On top of the spreading coronavirus impact on the markets and the economy, now the U.S. has to grapple with a Russia/Saudi price war in oil that has created a lock limit down of 5% in the equity futures market, and oil is having the worst day since around the first Gulf War. Long-term Treasury yields are creating a situation in which the Federal Reserve has few tools to help the markets beyond liquidity assurances. Many investors have been slow to act in how to position their assets ahead of the current market carnage.
24/7 Wall St. reviews dozens of analyst research reports each day of the week in an effort to find new ideas for traders and long-term investors alike. Some of the daily analyst calls cover stocks to buy, while some calls cover stocks to sell or to avoid.
One interesting point is that analysts have so far avoided the mudslide of mass downgrades for all sectors, even if consensus target prices have been coming down marginally. That said, the energy sector is now facing a mudslide of abandonment that will spill over into areas far beyond just oil and gas.
We have provided these analyst calls in a quick-hit summary for easy reading, and additional comments and trading data have been added on many of the calls. The consensus analyst price targets and other valuation metrics are from the Refinitiv sell-side research service.
These are the top analyst upgrades, downgrades and initiations from Monday, March 9, 2020.
SunTrust Robinson Humphrey downgraded more than 25 in its oil exploration and production universe. The firm now sees an oil price collapse as a price war kicked off this weekend as Saudi Arabia responded to Russia after they refused to endorse new production cuts for the OPEC+ group and after it refused to extend the existing oil cuts that end in three weeks, along with continued oil demand destruction due to COVID-19. The firm spoke with oil executives over the weekend and now suggests the E&P players are likely in for a bleak period if the price war and COVID-19 impact last more than a quarter. The list of downgrades is too large to write out, but these are the tickers: APA, CPE, CDEV, CHK, XEC, CLR, DVN, FANG, ESTE, ERF, EOG, XOG, HPR, MGY, MRO, MTDR, NOG, OXY, OVV, PE, PXD, RTLR, REI, ROSE, VNOM, WLL, WPX. Many of those stocks were down 20% to 30% in early trading indications.
Goldman Sachs even warned that, under the worst cases, oil could drop down close to $20.00 per barrel. Needless to say, that would be a lose-lose situation for even the strongest of oil giants. A report from DNB Bank in Norway has warned that this will turn into an outright price war.
Credit Suisse has downgraded its views to much less aggressive on the S&P 500 for 2020, but while it sees the news around COVID-19 getting worse, it also sees it waning by mid-2020. The coronavirus likely to affect profits by −8% and should rebound in the second half, with the firm cutting its more aggressive 3,600 target on the S&P 500 down to 3,300 by year-end as it lowered its 2020 EPS estimate to $165 from $175.
American Express Co. (NYSE: AXP) was raised to Outperform from Neutral with a $124 target price at Robert W. Baird. Amex closed down 2.4% at $108.24 and was indicated down about 5.6% at $102.25 on Monday morning, with a $139.13 prior consensus target price.
ADT Inc. (NYSE: ADT) was maintained as Outperform but its target price was trimmed to $10 from $11 (versus a $5.92 prior close) at Imperial Capital. Shares closed down 5.6% at $5.92 on Friday, down from a 52-week high of $9.70 and compared to an $8.61 consensus target price.
Anheuser-Busch InBev S.A./N.V. (NYSE: BUD) was named as the Zacks Bear of the Day stock. The firm said that the beer giant is battling changing consumer tastes and slower growth. Shares last closed at $53.80 and have a consensus price target of $80.48.
Cars.com Inc. (NYSE: CARS) was raised to Buy from Neutral with a $10 target price (versus a $7.10 close) at BTIG Research.
Cytosorbents Corp. (NASDAQ: CTSO) was reiterated as Buy and its target price was raised to $17 from $15 (versus a $6.01 close, after a 7.7% gain) at Dawson James. The firm noted it can raise revenues ahead with new indications and that it has only scratched the surface.
DHT Holdings Inc. (NYSE: DHT) was raised to Buy from Hold with a $6.50 target price (versus a $5.15 close) at Stifel.
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