24/7 Wall St. Top 7 Analyst Calls of the Week (BRCD, EGO, HCA, LNKD, PM, QIHU, ZLC)

Each morning we publish the top analyst upgrades and downgrades we have seen in Wall Street research calls that morning.  After you dig through enough research reports there are always some key standout research reports calling for huge upside (or downside) or which offer significant insight above and beyond what the market currently sees.

We have gone through many analyst research reports to find “the top analyst calls of the week.”  Of all of the calls we followed we came up with seven top research features from this last week that we wanted to keep in mind going forward.  Those top analyst calls calls were in shares of Brocade Communications Systems, Inc. (NASDAQ: BRCD), Eldorado Gold Corp. (NYSE: EGO), HCA Inc. (NYSE: HCA), LinkedIn Corporation (NYSE: LNKD), Philip Morris International Inc. (NYSE: PM), Qihoo 360 Technology Co. Ltd. (NYSE: QIHU), and Zale Corporation (NYSE: ZLC).

This week has mostly a bullish-call bias, but that is rarely the case as we usually have a mix of upgrades and downgrades that stood out throughout the week.  We often see some great research that flags more caution than ambition.  Included in each call is the price action and the implied target goals, along with color if applicable.

Brocade Communications Systems, Inc. (NASDAQ: BRCD) has failed to yield much of the upside we forecast that it could see when we called it one which could double over the next 12 to 24 months back in 2010.  This week came a sector upgrade for the most part in networking out of Janney Capital Markets’ Bill Choi where Brocade went from “Hold” to “Buy” with an $8.00 price target.  What was impressive about this call was that it was going into earnings and that can be a very dangerous time to recommend Brocade due to its volatile nature around earnings and guidance.

In short, it was a very gutsy call to upgrade Brocade even if it was part of a sector call.  Brocade closed up 6.5% at $6.67 on Friday and the 52-week range is $4.64 to $6.88.  Getting near the $11.00 per our old double is probably an opportunity that has passed Brocade by even if the stock is higher, but the $8.00 target from bill Choi of Janney Capital Markets compares to a consensus target from Thomson Reuters of $7.31.  Choi cited new products that can help it beat Cisco and on the belief that much negative news is already price into the stock.

Eldorado Gold Corp. (NYSE: EGO) is one with the double-double as two different outfits touted this battered gold stock during the week.  A firm in Quebec called Desjardins upgraded this one to “Buy” from “Hold” this week. The move was up over 3% combined after the call and that si how much it closed up this last week.  Another portfolio fund manager named Tom Winmill at Midas Fund (a gold fund) also gave us a very positive outlook for this low-cost gold producer in our exclusive interview on Friday where he discussed $1,700 gold with Eldorado among several of his top picks mentioned.  After we took a look, most analysts feel that Eldorado IS gold because there is an implied 50% upside in the whole group of analysts as is.

HCA Inc. (NYSE: HCA) was an unusual catch among Whale Watching Week where all the billionaire and large portfolio manager holdings were released.  Reuters has an internal analyst group that looks for anomalies and other unusual data for ideas, although it is not always issuing Buy/Sell recommendations.  The catch is in a Reuters internal analyst audio-video where it was noted after the big Whale Watching that HCA was now a position held by eight of the thirty top hedge funds now that it has come public again in an IPO.  This was an unusual catch and the sub-$35 price today compares to a consensus price target of $39.61.  As it came public in March, chances are that the eight of thirty may actually be more as investors might have been slow to add the position since they only had three weeks to decide whether to add this position before the quarter-end.

LinkedIn Corporation (NYSE: LNKD) rose far too much on the IPO due to a tiny share float of only about 8% of the company or so.  Our own poll showed that only 13% thought it would go above $60.00.  Some call Jim Cramer an analyst, some call him a pundit, some call him other names.  He can still impact shares, whatever you want to call him.  Cramer made a call this week basically calling LinkedIn a sham of an IPO that should be worth far less than when it went into the $90’s and $100’s after pricing up over 30% from the initial price at $45.00 per share.

Philip Morris International Inc. (NYSE: PM) is one where we do not see much more analyst upgrades in due to its significant appreciation already seen.  Despite fears of a price war, Standard & Poor’s Equity Research raised the rating to Strong Buy with a price target objective of $82.00 per share.  The stock closed at $70.19 on Friday and has a 52-week range of $42.94 to $70.77.  The consensus price target is $71.69 per Thomson Reuters data.  This was one of those unusual calls that will either be a leading call with analysts having to chase the stock with more upside commentary or one where S&P marked teh top of the stock for a while.

Qihoo 360 Technology Co. Ltd. (NYSE: QIHU) is an internet and mobile security products company in China with massive market share.  It had a strong IPO by pricing at $14.50 for about 12 million shares at the end of March after an expected price range of $10.50 to $12.50.  On Friday came an upgrade from Stifel Nicolaus, who was just a co-manager in the underwriting group of its IPO.  The upgrade went from “Hold” to “Buy” and now the price target is $38.00. Shares closed up over 3% on Friday at $29.43, and the Thursday gain after the LinkedIn tertiary benefits was already up over 4%.  The firm is calling for another 30% upside.  The post-IPO range has been $24.00 to $36.21.  This is ahead of earnings this coming week and we have a basic preview calendar for the week.

Zale Corporation (NYSE: ZLC) is sort of the red-headed stepchild of the jewelry business as this used to be a $20 and $3 stock that nearly imploded in the Great Recession.  Things have largely stabilized and Friday’s gain of 17% to $4.15 compared to a 52-week range of $1.35 to $5.88.  The gain on Friday can be attributed to Bank of America Merrill Lynch upgrade to “Buy” from “Hold” with a $4.75 price target. That target implies another 15% gain compared to Friday’s close and it implied a gain of about 35% compared to the $3.53 price from before the call.  BofA sees a better chance of it meeting estimates based in part upon positive commentary of jewelers in general. The firm also believes its turnaround is taking hold, even though margins are likely to decline due to inflationary pressures behind precious metals.

As with all the “top research calls,” there are almost always differing opinions that come through time.  We have often joked that you could read a word for word report and analysis and the only difference at the end from two different analysts is that one will end with “Therefore, you should buy” or “Therefore, you should sell.”  We always advise investors to do their own due diligence rather than relying solely on analysts and pundits offering opinions.  Most importantly, never forget the cardinal rule of prudent investing: Know exactly what you are investing in!

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JON C. OGG