to its own jobs index, yet the shares are trading above their typical P/E multiple and do not discount the weakening environment. Third, we expect a 7.8% EPS CAGR in FY2019-22e on similar revenue growth and little margin expansion (assuming conditions don't weaken, which would skew the risk to the downside), but PAYX is still expensive versus its Payments peers on that basis."
Deutsche said that it sees "slightly faster" revenue growth for Google Sites.
"We increase our revenue estimates on Alphabet post 2Q results reflecting (1) slightly faster Google Sites revenue growth in light of the strong 2Q results, easing comps, and a compelling ad product pipeline, (2) higher Google Cloud estimates, reflecting the updated revenue run-rate disclosure of $8B, (3) higher Pixel unit and revenue growth."
J.P. Morgan said the race track operator is now in a position to reap the benefits of past investments.
"Formula 1 is emerging from a transition period following Liberty assuming control of the asset in January 2017.Costs, which ramped over the prior two years, are at or close to run-rate levels, and F1 is now in position to reap the benefit of past investments. We estimate adjusted OIBDA will increase 20% this year with the start of a pay-TV deal with Sky, and forecast more modest though steady growth thereafter, driven by contractual escalators, new sponsors, additional grands prix, and broadcast renewals in the US and Western Europe for which we see upside."
Analysts said slowing global growth for Caterpillar leaves the "equity with a negative risk/reward."
"The company's leading positions have been bolstered by restructuring that has driven significant margin improvement and higher through cycle earnings power. While we are impressed with the progress, slowing global economic growth leaves the equity with a negative risk/reward trading above 10x our view of cycle peak earnings."
B. Riley said in its downgrade that it didn't think Urban's sales improved from the "weaker" 2019 second quarter.
"On the 1Q EPS call, management noted that it would expect sales to start to improve with new BTS product in July and into August. However, our checks have shown continued, elevated Y/Y promos in July and, so far, in August for both Anthro and UO, which leads us to believe that sales have not improved from the weaker 2Q19."
The social media web and application site was "well positioned" in the global ad industry, analysts said.
"We believe that Pinterest is well positioned as a host of content for the global advertising industry. About 72% of its active user base is international, and the company is in the early stages of monetizing this user base."
The bank cut Macy's after a disappointing earnings report.
"Macy's top-line profile remains constrained by declining brick-and-mortar sales across the bulk of its full-line stores, with increased promotions and growing digital sales pressuring gross margin. Looking ahead, 2019 top- and bottom-line assumptions remain at risk as guidance is heavily weighted to a 4Q improvement despite more difficult comparisons on a two-year and three-year stacked basis."
Note- This call was before the bell on Wednesday.