The stock market was taking a pause from its rally on Wednesday as technical conditions were looking overbought after more than a 20% rally in the S&P 500 since early April. And the fresh USA credit rating downgrade from AAA to Aa1 still has the bond market concerned as Treasury yields have risen in the aftermath of that call. Many investors missed out on the rally in recent weeks, but now with conditions overbought many long-term and short-term investors are wondering what to do with their capital heading into summer. Do they choose the “Sell in May and Go Away” strategy or do they look for new ideas?
Oggonomics reviews the daily flow of Wall Street research each morning looking for overlooked items and hidden gems that would have otherwise been overlooked. The effort is to find some of those new ideas for short-term traders and long-term investors alike. Many of these analyst calls are targeted directly at strategic investors who rotate their assets more than buy-and-hold investors.
From March all the way into May, the one research trend that dominated Wall Street was “downgrade lite” ideas where analysts maintain their formal ratings and slash their price targets to reflect lower share prices or a slower economy. The market is starting to see more formal analyst upgrades and much higher price targets now that the recovery has come. That said, most analyst calls are still bring price target cuts rather than price target hikes. That makes the strong upgrades look that much more interesting for strategic investors.
Investors need to always keep in mind that no single analyst report should ever be the sole basis to buy or sell a stock. Analysts can get their thesis wrong just like the rest of us. And sometimes the market or a company’s fundamentals can change in the blink of an eye.
Wednesday’s key Buy and Outperform ratings with stronger upside projections than the typical 8% to 10% analyst projections are below.
ACADIA Pharmaceuticals Inc. (NASDAQ: ACAD) was upgraded to Buy from Hold with a large price target hike up to $35 from $20 (versus $21.69 close) at Deutsche Bank. The upgrade is handily above consensus and reflects last week’s news of a positive Nuplazid patent litigation verdict that extend this drug’s lifecycle all the way out to 2038. This upgraded $35 price target is versus a $21.69 prior close, but the stock was at $17.60 before its 8-times volume spike sent its shares to $22.26 last Friday on the favorable verdict. Other analaysts hiked their price targets this week as well:
- Baird (Outperform) to $31 from $28
- BMO (Outperform) to $28 from $24
- Morgan Stanley (Equal-Weight) to $24 from $20
- Mizuho (Neutral) to $23 from $20
- Needham (Buy) to $30 from $27
AutoZone, Inc. (NYSE: AZO) was raised to Buy from Neutral and its price objective was raised to $4,800 from $3,900 (vs. $3880.15 close) at BofA Securities. This call appears to be a strategic call because this analyst upgrade it is right before next week’s earnings with a focus on revenue strength. The report highlighted that AutoZone has a resilient history during recessions, and that it sees market share gains and potentially being an inflation beneficiary.
Bilibili Inc. (NASDAQ: BILI) provides online entertainment for younger audiences in China. HSBC raised its rating to Buy from Hold and raised its target to $22.50 from $21.50 (versus $18.15 close). This call is ahead of the upcoming S8 game launch at the end of May, where the expected gains come from updates to the game play, as well as updates to maps and to characters.
ALSO READ: HOW NVIDIA SHOULD DOUBLE ITS SALES BY 2023!
Simon Property Group Inc. (NYSE: SPG) was reiterated as Buy with a $195 price target at Argus. This represents about 20% implied upside from the $162.94 close, and that’s before adding in a 5% dividend yield. The independent research firm is handily above a $185 consensus price target here and it is above its 52-week range of $136.34 to $190.13. This is unusual implied upside for a REIT stock (particularly as the largest retail-focused REIT worth $61 billion!). Argus has a positive view of Simon’s divestment of its ownership stakes in retailers like Forever 21 and Authentic Brands even as the sales will create headwinds for FFO/Earnings. Argus also positive about high-end apartments near its retail centers with a high-quality portfolio.
Six Flags Entertainment Corporation (NYSE: FUN) was reiterated as Overweight and its price target was raised to $43 from $41 (vs. $36.00) at Barclays. The higher target reflects Six Flags’ expanded long-term financial targets as the ultimate upside from its merger will overcome concerns of its financial leverage and macro-headwinds that are weighing on its investor sentiment currently. Six Flags has a 52-week range of $28.02 to $58.70 and it is down roughly 25% YTD. Stifel was even more aggressive here by raising its target to $50 from $48.
ALSO READ: 7 BLUE CHIPS TO BUY FOR BIG GAINS
United Rentals, Inc. (NYSE: URI) was reiterated as Overweight and its price target was raised to $920 from $780 (versus $715.47 close) at JPMorgan. The firm recently visited the company and is confident that its Specialty will remain a key growth driver, noting tariff concerns have receded from previous levels of concern. United Rentals has a 52-week range of $525.91 to $896.98 and its consensus price target was only around $758 ahead of this call.
JEFFERIES TOUTS REGIONAL BANKS
Jefferies issued new coverage on more than a dozen of the larger regional banks on Wednesday. The focus here was on the larger sized regionals by market cap which were given new Buy ratings and higher implied upside to the price targets than their peer group:
- East West Bancorp, Inc. (NASDAQ: EWBC) started at Buy with a $115 target (versus $94.34 close).
- Fifth Third Bancorp (NASDAQ: FITB) started as Buy with a $47 target (vs. $39.07 close).
- Huntington Bancshares Incorporated (NASDAQ: HBAN) started as Buy and a $20 target (vs. $15.94 close).
- M&T Bank Corp. (NYSE: MTB) started as Buy with a $225 target (vs. $185.74 close).
- Webster Financial Corporation (NYSE: WBS) started as Buy with a $65 target (vs. $52.65 close).
PLEASE NOTE: All analyst ratings and their price targets mentioned above were issued by each firm named in this summary. Their ratings and targets may differ greatly from firm to firm on Wall Street. Oggonomics does not issue any formal ratings and does not maintain any price targets of its own on these stocks. No analyst report, even those with very strong conviction, ever comes with any guarantees of profits and they never contain money-back guarantees in case you lose money.
