Market Maker Stock Picks – learn how to pick stocks from the institutional investors.

AEGIS:

• ARAY init buy and $7 tgt
• VAR init hold and $85 tgt

ARGUS:

• X upgraded to buy from hold with $39 tgt – We expect U.S. Steel to return to profitability this year with help from stronger pricing, continued cost reductions, and tariffs on imported steel. We also expect it to benefit in 2017-2018 from increased infrastructure spending under the Trump administration

BANK AMERICA:

• AGN – Valuation still very attractive; we see ~20% upside which we believe is fair as AGN has 1) several solid near-term growth drivers (Botox, Linzess, Viberzi, Vraylar, etc.), 2) an underappreciated pipeline with many potentially large opportunities (our model has almost zero specific pipeline value), 3) relatively less risk to US drug pricing regulation

BARCLAYS:

• Paper sector – Containerboard equity gains appear to have moved past fundamentals: On average, the stocks are up ~22% post the election vs the SP 500 up ~7%. Given our less robust fundamental view along with what we see as peak earnings and multiples, we have downgraded IP to UW from EW, and PKG and KS to EW from OW
• Steel – NUE and X were the latest of the steel stocks to offer an enthusiastic view on the outlook for the industry in 2017. We increase our price targets for both stocks and reiterate our Overweight rating on NUE
• Specialty pharma – adjust EPS estimates for ENDP, PRGO and AGN. We tweak estimates for AGN and JAZZ. Revisions for ENDP and PRGO are more significant. We also lower price targets for ENDP (from $22 to $15) and PRGO (from $110 to $100

BERNSTEIN:

• Airlines DAL upgraded to OP and AAL upgraded to market perform – Cites positive commentary on unit rev, booking trends amid mixed cost guidance

BTIG:

• LMOS – price target to $21 from $17.50 based on new 2018 estimates

CANACCORD:

• GIL – are reiterating our BUY rating and lowering our target price to US$29.00 (from US$31.00 previously). Our target price represents 16.6x our 2017 EPS estimate of $1.74. We have reduced our target multiple from 17.5x to reflect the soft retail spending environment
• ATHN – maintain our HOLD rating and $112 PT following 4Q’16 results. The 4Q’16 revenue and provider-add shortfall versus expectations likely does heighten the risk achieving the reaffirmed 2017 guidance. However, the company did stress its confidence in achieving the guide which was built on 2016 bookings (+5% y/y) and a record Enterprise annual recurring revenue contracts implemented in 4Q’16

CHARDAN:

• AVXS – Considering the above efficacy and safety issues for Spinraza relative to AVXS-101, we reiterate our AVXS Buy rating, make AVXS a Chardan top pick for 2017, and increase our AVXS PT from $85 to $100 (+18%). We also open a pair trade of AVXS (long) and IONS (short), on the increasing potential for 1) AVXS-101 use in SMA types 2 and 3, likely at Spinraza’s expense, and 2) Spinraza to increase the size of the SMA market ahead of an AVXS-101 launch

CITIGROUP:

• WETF upgraded to neutral – 4Q16 EPS miss and subsequent management call, we upgrade the shares. Several reasons pace our thinking, but the central tenant is that following 2/3 weakness, Consensus and sentiment have reset and we view the risk/reward as more balanced
• TEX – We resume coverage of TEX with a Neutral rating and $36 target. Following years of sluggish global growth, a more favorable economic backdrop appears to be emerging for TEX in ’17, and especially ’18.
• DLPH – Reiterate Buy and lift price target to $95 from $88 on a roll-forward to 2017E valuation. Delphi delivered a strong Q4 with upside surprises to both revenue and margins. The Q4 beat coupled with strong 2016 bookings suggests that 2017 guidance—which was solid—could actually prove somewhat conservative
• Insurance – Post week 1 of 4Q:16 earnings, we reiterate our call that investors should be selective in gaining exposure to the sector and highlight AMP as our top pick and MET as our contra-consensus Sell-rated stock. AMP – We have greater conviction in our 22-23% margin forecast for A&WM by 2021, given the 4Q:16 upside surprise and an up to ~85 bps lift from last December’s rate hike
• Food retailers – lowering targets for DG/DLTR to reflect multiple contraction by the peer group

COWEN:

• TSRO init MP and $155 tgt saying while Tesaro is a top 2017 takeout candidate and there’s a good chance of a deal, a broad label for its PARP is already priced into shares

CREDIT SUISSE:

• PRAH upgraded to OP from neutral and up tgt to $67 from $50 – are raising our 2017E and 2018E EPS to $2.97 and $3.49 (from $2.88 and $3.19), respectively, on greater enthusiasm for PRAH’s recent partnership with Takeda, an incrementally more positive outlook for the broader functional outsourcing market (~one third of revenues), and relatively healthy CRO industry fundamentals
• PRXL downgraded to neutral from OP and lowering our PT to $65 (from $68) on the slower revenue and earnings growth profile, with increasingly limited visibility thereon.
• RGR/AOBC – are lowering estimates on SPWH based on recent industry data points; while there is more risk on the firearms business than in the past, we believe the stock more than reflects that now; Additionally, we continue to expect offsets from oil market improvements, and improving competitive dynamics

DAVIDSON:

• VSTO downgraded to neutral from buy – Headwinds Increasing; Softening Ammunition Trends Further Cloud Earnings and cut tgt to $28

DEUTSCHE BANK:

• VR downgraded to hold from buy on valuation
• TOT upgraded to buy from hold
• FL – continues to stand out in the retail space as a destination in the mall & online, producing positive SSS against a backdrop of negative and decelerating traffic trends. However, with mixed channel checks, a deceleration in SportScan data, and delayed tax refunds, we are tweaking our comp estimates lower by 100 bps for 4Q and 1Q.

EVERCORE/ISI:

• CRR upgraded to buy from hold and up tgt to $19 from $10
• AN downgraded to hold from buy saying CY17 is shaping up to be an investment year and reduced estimates; reduced CY17 earnings estimate to $4.10 from $4.25, CY18 to $4.50 from $4.60 and sees EBIT margin  down 30bps year-over-year for the first 9 months on stepped up investment spend/lingering GPU pressure and EBIT dollars down year-over-year

FBR CAPITAL:

• GALE downgraded OP to MP and tgt cut to $4 from $11

GOLDMAN SACHS:

• NVDA – scheduled to report FQ4 earnings on February 9 post close. Bottom line, we expect the company to beat-and-raise once again as intra-quarter data points suggest healthy demand trends in the three core segments (i.e. Gaming, Data Center and Automotive). We reiterate our Buy rating (on the CL) ahead of the print with 12.8% potential upside to our 12-month price target of $129

JEFFERIES:

• Border tax – work on Border Adjusted tax suggests DG and BBBY could be beneficiaries under the GOP corporate tax reform proposal.  Both companies have a relatively low percentage of direct imports, and would benefit from other provisions of the plan, including the deductibility of CAPEX and a lower tax rate
• TIF – It appears the board pushed for new leadership to achieve this change. With former CEO Kowalski back on an interim basis, TIF is in fine hands. We look forward to a faster pace of change under the next CEO, which was lacking under prior leadership. We are buyers esp. on any weakness due to this announcement

JMP SECURITIES:

• HIVE downgraded OP to MP

JP MORGAN:

• COG upgraded to OW from neutral and up tgt to $27 – Cabot offers a combination of the highest quality shale gas asset in the U.S. and best-in-class execution. We had been on the sidelines since our launch last year as we awaited clarity on pipeline projects to unlock the growth potential of the asset base.
• Gaming – According to our checks, GGR for the first 5 days of February is estimated at MOP6.3b, implying average daily revenue (ADR) of MOP1.26b/day. No matter how we look at it, this is a very strong
• EXPE – Online Travel Tracker-2/6/17: Dec US Lodging Soft, But Europe Better On Weaker Comps; Also Lowering ’17 EXPE EBITDA, Neutral

LOOP CAPITAL:

• RGC – will release Q4 results after the close this Thursday, and ahead of the print, we are comfortable with our projections of $820.5mm in revenues, $154.4mm in EBITDA (non-adjusted), and $0.30/share in core, non-GAAP EPS, numbers we improved back on January 10th

MKM PARTNERS:

• ULTI – expect results and guidance will be largely in-line with consensus. While this may not act as a short term catalyst in itself, a typical “meet and maintain” quarter should prove reassuring to investors concerned about the ending of the NetSuite partnership, potential Obamacare changes, and potential Workday (WDAY, Not Rated) competition
• RGC – Industry outlook is favorable but some Regal specific issues keep us sidelined. We remain positive in our view toward the exhibition industry. The domestic market has recorded two record revenue years in a row and based on our view toward the 2017 and 2018 slates, we look for another two years of new highs. However, with regard to Regal, valuation is at a fair 8.5x theatre level EBITDA. In addition, recent sales by lead investor The Anschutz Corporation, in our opinion, places a ceiling on the shares

MIZUHO:

• DRE upgraded to buy from neutral
• TIF downgraded to neutral from buy

MORGAN STANLEY:

• Chemicals – CE tgt to $88 from $70 and EMN PT to $83 from $71 – raising our price targets on both Celanese and Eastman to reflect: 1) Higher Chemicals sector and market multiples; 2) Greater certainty of estimate achievability now that problem child acetate tow is likely near the bottom (i.e., far from riskless, but less far to fall); 3) further cost productivity opportunities have been solidified (excellent track record in prior years should allow the market to give prospective credit for this year); and 4) continued solid growth in their respective specialty segments despite and otherwise tepid macro operating environment
• CPN downgraded to EW from OW & Reduce PT to $13 from $18 – We see risk to ~$300m (15%) of CPN’s EBITDA from improving renewables & storage economics in CA. While we think current valuation reflects these risks, CPN screens expensive on both EV/EBITDA and free cash flow metrics vs. peers, despite much higher leverage
• DECK – delivered a disappointing 3Q EPS report. 3Q EPS missed consensus by 13c and the company lowered FY EPS guidance well below consensus ($3.45-3.55 vs. $4.14). We reduce our FY17 EPS estimate by 15%.
• IRTC – OW & Raise PT to $34 from $30 – iRhythm’s ZIO service is a disruptive technology in a large growing market. The ZIO service offers compelling diagnostic yield / cost combination relative to existing ambulatory ECG monitoring modalities and presents a compelling clinical value proposition for all stakeholders including patients, providers and payors

