Each morning 24/7 Wall St. issues a list of some of the key analyst upgrades, downgrades, and initiations seen from Wall Street research firms. We review these and other calls from the week to see which stand out the most. Some are great calls that were greatly insightful. Other calls may be relevant well into the future. And then there are some calls which turned out to be total duds that were very painful for the analysts who made them and to the traders that listened.
After reviewing and filtering all of these research reports, we end up with the top analyst calls of the week. The top analyst calls of the week were in the following stocks: American Water Works Company, Inc. (NYSE: AWK); Annaly Capital Management, Inc. (NYSE: NLY); ARM Holdings PLC (NASDAQ: ARMH); Intel Corporation (NASDAQ: INTC); Bank of America Corporation (NYSE: BAC); Citigroup, Inc. (NYSE: C); J.P. Morgan Chase & Co. (NYSE: JPM); Caterpillar Inc. (NYSE: CAT); Delta Air Lines (NYSE: DAL); Dendreon Corporation (NASDAQ: DNDN); Diamond Foods, Inc. (NASDAQ: DMND); Human Genome Sciences Inc. (NASDAQ: HGSI); OpenTable, Inc. (NASDAQ: OPEN); SanDisk Corporation (NASDAQ: SNDK); Valero Energy Corporation (NYSE: VLO); Vical Inc. (NASDAQ: VICL); and YRC Worldwide Inc. (NASDAQ: YRCW).
American Water Works Company, Inc. (NYSE: AWK) was down on Friday, but earlier in the week it was added to the #1 Strong Buy List at Zacks. Despite its performance and valuations, we still see this one as a favorable stock for most investment portfolios.
Annaly Capital Management, Inc. (NYSE: NLY) saw shares slide this last week but we had an analyst duel. Wells Fargo raised Annaly to Outperform on Thursday, but Ladenburg Thalmann cut the rating to Neutral from Buy.
ARM Holdings PLC (NASDAQ: ARMH) was given a much better upside call against Intel Corporation (NASDAQ: INTC) by BMO Capital Markets mid-week, but this call goes against what the consensus analyst group is calling for. BMO raised ARM to Outperform and simultaneously downgraded Intel to Market Perform in the call.
Banking Sector Alert: On Tuesday afternoon came a bank sector downgrade by S&P Capital IQ, where Bank of America Corporation (NYSE: BAC), Citigroup, Inc. (NYSE: C) and J.P. Morgan Chase & Co. (NYSE: JPM) were both downgraded to “Hold” from “Buy.” On Wednesday morning Credit Suisse actually raised Citigroup, Inc. (NYSE: C) to “Outperform” and it gave a $48 price target.
Caterpillar Inc. (NYSE: CAT) was one of the few infrastructure players given a positive call by a new round of research calls by Morgan Stanley this last Wednesday. The firm started Caterpillar with an “Overweight” in a call which was cautious among many infrastructure and farming equipment makers.
Delta Air Lines (NYSE: DAL) is among the battered airline sector stocks, but on Friday it was Raised to Outperform by Zacks and the firm gave it the Bull of the Day status. Finding an airline bull is currently like finding a preacher taking tequila shots during “last call.”
Dendreon Corporation (NASDAQ: DNDN) had an awful week, falling from over $10 to under $7.00 after its earnings showed another disappointing round of sales for Provenge and then on added competition looking better in the field of prostate cancer treatments. After earnings, Goldman Sachs threw its “bull” hat into the garbage. The stock was downgraded to Neutral from Buy and that was one of the last remaining bulls in the stock.
Diamond Foods, Inc. (NASDAQ: DMND) had a very rough week after its Pringles deal has been delayed to a walnut accounting issue. Shares fell even further on Friday and that might make our “review through the eyes of a value investor” a bit more attractive than how we rated it this last week. This one was downgraded to Sector Perform at RBC and it was cut to Neutral at BofA/Merrill Lynch. This was around $67.50 just a week earlier but shares were down at $46.40 at the close on Friday.
Human Genome Sciences Inc. (NASDAQ: HGSI) was given a call which could have saved investors well over 5%. On Tuesday morning it was downgraded to Underperform as Bear of the Day at Zacks, but what helped was that this call was ahead of its convertible bond offering. Shares lost more than 10% this last week.
OpenTable, Inc. (NASDAQ: OPEN) was looking like it was going to have a rough week after earnings but it came back significantly from its lows. While we saw downgrades issued by BofA/Merrill Lynch and Morgan Keegan, we also saw that the restaurant reservation leader was raised to Buy at ThinkEquity.
SanDisk Corporation (NASDAQ: SNDK) is one we noted may have peaked when it tipped its hand at the stock buyback a week earlier. We had an analyst duel this week: Cut to Neutral at Stern Agee; named value stock of the day at Zacks.
Valero Energy Corporation (NYSE: VLO) is not normally impressive to see a “reiterated Buy” rating, but this last week brought a $35 target in that reiterated-buy rating from Argus. This implies some 40% upside remaining and the observations help to explain why the stock did not sell off after rumored acquirers denied having an interest in buying Valero.
Vical Inc. (NASDAQ: VICL) is one which is rarely named but it is always interesting when an analyst calls for 100% upside. The team at Credit Suisse initiated Vical with an “Outperform” rating. What was more impressive was the $7.00 price target versus a $3.45 close before, and here is why the firm sees 100% upside.
YRC Worldwide Inc. (NASDAQ: YRCW) is hardly followed at all any longer and the report came out ahead of the earnings and ahead of the reverse split data. YRC was raised to Hold from Sell at Stifel Nicolaus. Getting anyone less negative here is probably a miracle for a company which many feel should not even still be public.
Also avaliable as key analyst events during the week:
- Largest upside stocks in specialty retail;
- Largest upside stocks in food processing;
- Gabelli changed all 5 components in its “Focus Five” list.
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JON C. OGG
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