Nike Lunar Flyknit HTM Milano
Source: Farfetch
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Here are some of the best analyst calls on Wall Street this week:
Morgan Stanley- Nike, Overweight rating
Morgan Stanley said it is “cautious” about the 2019 holiday season due to a “difficult” spring season. The firm said it prefers active apparel and footwear, which makes Nike a top pick heading into the holidays. Morgan Stanley said it liked the company’s direct-to-consumer “transformation efforts” among other things.
“In particular, we expect NKE to be an outsized winner within our coverage this holiday season, driven primarily by its ongoing direct-to consumer transformation efforts, particularly Nike.com, NikePlus memberships, and its SNKRS app. We note 4Q typically experiences the largest increases in eCommerce activity and penetration, which should benefit not only NKE revenues, but margins as well, as we estimate NKE’s online business carries a 900-1000 bps higher EBIT margin than wholesale.”
Stephens- The Trade Desk, Overweight rating
Stephens initiated coverage of The Trade Desk which is an online advertising marketplace. The firm gave the company an overweight rating and said it had a more “defendable” business model than Netflix. It also said the company had “fewer regulatory risks” than Alphabet or Facebook.
“We believe investors should own TTD – the leading, independent demand-side platform in the digital advertising ecosystem – because it is a more distributed, defendable and profitable business model than NFLX or ROKU and it carries fewer regulatory risks than GOOGL or FB. The stock is volatile and expensive , but we are initiating coverage with an OW/V rating and $250 PT, which assumes the stock will trade at 11.1x EV/21E sales and 14.3x gross profit a year from today.”
DA Davidson- Sonos, Buy rating
DA Davidson said the consumer electronics manufacturer was a “natural” acquisition candidate for Apple after Alphabet’s recent purchase of Fitbit. The firm said it expects shares to “appreciate” in value and said it is similar to Apple in that it has “product quality” and “design acumen.”
“On the bad block of hardware companies, we consider Sonos to be: 1) the best house on the block and 2) the one adjacent to the mansion on the neighboring block, Apple. Similar to Apple, it: 1) makes products that we believe are, for the most part, superior to the competition, 2) has an eye for design, with products that look better than the competitions’, and 3) boasts a premium brand that enables it, along with the aforementioned reasons, to sell its products at higher prices than others.”
Morgan Stanley- Tal Education Group, Overweight rating
Morgan Stanley said it sees more consolidation in the online education space and that a “$100 billion dollar market cap lies online.” The firm singled out Tal Education Group which is a company headquartered in China that delivers after-school tutoring programs for primary and secondary school students. Morgan Stanley also said it see a $40 billion dollar “opportunity” in the U.S. offline business.
“Higher ceiling of online education potential could drive TAL to be a US$100bn company long term: We believe the online education market will be more consolidated. We look for TAL to take a 15% share of the K12 online after-school tutoring market (we estimate it will reach US$160bn), and to achieve a 12.5% OPM in 2030. At 25x long-term P/E, TAL’s online business would have a long-term market value of US$60bn. Further, we expect the offline business will grow to US$40bn in 2030.”
Oppenheimer- Wayfair, Outperform rating
Oppenheimer said it is staying “positive” longer-term on Wayfair despite a recent decline in shares for the furniture and home-goods e-commerce company. The company recently reported disappointing earnings amid a concern about slowing sales growth. The firm said it was keeping its outperform rating but that shares could be in the “penalty box” for a bit longer.
“Shares of Outperform-rated Wayfair have struggled lately, as the market digests indications of weakening top-line expansion and has turned more discerning toward high-growth, less-than-profitable business models. We have reviewed carefully Wayfair and our longer-term, positive call on its equity. Shares could remain in the “penalty box” for a while longer. That said, for a few key reasons, we view the W business model as intact and longer-term prospects for shares as compelling: 1) Still impressive top-line growth is apt to rebound somewhat as transitory pressures abate; 2) In coming quarters, operating leverage is likely to improve as investment spending eases; and 3) Shares are now tracking consistent with recent trough levels.”