- Bank of America is upgrading Nike to neutral from underperform.
- Morgan Stanley is lowering its price target on Netflix to $400 from $450.
- Citi is initiating CrowdStrike as sell.
- Imperial is upgrading Planet Fitness to outperform from in-line.
- Susquehanna is downgrading Toll Brothers to neutral from positive.
- Loop Capital is upgrading Western Digital to buy from hold.
- Seaport Global is downgrading Canopy Growth Corporation to neutral from buy.
- Wells Fargo is initiating Beyond Meat as market perform.
- Stephens is downgrading Delta Airlines to equal weight from overweight.
- UBS is downgrading Tapestry to neutral from buy.
Here are the biggest calls on Wall Street on Monday: Bank of America upgraded Nike to 'neutral' from 'underperform' Bank of America said new sportswear apparel and growth is helping offset challenges of the past few years including a more competitive marketplace. "We believe accelerated democratization of the Nike brand will further offset the challenges of the last 3 years, including significant third-party retail store closures, global stagnation in 'performance' (Running, Training & Basketball) footwear & apparel sales (as casual athletic/athleisure trends now dominate), and the resurgence of adidas as a more significant global competitor from both a technology (boost) and fashion (Yeezy & three stripe apparel) standpoint." Read more about this call here . Morgan Stanley lowered its price target on Netflix to $400 from $450 Morgan Stanley lowered its price target on Netflix ahead of the company's earnings report and noted that the market view of the company has not been this cautious for quite some time. "Our base case is for nearly 280mm paid members at YE24, margins of 28%, and EPS of $21. Our DCF supports valuation of $400/share. That also implies ~26.5x our '24E EPS, discounted back to YE20. Our new bear case, which assumes a fairly steep deceleration in net additions growth and lower long-term margins, spins out roughly $13 EPS in '24E, which on a 20x multiple would discount back to $190/share at YE20, or ~4x '21E bear case revenues, reflecting roughly 30% downside." Citi initiated CrowdStrike as 'sell' Citi said in its initiation of CrowdStrike that it doesn't think the market can sustain its current rate of growth for the cyber security company. "While the trajectory is impressive, it's not unheard of in security (FEYE 2012-2014), we view the market opportunity as not enabling a sustaining of this growth. Furthermore, we note the history of the security market makes it challenging for the stock to sustain its 17x CY20 EV/Rev multiple, which is amongst the highest in software." Imperial upgraded Planet Fitness to 'outperform' from 'in-line' Imperial said in its upgrade that Planet Fitness is a "best in class" fitness operator and a premium consumer growth stock. "After the recent decline in the shares, we are upgrading our rating to Outperform. We consider Planet Fitness to be a 'best in class' fitness operator and a premium consumer growth stock. In our view, PLNT's business fundamentals remain strong and management has a track record of skillful cash deployment. We view PLNT as a core long-term holding." Susquehanna downgraded Toll Brothers to 'neutral' from 'positive' Susquehanna downgraded the stock mainly on valuation. " TOL shares have outperformed the SPX by 300 bps year to date and at 10x 2020 EPS, shares are at their historical average forward P/E. We are lowering estimates for both 2019 and 2020 as we taper our outlook for sales pace improvement and operating leverage through next year. Based on our current earnings outlook, we'd look to become constructive again in the mid to lower $30s." Loop Capital upgraded Western Digital to 'buy' from 'hold' Loop said in its upgrade that it thinks the company can "deliver" revenue and earnings per share "upside" for the September and December quarters. "We're upgrading WDC to Buy from Hold and raising our price target to $75 from $50. For the first time our work suggests Flash ASPs can begin to increase QoQ in the September and December quarters and we believe can sustain those increases in calendar 2020. That being the case, we believe WDC can embark on a path to at least $7.50 in normalized EPS in calendar 2021." Seaport Global downgraded Canopy Growth Corporation to 'neutral' from 'buy' Seaport said in its downgrade note that it sees "reduced" earnings expectations among other things. "We are making downward revisions to our CGC model today, alongside a broader reset on expectations for the Canadian cannabis space. We reduce our forward sales and earnings expectations, to include a new FY2021 view of $475.5MM in revenue and ($75.1MM) in EBITDA. As a result of these changes, we are lowering our rating on the shares to Neutral from Buy." Wells Fargo initiated Beyond Meat as 'market perform' Wells Fargo said in its initiation that Beyond Meat growth "potential" was already fully "discounted" into current valuation. "In BYND , we see a company well positioned to grow in the nascent plant-based meat alternatives space; a category strongly suited to benefit from generational change as consumers' concerns pertaining to dietary health, environmental degradation, and animal welfare increasingly drive food purchase decisions. That said, we think BYND's growth potential is fully discounted into current valuation and advocate waiting for increased visibility pertaining to competitive entrants and marketplace adoption before owning the name." Stephens downgraded Delta Airlines to 'equal weight' from 'overweight' Stephens said that Delta was a "high quality" company but that estimates for 2020 were too "high." "Investors are understandably frustrated that despite a highly favorable operating environment this year, DAL is unable to more aggressively drive yields higher. Moreover, the Company, for the third time in the last four years has raised its unit cost outlook for the second half of the year. We continue to view DAL is an extremely high quality company, however we believe FY20 estimates are too high and may need to come down materially given the uncertainty around Domestic yields in FY20 and the impact to fuel prices from IMO. We don't see the stock's multiple re-rating higher in that environment." UBS downgraded Tapestry to 'neutral' from 'buy' UBS downgraded Tapestry on a "challenging" macro environment with little upward earnings per share revision "potential." "Two reasons we see little upward EPS revision potential -1) The UBS Evidence Lab Softlines Industry Sales Forecast suggests US consumer Holiday spending intentions are lackluster. 2) A key takeaway from our recent Future of Retail conference was pressure on mid-tier brands like Coach and Kate Spade from used handbag market growth likely continues into the foreseeable future."
Chief Executive Officer and president of Nike Mark Parker.
Lluis Gene | AFP | Getty Images
Here are the biggest calls on Wall Street on Monday: