Here are the biggest analyst calls of the day: Roku, Lululemon, Facebook & more

Published Mon, Oct 28 20198:48 AM EDT

Key Points

Bank of America is initiating Roku as buy.
J.P. Morgan is upgrading JetBlue to overweight from neutral.
MKM is upgrading Travelers Companies to buy from neutral.
Citi is downgrading American Eagle Outfitters to neutral from buy.
Citi is downgrading Lululemon to neutral from buy.
Citi is opening a negative catalyst watch on L Brands.
Stifel is raising its price target on Facebook to $205 from $180.
Jefferies is initiating Yum China as buy.
SunTrust is upgrading Fortune brands to buy from hold.
Bernstein is lowering its price target on Beyond Meat to$100 from $130.
Piper Jaffray is downgrading Estee Lauder to neutral from overweight.

Here are the biggest calls on Wall Street on Monday: Bank of America initiated Roku as 'buy' Bank of America initiated the online media streaming company and said it had "superior" brand recognition. "We view the stock as attractive for the following reasons: 1) The negative impact of new offerings from competitors is overestimated, in our view; 2) Strong platform rev growth should continue as advertisers shift ad budgets towards OTT; 3) Roku should continue to benefit from increasing consumer demand for affordable smart TVs, enabled by the Roku TV OS; 4) Roku continues to compete effectively against large streaming players due to superior brand recognition." J.P. Morgan upgraded JetBlue to 'overweight' from 'neutral' J.P. Morgan upgraded the airline and said it had "upside" potential. "Meanwhile, JBLU – still far from a sell-side favorite – is now expected (by us) to limp across the $2.50 earnings line in 2020. Even when coupled with our second lowest target multiple, upside potential to our JBLU target price of $24 exceeds 25%, lifting our rating to Overweight." Deutsche Bank upgraded Tiffany to 'buy' from 'hold' Deutsche upgraded the stock after luxury goods firm LVMH said it had interest in taking over Tiffany. "Jewellery has long been seen by luxury players as an attractive and reliable industry with significant scope of market share consolidation, given that it is largely unbranded (only 20%) and with less than a handful of global players. In this frame-work, acquiring one of the leaders is a shortcut. Especially if you already own one of the other top-five brands (Bulgari). In this context, the various weekend press articles about the interest in Tiffany by LVMH seem to have a rational backing and are tied with its history of interest in the brand, and to the good knowledge LVMH has of the current management and some of the board members (ex Bulgari)." MKM upgraded Travelers Companies to 'buy' from 'neutral' MKM upgraded the insurance company after the company missed on its earnings report last week. "We are raising our Rating on Travelers Companies to Buy from Neutral following its earnings miss last Tuesday (October 22) and its sell-side analysts meeting last Friday. As our note said last Wednesday, Travelers missed earnings badly, but this was needed for better rates ahead." Citi downgraded American Eagle Outfitters to 'neutral' from 'buy' Citi said it saw a risk to estimates "near term" due to "choppy" weather and "elevated" inventory levels. "While we still believe AEO is a market share winner in the teen landscape and Aerie is a winning concept that has a long runway for growth, we see risk to estimates near term. The company exited 2Q with elevated inventory levels (+15% vs. 2Q sales growth +4%) and we believe choppy weather in 3Q has only exacerbated the problem." Citi downgraded Lululemon to 'neutral' from 'buy' Citi said merchandise margins may be "weaker" than expected for the clothing retailer. "But the stock is at our TP, and trading at ~22.5x our F20E EBITDA, the market expects results to be flawless, leaving little room for disappointment. With that backdrop creating a more balanced risk reward, we have recently noticed a pickup in promos, above and beyond what we usually see from LULU. As a result, we believe merch margins may come in weaker than expected. LULU remains a winner long term, and there is nothing wrong with the brand, but near term higher promos make us question if they are as flawless as they have been." Citi opened a 'negative catalyst watch' on L Brands Citi opened a negative catalyst watch on the clothing retailer and said it saw "significant risk" to the company's merchandise margins. "We see near-term downside to LB shares. LB's plan was to pullback on promotions in 2H19 at both VS and PINK as they worked to improve their assortments. However, as 3Q progressed we have noticed a meaningful uptick in promotional cadence on our store checks at both brands. We believe there is a significant risk to LB's merchandise margins in 2H19, particularly in 4Q." Stifel raised its price target on Facebook to $205 from $180 Stifel raised its price target on the stock and said it has a more "optimistic" view on revenue and costs in to 2020. "We raise our 12-month Target Price on FB shares to $205 to reflect a slightly more optimistic view on revenue and costs in FY:20 and beyond. We remain Hold-rated as we think regulatory / antitrust overhangs will continue to weight on FB shares, but see valuation as increasingly attractive relative to past levels and current valuation levels for peers." Jefferies initiated Yum China as 'buy' Jefferies said it sees "upside potential" for the fast-food restaurant company. "We like YumC 's business model as the largest QSR operator in China with 6,000 stores under the KFC brand. Its 4-pillar-strategy (i.e., focusing on store, product, digital and delivery) has successfully revamped the operation and stays relevant to the consumer (especially younger consumers). We see upside potential to its share price of ~25%." SunTrust upgraded Fortune brands to 'buy' from 'hold' SunTrust upgraded the home and security products company and said tariffs on some products should result in "pricing and volume gains" in 2020. "We are upgrading FBHS to Buy based on the following (1) We believe that demand from new resi and remodel resi will accelerate organic growth in all products in 2020 (2) Tariffs on Chinese cabinets should result in pricing/ and some volume gains in 2020 (3) Plumbing remains the best area of growth in Building Products that should continue (4) Potential that management could spin off its struggling cabinet unit which would improve future growth of RemainCo. Our new PT of $75 assumes multiple expansion to ~13x, in-line with historic avg, given an expected resurgence of an expansion cycle." Bernstein lowered its price target on Beyond Meat to $100 from $130 Bernstein lowered its price target ahead of the company's IPO lock-up expiration date. " Beyond Meat 's stock price has plunged from ~$148 in early October to ~$100. The selloff was likely driven by the IPO lock-up expiry on October 29, when ~46m shares (~75% of shares outstanding), will be eligible for sale, although a portion will be subject to volume and other restrictions under Rule 144." Piper Jaffray downgraded Estee Lauder to 'neutral' from 'overweight' Piper Jaffray downgraded Estee Lauder and said female teens are wearing less make-up. "Too, based on our proprietary work with teens (often a leading indicator), we are seeing a greater no. of teens opting to wear less makeup or none at all. We are making no change to our estimates but taking our multiple from 35x to 34x our FY20E given muted visibility within cosmetics. Our PT moves from $210 to $204. We still see the longer-term biz model drivers intact (China, travel retail & digital) but greater geopolitical uncertainty & softer category trends could limit the magnitude of upside."

People pass by a video sign display with the logo for Roku, a Fox-backed video streaming company, Sept. 28, 2017.

Brendan McDermid | Reuters

Here are the biggest calls on Wall Street on Monday:

Bank of America initiated Roku as 'buy'

Bank of America initiated the online media streaming company and said it had "superior" brand recognition.

"We view the stock as attractive for the following reasons: 1) The negative impact of new offerings from competitors is overestimated, in our view; 2) Strong platform rev growth should continue as advertisers shift ad budgets towards OTT; 3) Roku should continue to benefit from increasing consumer demand for affordable smart TVs, enabled by the Roku TV OS; 4) Roku continues to compete effectively against large streaming players due to superior brand recognition."

J.P. Morgan upgraded JetBlue to 'overweight' from 'neutral'

J.P. Morgan upgraded the airline and said it had "upside" potential.

"Meanwhile, JBLU – still far from a sell-side favorite – is now expected (by us) to limp across the $2.50 earnings line in 2020. Even when coupled with our second lowest target multiple, upside potential to our JBLU target price of $24 exceeds 25%, lifting our rating to Overweight."