9:04 am Top Pre-Market Analyst Actions
- Western Digital (WDC) was upgraded to Outperform from Market Perform at Cowen noting from here, investors should focus on a broadened TAM enabled by SanDisk (SNDK) while the insertion of another new planar node from Toshiba (TOSBF) could add GM offsets during 3D migration. Given low bar, firm thinks WDC should begin to trade at a premium.
- A lackluster start to May has softened as of later with the shares rallying for a few sessions since the middle of the month; the stock now stands about -31.8% YTD as the Technology (XLK) sector sees pressure, and this morning the stock trades +2.6% ahead of the bell
- Johnson Controls (JCI) was upgraded to Outperform from Neutral at Credit Suisse as concerns surrounding the Tyco (TYC) merger now seem to be reflected in the valuation. Additionally, they see a re-rate of shares post the Adient spin-off in October.
- Shares have had a strong few months here in 2016, up nearly +10% YTD and +27.1% from YTD lows; this morning, the stock continues higher, up about +1.8%
- Best Buy (BBY) was downgraded to Neutral from Buy at Citigroup following the Q1 report as they see limited upside given continued investments in the omnichannel and weakness in phones, tablets, PCs and video games.
- BBY posted a strong rally in mid-February and into early-March, a move that put shares up about +17.1% at that time; the stock trades lower about -4.3% following the print and rating move
- CF Industries (CF) was downgraded to Underperform from Neutral at BofA/Merrill and to Sector Perform at Scotiabank as the former expects nitrogen pricing to go lower and pressure shares.
- CF dips -1.7% ahead of the bell this morning following the rating cuts, compounding the recent downside which has taken the stock -25.5% in 2016
- Viking Therapeutics (VKTX) was initiated with a Buy at Maxim Group as they noted VKTX expects VK5211 to produce the therapeutic benefits of testosterone with improved safety, tolerability, and patient acceptance due to a tissue-selective mechanism of action and an oral route of administration. Firm notes VK5211 may be the answer in hip fracture. Firm sees an undervalued company with multiple assets.
- VKTX is very thinly traded, but has seen an uptick in volume during the past month and a half; the stock was initiated at HC Wainwright more than a month ago in early-April, and that day shares spiked +102% at highs; this morning, the advance is a but more tame with the stock +8.3% premarket
- SAGE Therapeutics (SAGE) was initiated with a Sell at Chardan Capital Markets based on an absence of clinical evidence that SAGE's lead asset, phase III SAGE-547 (allopregnanolone), is differentiated from other, old GABAA-receptor-modulating anti-epilepsy drugs.
- SAGE has been on a relative downward streak in May as the stock is about -14% month-to-date; the losses intensify YTD (-42.7%) and continue said negative bias in the premarket, down about -6.9%
Briefing.com note: This is a select subset of all of the morning's analyst actions, which can be seen on our Upgrades/Downgrades Calendar here
9:04 am La Jolla Pharm initiated with a Buy at Lake Street; tgt $25
Lake Street initiates LJPC with a Buy and price target of $25 as they anticipate positive topline date readout of the ATHOS-3 trial by year-end 2016, supporting NDA submission in early-2017, and commercialization in early-2018 of co's lead candidate LJPC-501 -- serving as major catalysts for its shares. Firm believes '501 is uniquely positioned as a breakthrough therapy for catecholamine-resistant hypotension, addressing a TAM > $1B+, with peak sales potential in well in excess of $500MM.
9:04 am Home Depot initiated with a Buy at Topeka Capital Mkts
Topeka Capital Markets initiates HD with a Buy and price target of $158. Firm expects momentum to continue in co's sales and earnings growth as we head deeper into the peak selling season for home improvement products. Co's superior mgmt team is using its dominant scale to take market share. Firm believes there is still time to invest in the housing recovery with signs of continued strengthening in macroeconomic factors that drive the home-related sector.
9:03 am Huntington Ingalls downgraded to Sell at Stifel; tgt $135
Stifel downgrades HII to Sell from Hold and sets target price at $135 as they see (1) the risk/reward trade off supportive of a Sell and (2) a disconnection between bulls who like HII because of its valuation gap with peers on a P/E basis and what FCF says shares are worth. Quite simply, shares trade at a P/E discount because of (1) lower margins (200bps) vs. peers, (2) flat sales and a less compelling outlook for EPS growth, and (3) lower free cash flow conversion. On a cash flow basis, shares (1) trade at a 15% premium to peers on P/FCF which they just don't understand and (2) look expensive using DCF.
9:03 am Viking Therapeutics initiated with a Buy at Maxim Group; tgt $5
Maxim Group initiates VKTX with a Buy and price target of $5. Firm notes co expects VK5211 to produce the therapeutic benefits of testosterone with improved safety, tolerability, and patient acceptance due to a tissue-selective mechanism of action and an oral route of administration. VK5211 has been evaluated in three phase I studies and has demonstrated statistically significant increases in LBM among treated subjects following 21 days of treatment. In a pre-clinical model of osteoporosis, VK5211 demonstrated improvements in BMD, bone mineral content, bone strength, and other measures. VK5211's therapy could result in benefits to patients recovering from hipfracture surgery.
9:02 am Forward Air upgraded to Outperform at RBC Capital Mkts; tgt raised to $52
RBC Capital Mkts upgrades FWRD to Outperform from Sector Perform and raises their tgt to $52 from $50. Firm notes with co largely completing the integration of Towne Air and realizing significant margin improvement as a result, they are more comfortable in the outlook going forward (no pun intended). With the integration complete, firm believes the operation is running stronger than the past six to eight quarters and the outlook is much improved. Further, they are comfortable with their Street high 2017 EPS est. As such, they believe co's current valuation and stock price offer an attractive entry point.
- Security Upgrades & Downgrades