Here are Monday's biggest analyst calls: Micron, Western Digital, Pepsi & more

Published Mon, Dec 16 20199:04 AM EST

Key Points

Susquehanna upgraded Western Digital to positive from neutral.
Susquehanna upgraded Micron to positive from neutral.
Citi upgraded Goldman Sachs to buy from neutral.
Bank of America upgraded British American Tobacco to buy from underperform.
Goldman Sachs added Amgen & UnitedHealth to the conviction buy list.
Morgan Stanley downgraded Pepsi to equal weight from overweight.
Loop downgraded Urban Outfitters to hold from buy.

Here are the biggest calls on Wall Street on Monday: Susquehanna upgraded Western Digital to 'positive' from 'neutral' Susquehanna upgraded Western Digital on the expected ramp-up of the 5G smartphone build cycle. "In a nutshell, we expect the 5G smartphone build cycle to start in earnest in late Mar-Q, which combined with all the cuts to NAND cap-ex and wafer starts, all aimed at reducing bit supply growth rate, should lead to a tight NAND supply-demand market by June-Q. We actually don't rule out (real) "shortages" hitting the headlines by mid-summer! Game console upgrade cycle of 2020 could also exacerbate the NAND shortages into 2H20." Susquehanna upgraded Micron to 'positive' from 'neutral' Susquehanna upgraded Micron and said it sees an attractive risk/reward for the chip maker. "However, we see increased prospects of a sustainable DRAM/NAND average selling price improvement starting in the May quarter and sustaining into 2H20. As such, we are increasing our FY21 EPS estimate and now argue for earnings power in the $8-$10 range, thus providing MU shares with an attractive risk/reward profile looking 12 months out. Upgrading to Positive, with price target of $85." Citi upgraded Goldman Sachs to 'buy' from 'neutral' Citi said it saw a more favorable risk/reward for the brokers due to their lack of interest rate exposure among other things. "We are upgrading GS to Buy from Neutral as we see favorable risk/reward at the brokers given their lack of interest rate and credit risk, and would likely instead see earnings upside if an accommodative Fed spurs capital markets activity. We see a path for GS to increase returns towards 13% through positive operating leverage, efficiency gains, business mix, improving funding costs, and capital return." Read more about this call here . Bank of America upgraded British American Tobacco to 'buy' from 'underperform' Bank of America said in its double upgrade of the tobacco maker that the near-term regulatory risk has lessened among other things. "Recent company and NGP portfolio reorganisation show a much needed sense of urgency necessary to compete in the new world of Tobacco. We think the competitive environment is turning favourable to BAT and see lower near-term regulatory risk. We think improving fundamentals, better visibility and 7.4% DY will lead the stock to re-rate." Goldman Sachs added Amgen & UnitedHealth to the 'conviction buy' list Goldman said its outlook for Amgen is above the Street's consensus, based on the company's receding headwinds and product pipeline while it saw near-term earnings power for UnitedHealth. "New Conviction ideas: Ahead of 2020, we add three names to the Americas Conviction List (CL): AMGN : We are above consensus for 2020/21 revenue and EPS, and we believe stock performance will likely follow upward earnings revisions in a backdrop of receding headwinds and new pipeline readouts. UNH : Our conﬁdence in near-term earnings power underscores our view that stock performance will likely follow a positive EPS revision cycle, even if the multiple holds its slight historical relative P/E discount." Morgan Stanley downgraded Pepsi to 'equal weight' from 'overweight' Morgan Stanley downgraded the stock mainly on valuation. "We are downgrading PepsiCo to Equal-weight from Overweight, mainly on price after a ~24% YTD stock jump, outperforming large cap staples peers by 1,000 bps. We have been recommending PEP for more than seven years, since our May 2012 upgrade after an EPS rebase." Loop downgraded Urban Outfitters to 'hold' from 'buy' Loop downgraded Urban Outfitters and said it had concerns about intensifying promotional activity among specialty apparel sellers. "Though shares have bounced back after disappointing guidance was issued on November 19, we believe promotional activity has intensified more than usual among specialty apparel retailers, and F2020 EPS estimates have not been lowered enough in our view. Our F2020 EPS estimate of $2.10 is 28 cents below consensus, with SSS modeled +4.2%. Consensus SSS is projected at +2.9%, but gross margin consensus is 80 bps above our projection."

Chris Rank | Bloomberg | Getty Images

Here are the biggest calls on Wall Street on Monday:

Susquehanna upgraded Western Digital to 'positive' from 'neutral'

Susquehanna upgraded Western Digital on the expected ramp-up of the 5G smartphone build cycle.

"In a nutshell, we expect the 5G smartphone build cycle to start in earnest in late Mar-Q, which combined with all the cuts to NAND cap-ex and wafer starts, all aimed at reducing bit supply growth rate, should lead to a tight NAND supply-demand market by June-Q. We actually don't rule out (real) "shortages" hitting the headlines by mid-summer! Game console upgrade cycle of 2020 could also exacerbate the NAND shortages into 2H20."

Susquehanna upgraded Micron to 'positive' from 'neutral'

Susquehanna upgraded Micron and said it sees an attractive risk/reward for the chip maker.

"However, we see increased prospects of a sustainable DRAM/NAND average selling price improvement starting in the May quarter and sustaining into 2H20. As such, we are increasing our FY21 EPS estimate and now argue for earnings power in the $8-$10 range, thus providing MU shares with an attractive risk/reward profile looking 12 months out. Upgrading to Positive, with price target of $85."