Being a strategic investors requires more dedication and a hands approach compared to “buy and hold forever” strategies. Strategic investors can still have long-term views, but they may rotate in and out of certain sectors, strategies or asset classes with some or all of their funds.
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The flow of daily analyst calls offers many new ideas for strategic investors looking for more specific moves. These analyst calls can also be a useful tool for “buy and hold” investors for reasonable long-term valuations and expectations.
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Wall Street analysts have made some interesting strategic changes based upon upcoming events and how to play them. These analyst calls are showing specific strategies as to why they are “strategic” at this time — some almost immediately ahead of their earnings reports.
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Oggonomics has tracked “strategic investors” calls from Goldman Sachs updating its Conviction Buy List and from Evercore ISI’s “Strategic outperform” and “Strategic underperform” stocks. The opinions, notes and price targets are from each firm named. Oggonomics does not maintain any of its own formal investment ratings or price targets on these stocks.
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Oggonomics would also like to remind its readers that no single analyst call should ever be used as the sole reason to buy or sell a stock. Analysts can be wrong just like the rest of us, and sometimes the fundamental situation can change overnight. No analyst report ever comes with any guarantees that their price targets will ever come to fruition.
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GOLDMAN SACHS CONVICTION BUY UPDATES
The Goldman Sachs Conviction Buy List is a list of stocks that are given specific upside views for the coming year. These are generally the firm’s top picks for each sector at any given time, and the list is updated each month for rotations in and out. March’s update included three U.S. stocks and two European stocks for increased upside expectations.
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Baxter International (NYSE: BAX) is rated Buy with a $42 price target (versus $34.75 current) and was added the U.S. Conviction But List in the monthly update, noting an expected turnaround after a 20% drop in the last year and more than a 60% drop over the last 5-year period. Goldman Sachs now sees stable revenue growth in the mid-single-digits and sees margins and free cash flow growth from here.
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Deere & Co. (NYSE: DE) is rated as Buy with a $583 price target (versus $478.50 current) and was added to the U.S. Conviction Buy list in the March-2025 update. Goldman Sachs sees earnings reaching a positive earnings inflection with a cyclical trough for agriculture equipment inventory in 2025. The firm also sees an incremental boost from its subscription business as that plan rolls out.
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Viper Energy Inc. (NASDAQ: VNOM) was added to the Match update of the U.S. Conviction Buy list, to the firm’s US Conviction List as part of its monthly update. Goldman Sachs had started coverage as Buy with a $70 target in December, and that target price was now put at $72 (versus $47 now). Viper Energy is considered to be unique because of little no capital spending after it acquires oil and natural gas properties in the Permian Basin as well as organic and inorganic growth from the Diamondback Energy Inc. (NASDAQ: FANG) parent.
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Novo Nordisk (NYSE: NVO) has enjoyed its stay as king of the diabetes drug market for two decades or more, and now Goldman Sachs is adding it to the firm’s European Conviction Buy List for the March-2025 update. The recent lack of performance (actually underperformance) was called as overdone and an attractive entry point for investors with several upcoming catalysts this year.
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Rio Tinto PLC (NYSE: RIO) was added to Goldman Sachs’ European Conviction Buy List in the March-2025 update. Goldman Sachs sees solid production growth in 2025 as it is expected to outpace other mining stocks this year.
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EVERCORE ISI GOES “Strategic”
While “Strategic” often pertains to gains, there are also “strategic underperform” calls occasionally made by analysts. Evercore ISI has a Strategic outperform List and a Strategic underperform List. These have been broken down as Outperform first and Underperform after.
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Kroger Co. (NYSE: KR) may be a coincidental timing as CEO Rodney McMullen abruptly resigned after the board of directors conducted a personal conduct probe. This had the stock down 1.5% at $64.00 on Monday. Evercore ISI added Kroger to its Strategic outperform list ahead of this week’s earnings. With the merger now history, the analysts see a potential 8% to 10% upside move for its shares due to its defensive growth characteristics while consumers are less consistent at this time. Evercore has a $75 price target.
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Target Corporation (NYSE: TGT) was also added to Evercore ISI’s Strategic outperform list, but only with an In-Line rating and a $135 price target (versus $125.00 at this time). The move is ahead of this week’s earnings report as shares should play some catching up after underperforming as it lost one-third of its value from a year ago. A move above $130 was posed as a reasonable outcome after earnings, and Target’s 52-week low of $120.21 should show that the sentiment has been quite weak.
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Best Buy Co., Inc. (NYSE: BBY) was added to Evercore ISI’s “Strategic underperform” list ahead of this week’s earnings report. The report noted that management’s guidance is likely to reflect current trends for consumers and that the stock will likely push the stock towards $80 rather than seeing a breakout to head toward $100. The stock currently sits just under $90 and is expected to face pressure from a slower consumer and a highly promotional push to generate sales.
