Here are Wednesday's biggest analyst calls of the day: Boeing, Cisco, Microsoft, Southwest & more

Published Wed, Jan 8 20208:44 AM ESTUpdated Wed, Jan 8 202010:16 AM EST

Key Points

Cowen downgraded Boeing to market perform from outperform.
Mizuho upgraded Occidental Petroleum to buy from neutral.
Cowen downgraded Yum! Brands to market perform from outperform.
Bank of America downgraded Cisco to neutral from buy.
Bank of America downgraded Southwest Airlines to neutral from buy.
Morgan Stanley raised its price target on Microsoft to $189 from $157.
Wedbush downgraded VF Corp to neutral from outperform.

Here are the biggest calls on Wall Street on Wednesday: Cowen downgraded Boeing to 'market perform' from 'outperform' Cowen downgraded the stock and said it expects the company to incur additional costs related to the 737 Max issues. The downgrade was not related to the crash of a Boeing plane in Iran overnight. "We're downgrading BA to Market Perform for additional costs from the MAX production suspension and certification delays. We see these holding free cash flow to $15/sh. in '20 and $26/sh. in '21 with a flattish 2022. We're paring our PT to $371, a 7.0% '21 cash flow yield." Mizuho upgraded Occidental Petroleum to 'buy' from 'neutral' Mizuho upgraded the hydrocarbon and petrochemical company and said the "worst" is behind it and expects "sustainable" dividend growth in 2022. " OXY was the worst performing stock in our E & P coverage in 2019, following the APC acquisition and associated financial burden taken on; it is the least recommended oil stock in our coverage - quite a notoriety. We believe the worst is behind the company, and we see increasing line of sight for sustainable dividend growth in 2022 and beyond. With the stock currently yielding ~7.0%, that yield supported by recent improvement in oil prices and 350kbd collared in 2020, and the company having made good recent progress on divestitures, we believe the time is now for an upgrade. Cowen downgraded Yum! Brands to 'market perform' from 'outperform' Cowen downgraded the fast food company on concerns about the company's Pizza Hunt brand. Yum! also operates other brands such as Taco Bell and KFC. "We are concerned Pizza Hut's sales underperformance and profit headwinds from incremental bad debt expense will lead to downside to 2019-21E EPS, command the investor narrative, and serve as a distraction to YUM management. We remain constructive on Taco Bell, though we do not believe our above-consensus 2020E comps will be enough in the context of our below-consensus EPS estimates." Bank of America downgraded Cisco to 'neutral' from 'buy' Bank of America downgraded the multinational technology company and said it sees a "lack of catalysts" in 2020. First, we are downgrading Cisco from Buy to Neutral and lowering our PO from $56 to $52, now based on 14x our CY21E EV/FCF. Our main motivation is the lack of catalysts in 2020. While this may be reflected in Cisco's weak 2Q20 guidance, we expect pressures to continue into 2H20. Bank of America downgraded Southwest Airlines to 'neutral' from 'buy' Bank of America downgraded the stock and said it expects the 737 Max issues to continue to plague the airline through mid 2020. "We upgraded LUV to Buy back in September as we thought the return of the 737 MAX would help drive more normalized earnings power and strong margin growth in 2020. However, we may have been too early with our call given the recent developments at Boeing and our Boeing analyst's revised North America return to service estimate to April from March. As such, we expect LUV's 737 MAX headaches to continue through mid-2020, and we lower our 2020 EPS estimates -9% and bring our rating to Neutral from Buy." Morgan Stanley raised its price target on Microsoft to $189 from $157 Morgan Stanley raised its price target on the stock to a Street high and said it sees "expanding margins" and "durable double-digit" gross profits. "The rising mix of Cloud revenues, lapping of product cycles in the high margin Windows OEM, Windows Server and SQL Server business and the upcoming Gaming hardware cycles have stoked investor concerns on the durability of gross margin improvements in Microsoft's FY21. We took the opportunity to revisit our bottom-up gross margin analysis to assess the likely impacts of these potential revenue mix shift changes." Wedbush downgraded VF Corp. to 'neutral' from 'outperform' Wedbush downgraded the footwear and apparel company mainly on valuation. "Our rating on VFC is moving to neutral from outperform based on valuation and investor expectations for upside generated by Vans and to a lesser extent The North Face ahead of results on Thursday, January 23rd when the company is expected to post EPS upside for 3Q20 and slightly raise the FY20 outlook."

Grounded Boeing Co. 737 Max airplanes are seen in a parking lot near Boeing Field in Seattle, Washington, on Tuesday, Dec. 17, 2019.

David Ryder | Bloomberg | Getty Images

Here are the biggest calls on Wall Street on Wednesday:

Cowen downgraded Boeing to 'market perform' from 'outperform'

Cowen downgraded the stock and said it expects the company to incur additional costs related to the 737 Max issues. The downgrade was not related to the crash of a Boeing plane in Iran overnight.

"We're downgrading BA to Market Perform for additional costs from the MAX production suspension and certification delays. We see these holding free cash flow to $15/sh. in '20 and $26/sh. in '21 with a flattish 2022. We're paring our PT to $371, a 7.0% '21 cash flow yield."

Mizuho upgraded Occidental Petroleum to 'buy' from 'neutral'

Mizuho upgraded the hydrocarbon and petrochemical company and said the "worst" is behind it and expects "sustainable" dividend growth in 2022.

"OXY was the worst performing stock in our E&P coverage in 2019, following the APC acquisition and associated financial burden taken on; it is the least recommended oil stock in our coverage - quite a notoriety. We believe the worst is behind the company, and we see increasing line of sight for sustainable dividend growth in 2022 and beyond. With the stock currently yielding ~7.0%, that yield supported by recent improvement in oil prices and 350kbd collared in 2020, and the company having made good recent progress on divestitures, we believe the time is now for an upgrade.