Wendy's upgrades and Bluebird Bio downgrades also among notable calls
Check out today's top analyst calls from around Wall Street, compiled by The Fly.
BUY MICROSOFT: Oppenheimer analyst Timothy Horan upgraded Microsoft (MSFT) to Outperform from Perform with a $260 price target. A Biden Presidency should improve relations with China where Microsoft has significant exposure, while a Republican majority Senate should prevent higher corporate taxes, Horan told investors in a research note. Further, the analyst expects treasury yields to stay low, making Microsoft's 3% free cash flow yield "attractive." Horan added that Microsoft's cloud growth has been more resilient than expected as industries accelerate their digitization initiatives.
EXPECTED GROWTH PICKUP IN 2021: JPMorgan analyst Philip Cusick upgraded Verizon Communications (VZ) to Overweight from Neutral with a price target of $65, up from $61. The upgrade is based on accelerating wireless service revenue growth, the clearing of spectrum shortages, Tracfone accretion, reduced fears of tax increases and potential new revenue sources around fiber and fixed broadband developing in 2021, Cusick told investors in a research note. Further, the analyst believes Verizon will resume buybacks as early as 2022. Verizon is "both a very defensive stock at current levels and poised to grow as investors gain confidence in the acceleration of the business," Cusick added.
DRIVE-THRU SHIFT: Bank of America analyst Gregory Francfort upgraded Wendy's (WEN) to Buy from Neutral with a $26 price target following the company's third quarter results. The analyst believes Wendy's is well positioned to capitalize on restaurant market share consolidation to drive-thru centric, quick-service brands at the expense of mid-sized brands and independents. Francfort also noted that quick service has seen greater demand than pre-COVID.
MKM Partners analyst Brett Levy also upgraded Wendy's to Buy from Neutral with a price target of $26, up from $23. The analyst pointed out that the company reported "solid" third quarter top- and bottom-line results, with sales remaining "well ahead" of historical patterns. Further, Levy contended that the strategic initiatives at Wendy's are taking hold, and said he sees the company as being "well positioned" in the near-term to capitalize on their menu flexibility across all dayparts.
LENTIGLOBIN SUBMISSION DELAY: BMO Capital analyst Matthew Luchini downgraded Bluebird Bio (BLUE) to Market Perform from Outperform with a price target of $56, down from $108. The 12-month delay in U.S. sickle cell diseases regulatory filing puts Bluebird's execution issues "to the breaking point," Luchini told investors in a research note. The analyst added that while the shares are down 33% year-to-date, he still struggles to see a catalyst that could drive a valuation re-rating "since execution concerns will dominate."
Barclays analyst Gena Wang also downgraded Bluebird Bio to Equal Weight from Overweight with a $64 price target after the company delayed the LentiGlobin submission for sickle cell disease.
MOVING TO THE SIDELINES: Loop Capital analyst Anthony Chukumba downgraded Five Below (FIVE) to Hold from Buy with an unchanged $140 price target. The analyst cited the stock's valuation to a forward earnings multiple of 37.7-times after its recent period of outperformance, but noted that Five Below remains "one of the most compelling" long-term growth stories in the specialty hardlines retailing sector.
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