Chipotle Mexican Grill food catering.
Adam Jeffery | CNBC
Here are the biggest calls on Wall Street on Friday:
Baird named Chipotle a ‘positive fresh pick’
Baird said it likes the stock for “near and long-term horizons.”
“Based on the pullback in the stock relative to the April-May highs, combined with our incrementally positive view of the fundamental outlook coming out of our conference this week, we highlight CMG as an attractive stock for investors with near- and long-term horizons. We see opportunity for signs of strong top-line momentum in Q2/2H19 to contribute to more positive sentiment on the shares given prospects for CMG to show major earnings power as unit volumes recover toward prior peaks. “
J.P. Morgan upgraded Garmin to ‘neutral’ from ‘underweight’
After a change in analyst coverage, J.P. Morgan said the stock’s risk/reward profile is now more balanced following a 12 percent decline from its multi-year high in early April.
“The stock is down ~12% since hitting a multi-year high in early April (S&P down ~2%), and we think risk reward is more balanced. We think the stock is a relatively safer play given its diversified product lineup against a backdrop of increasing market volatility and declining yields. The balance sheet is very strong, with $2.6B in net cash/no debt and annual FCF north of $600mm or (~4.4% FCF yield) that comfortably funds an attractive dividend yield of ~2.9%. That said, we remain sidelined here on valuation, as the EV/EBITDA multiple is at a 1.5 turn premium to its 3-year forward avg, and above consumer electronics peers; we wait for a pullback in the stock, and evidence that margins are recovering in Outdoor and Fitness to get on board. Further, Garmin is not immune to a downturn in consumer spending, and recent retail data point “have been soft.”
Stifel upgraded Schlumberger to ‘buy’ from ‘hold’
Stifel said the oilfield services company has a “compelling” risk/reward.
“We are upgrading the shares of SLB to Buy from Hold and maintaining our $50 target price. The keys to our upgrade include: 1) compelling risk/reward at current levels; 2) solid free cash generation; 3) our belief that the $2.00 per share annual dividend is safe and investors are getting “paid to wait”; and 4) rising international activity; although the trajectory of improvement internationally is hard to pinpoint, SLB is well positioned to benefit as activity rises outside North America.”
Telsey downgraded The Michaels Companies to ‘market perform’ from ‘outperform’
Telsey downgraded the stock after the company’s earnings report and concerns about tariffs.
“We are downgrading MIK to Market Perform from Outperform, as we now see several risks as overhangs on earnings and valuation over the next several quarters. First, we believe the company’s 2019 comp guidance could prove optimistic in light of worse than expected 1H19 performance, despite an expected improvement in merchandising, pricing, and seasonal events to drive traffic. We are modeling a comp of (0.2%) vs. the guidance of 0%-1%. Second, the gross margin impact from the recent 25% tariff on List 3 (12% of COGS) is likely to carry over into 2020 as Michaels’ inventory turns 2x a year. Third, if tariffs on List 4 are implemented, Michaels has meaningful incremental exposure with the majority of its private label product (60% of sales) imported from China. As a result, we believe it is prudent to take a more cautious approach to earnings and the stock’s valuation. “
BMO downgraded Camping World to ‘market perform’ from ‘outperform’
BMO said it still has concerns about the RV industry and the “overall direction” of the company.
“We are downgrading shares of Camping World to Market Perform from Outperform, with a revised target price of $11 from $20. We have growing concerns that the RV industry may be taking longer than anticipated to “right size,” with channel inventory, especially Camping World’s, still at higher-than-desired levels. We are also more concerned about the overall direction of the company, owing to its ever-changing strategy, particularly its evolution since the acquisition of assets of Gander Mountain out of bankruptcy.”
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