Stifel downgraded Alphabet to ‘hold’ from ‘buy’
“We view shares as fairly-valued at current levels and believe the multiple is likely to remain range bound over the next twelve months as a potential deceleration digestion period lies ahead with lower visibility into near-term revenue growth rates. The upside to Street margin in 1Q would be an encouraging trend all else equal, though the topline deceleration path and questions regarding Alphabet’s long-term revenue growth trajectory are likely more meaningful to intermediate-term stock performance in our view, while discretionary spending could also cause opex to tick up again in future quarters. At aftermarket prices, GOOGL shares trade at approximately 22x our 2020E GAAP EPS, matching the three-year historical average of 22x forward two-year EPS. ”
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“Although peak NIM concerns resurfaced during the US banks’ Q1 reporting season, the over-riding message was positive with credit remaining benign, costs well controlled and core loan growth steady. Trading revenues were also better than feared and management provided positive commentary around the near-term outlook. We are downgrading BAC to Neutral (from Overweight) following the 25% rise YTD and with the valuation back to a more normalised level. Our forecast FY19 EPS changes range from +4% (JPM) to -6% (WFC). Citi and MS remain our top picks in the sector.”
“We are initiating coverage on Zoom Video Communications with an Outperform rating and a 1-year target price of $89. We forecast revenue and FCF growth CAGRs of 38% and 74% (FY20-26), respectively. Our bullish investment thesis is based on four pillars: 1)Large and growing TAM of $40B+. 2) Long-term sustainable share gains in video conferencing, collaboration tools, and VOIP services, driven by superior technology, ease of use, simplicity of IT management, and cost competitiveness. 3) Upside surprises on revenue, driven by continued enterprise penetration and international expansion, with Zoom phone as a free call option for longer-term growth. 4) Underappreciated LT earnings potential, driven by superior growth efficiency and structural cost advantages. ”
“With the Investor Day behind us (and Avengers in theaters), investors wonder if there are any remaining catalysts for the shares. We see two: 1) We expect Disney to acquire the 33% of Hulu currently held by Comcast and 2) The two Star Wars parks open up in 2019: Disneyland opens in May and Disney World opens in August. Recall, Disney benefitted from a multi-year lift in attendance when Cars Land opened at Disneyland in 2012. ”
“We are upgrading Dollar General to a Buy from a Hold rating while boosting our price target to $152 from $105, implying 22% upside from current levels. We believe Dollar General currently has three compelling top-line growth and profit margin expansion drivers: (1) the recent addition of Western Union (WU:$19.41-NR) services; (2) the DG Fresh fresh and frozen goods self-distribution initiative; and (3) the Fast Track supply chain and self-checkout initiative. As a result, we expect Dollar General’s operating margin to expand for the first time in five years in F2020. Our price target is based on 20.7x our F2020 diluted EPS estimate. ”