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Calls Of Note: The Research Moving The Market On Wednesday

August 12, 2015 10:56 am
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The following represents a hand-picked selection of notable research curated by an analyst known in some circles as “The Sith Overlord Of The Street.”

Morgan Stanley: Upgrading Google To Overweight

Brian Nowak of Morgan Stanley upgraded shares of Google Inc (NASDAQ: GOOG) (NASDAQ: GOOGL) to Overweight from Equal-weight with a new $820 price target as the company’s reorganization marks a “positive step” towards better understanding core Google profitability.

Nowak noted that improved disclosure has successfully lead to multiple expansion at other Internet companies and a similar outcome for Google/Alphabet is likely as investors now gain a “clearer” picture of the long-term operating leverage and cash flow.

UBS: Shift In Housing Market

Susan Maklari of UBS commented that the housing market is “transitioning” to a more volume based growth profile, driven by the re-emergence of the entry level.

Maklari added that the rate of home price appreciation should “ease” and over the next 18-24 months, giving an “optimistic” outlook on housing broadly.

Piper Jaffray: Carrier Device Installment Plans A Tailwind For iPhone

Gene Munster of Piper Jaffray stated that mobile carriers installment plans will over time result in a “compressed upgrade window” for Apple Inc. (NADAQ: AAPL)’s (Overweight, $172 price target) iPhone users.

Munster noted that the roll-out of Next and Verizon’s contract-less offerings suggests “there may not be one specific quarter where the tailwind is recognized and it may be a more gradual and consistent slight tailwind for multiple quarters until the majority of users transfer to those types of installment plans.”

KBW: Upgrading KeyCorp To Market Perform

Christopher Mutascio upgraded shares of KeyCorp (NYSE: KEY) to Market Perform from Underperform with a new $15.50 price target as shares underperformed the market as of late and are no longer trading at a premium.

According to Mutascio, the company’s second quarter EPS of $0.27 was one cent below the consensus estimate but a penny above his estimate. As such, the analyst suggested the print “provides greater confidence” in 2016 and 2017 estimates.

Goldman Sachs: China Skepticism Priced Into Auto Stocks

Patrick Archambault of Goldman Sachs noted that auto supplier stocks have fallen 10 percent since late May and some may expect further downside from China’s questionable longer-term growth outlook.

However, Archambault argued that the market is already applying a “fairly sizable” discount rate to auto stocks given the “limited visibility” on China.

Bernstein: Incrementally Bullish On Visa

Lisa Ellis of Bernstein reiterated an Outperform rating on shares of Visa Inc (NYSE: V) with a price target raised to $90 from a previous $84 which reflects the long-term benefits if it successfully acquires Visa Europe which is estimated at an 80 percent probability.

Ellis added a “united” Visa would offer the company a more efficient capital structure and additional long-term margin expansion opportunity.

Barclays: Upgrading American Midstream To Overweight

Richard Gross of Barclays upgraded shares of American Midstream Partners LP (NYSE: AMID) to Overweight from Equal Weight with an unchanged $20 price target following the company’s guide towards an “achievable” five percent distribution growth in 2016.

Bernstein: AMD’s Management Bonus Is ‘Unbelievable’

Stacy Rasgon of Bernstein stated that Advanced Micro Devices, Inc. (NASDAQ: AMD)’s (Underperform, $1.50 price target) “sizeable” equity awards to senior executives is “extremely distasteful” and comes at a time when the business “has fallen apart over the last year.”

Rasgon did note that retention incentives could be behind the bonuses which is “the only thing that could make sense” and that she would otherwise be “horrified to see the management team reward for performance at this juncture.”

Bernstein: What Is The ‘New Citrix Plan’ Worth

Mark Moerdler of Bernstein commented on Citrix Systems, Inc. (NASDAQ: CTXS) announcement during its earnings call of the new “Citrix Plan” presented by Elliott Management.

Moerdler valued the GoTo Businesses at $3.3 billion, NetScaler Businesses at $2.4-$2.5 billion and a $74 per share value for ‘Core’ Citrix. As such, the analyst suggested the combined entity would be worth around $99 per share.

BMO Downgrading L Brands To Market Perform

John Morris of BMO Capital Markets downgraded shares of L Brands Inc (NYSE: LB) to Market Perform from Outperform with a price target lowered to $76 from a previous $103 as near-term upside could prove “more challenging.”

Morris is estimating the company to record a flat second quarter operating margin from VS and a down divisional operating margin for the year.

SunTrust: Upgrading Computer Science To Buy

Frank Atkins of SunTrust Robinson Humphrey upgraded shares of Computer Sciences Corporation (NYSE: CSC) to Buy from Neutral with an unchanged $78 price target as the federal and commercial IT services demand environment “paints a picture of steady growth.”

According to Atkins, Computer Sciences could realize top line growth in 2016 which should drive “meaningful” multiple expansions.

Stephens: Boosting Abiomed’s Price Target

Chris Cooley of Stephens reiterated an Overweight rating on shares of ABIOMED, Inc. (NASDAQ: ABMD) with a price target raised to $128 from a previous $103 following the company’s “credible” and “arguably conservative” case for the company to see an organic top-line compounded annual growth rate of over 30 percent through 2020.

Nomura: Upgrading Two REITs To Buy

Brock Vandervliet of Nomura upgraded shares of two agency REITs to Buy from Neutral: American Capital Agency Corp (NASDAQ: AGNC) with a price target raised to $23 from a previous $21 and Annaly Capital Management, Inc. (NYSE: NLY) with a price target raised to $12 from a previous $10.

According to VAndervliet, the “damage” to book value in the second quarter for both firms are “priced in” and unlikely to recur based on a favorable U.S. rates outlook and coupled with “large” sharebuybacks in play.

Longbow: Positive On Home Depot, Lowe’s Ahead Of Earnings

David MacGregor of Longbow Research commented that his channel checks indicate an above consensus same store sales comp for both Home Depot Inc (NYSE: HD) (Buy rated, $130 price target) and Lowe’s Companies, Inc. (NYSE: LOW) (Buy rated, $85 price target).

The analyst added that both companies likely saw a soft first part of the quarter due to poor weather but benefited in June and July from an acceleration in R&R and home maintenance activity.

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