NOMURA:

• RRC upgraded to buy from neutral on valuation as changed view to reflect share underperformance, combined with the quality of its asset base, strength of management, and ability to surprise on capital efficiency; maintains $45 tgt

OPPENHEIMER:

• CTSH – Heading into 2017 and 4Q16 earnings (Wed. 2/8, before market open), we maintain our Outperform rating but lower our price target to $60 (from $68). While CTSH’s fundamental backdrop appears poised to improve in CY17, and we anticipate a more shareholder-friendly capital allocation posture, we are concerned by recent immigration/visa developments
• TRMB – With TRMB reporting Wednesday, we update our proprietary composite of indicators. We observe modestly positive trends noting that the company must continue to deliver increased mix toward software and growing EBITDA margins, which we believe is likely. We see potential for slightly softer business climate in 4Q16/early 2017 as customers assess uncertainties around policy changes and new financing structures for domestic infrastructure spending. However, we anticipate that as funding details take shape, TRMB would be an early stage beneficiary

PIPER JAFFRAY:

• BIVV init neutral

RAYMOND JAMES:

• FDX upgraded MP to OP with $210 tgt – expects FedEx to stay ahead of eCommerce growth by investing, but does not see dollars of capital rising, and actually expects capex/sales to fall in coming years as sales grow

RBC CAPITAL:

• TRUE upgraded to OP with $17 target – positive catalysts cited by the analyst are an acceleration of the company’s partnerships, improved relations with dealers, enhanced marketing efforts, a large total market opportunity, and continued strong industrywide U.S. car sales

Market maker Stock picks ROTH CAPITAL:

• GLUU upgraded to buy from neutral, PT to $3.25 from $2.00, citing potential for upside to bookings in 4Q
• NVDA downgraded to neutral from buy
• BLUE downgraded to neutral from buy

RW BAIRD:

• LH downgraded to neutral from OP

SUNTRUST:

• TSRO tgt raised to $190 from $145

SUSQUEHANNA:

• COG upgraded neutral to positive – Following last Friday’s FERC approval of the Atlantic Sunrise Pipeline, we are upgrading COG to Positive given improved production growth visibility beyond this year. Increasing price target to $26

UBS:

• AAPL – price target is $138 or 15x F17e EPS based on a return on incremental invested capital of 15-20% and earnings growth of 3-5% over the next five years driven by a growing installed base. Also, near-term earnings momentum is positive
• SBUX – Despite NT challenges, sales drivers highlight path to +MSD Americas sss We remain confident sss can reaccelerate through FY17 and beyond as compares ease, throughput is addressed, and multiple sales layers exist

Market Maker stock picks WEDBUSH:

• STML – reit OP and $11 tgt – Third confirmed CLS-related death in ongoing Phase 2 BPDCN study raises concerns of possible FDA hold and viability of SL-401 program; we still believe drug is approvable, but likely only in BPDCN setting. Company confirms another death (likely due to CLS but not confirmed), maintains timeline for study completion and BLA filing
• CBS – Raising PT to $77 from $73 and Re-It OP on Our Top TV Play – says most attractive PEG in the space on our revised estimates, reiterating OUTPERFORM. The bull case for CBS shares is that it has the most attractive 2018 PEG of our large-cap media coverage
• TPX – While we see more downside than upside to our estimates should the TPX-MFRM contract termination be permanent, our probability-weighted earnings power analysis points to ~$418m in EBITDA. A 10.4x EBITDA multiple (a discount to historical levels given less certainty) drives our $45 target price
• FEYE – cut tgt to $11 from $14 – remain on the sidelines on FEYE. While the company pursued an aggressive growth strategy with its hardware appliances, firewall competitors began fielding cheaper add-on offerings for advanced threat protection, and the market shifted towards cloud

WELLS FARGO:

• APO upgraded to Outperform from Market Perform as believe the market is underappreciating the rapid growth of APO’s carry generating assets under management (AUM), more than doubled since 2015, which puts the company in a solid position to generate substantial carried interest
• LGIH downgraded to Underperform from Market Perform reminding investors we downgraded our roughly a month ago on decelerating growth concerns. Friday evening (2/3), those concerns were realized as the company reported disappointing January Closings, which fell nearly 26% to 172 from 232 last year despite community growth of 20%, resulting in Absorptions declining 38% to 2.6/mo. This is the company’s lowest Closing absorption pace since coming public in 2013