UBS Upgrades NFLX and Goldman Sachs Upgrades Alcoa (AA) and efferies Upgrades DuPont (DD) to Buy.
UBS upgraded Netflix (NASDAQ: NFLX) from Neutral to Buy with a price target of $175.00 (from $136.00).Analyst Doug Mitchelson comments “We see upside to 1Q17 subscriber guidance given momentum in Europe and LatAm, and modest improvements in Japan, as detailed in our UBS Evidence Lab analysis of app download data, while Netflix’s leadership positions in the U.S., U.K. and Canada appear secure. Notably, this momentum is during a 1Q17 stretch where original content releases are light and 1Q17 growth had been pulled forward into 4Q16 per management due to 4Q16’s strong originals – it would not have been surprising to see momentum soften in 1Q rather than the strengthening we are seeing. Also, Comcast commentary regarding the success of X1 integration of Netflix is encouraging and we expect ongoing churn reductions as Netflix adds more U.S. pay TV integration deals and as X1 penetrations rise.
Goldman Sachs upgraded Alcoa (NYSE: AA) from Neutral to Buy with a price target of $52.00 (from $34.00).
Analyst Andrew Quail is positive on what he calls a “cash machine in supportive commodity environment.” He also jacks up his EPS estimates for FY 2017 from $1.45 to $2.40, FY 2018 from $1.22 to $2.68, and FY 2019 from $1.23 to $2.89. Quail expects AA to generate about 12% free cash flow yield on average through 2018. Further, Quail notes how his estimates compare to the rest of Wall Street (emphasis ours): “We believe Street estimates underappreciate AA’s earnings power given the current macroeconomic background. Our new 2017/18 EBITDA expectations of $2,076/ $2,035mn are 10%/ 8% ahead of consensus estimates after reflecting our commodity team’s revised price deck. We expect upward revisions to consensus numbers to drive AA shares in the coming quarters as investors begin to appreciate the strong FCF generation ahead for Alcoa.”
Jefferies upgraded DuPont (NYSE: DD) from Hold to Buy with a $96 price target.
Analyst Laurence Alexander commented, “Following the recent market rally, emphasizing self-help and EPS growth prospects less chained to the industrial cycle will likely improve both absolute returns and risk/reward in the chemical sector. With this in mind, and with the merger likely to close in the near future, we are upgrading Dow and DuPont to Buy from Hold.”
Alexander said if Dow-DuPont had kept up with market multiple expansion since right before the merger was announced, the shares would trade 7%-10% higher than Friday’s close.