Major Blue Chip Analyst Upgrades and Downgrades in Apple, Intel, Caterpillar, Gilead, JPMorgan and Nike

Investing

Published: September 10, 2016 10:05 am

Last Updated: January 13, 2020 3:43 am

The week of September 9 ended on a sour note after more Federal Reserve jawboning about the need for rate hikes ahead. Regardless of any market weakness, the reality is that the Dow Jones Industrial Average and the S&P 500 Index are still very close to all-time highs. Investors have demonstrated for more than five years now that they will buy every single market pullback. Those same investors are looking for new ideas for gains and income as well.

24/7 Wall St. reviews dozens of analyst research reports each morning of the week. This becomes hundreds of analyst calls reviewed per week. Some of these analyst reports feature stocks to buy, and sometimes they pertain to key upgrades and downgrades in blue chip stocks that are Dow stocks or that could be Dow stocks in the years ahead.

Investors should understand that traditional Dow stocks and most S&P 500 stocks are given implied upside of 8% to 15% by analysts at this stage of the bull market on their Buy and Outperform ratings. That is far from universal, but it is generally where we are now with the market so close to all-time highs.

As a reminder, analysts are not always right. Sometimes they are very wrong. Sometimes outside forces or unexpected company missteps also wreck a thesis. These are the top blue chip upgrades, downgrades and initiations tracked for the week of September 9.

Mixed Views on the Mighty Apple

After the iPhone 7 and Apple Watch refresh demonstrations this week, Apple Inc. (NASDAQ: AAPL) saw many analysts making calls on the stock. Credit Suisse featured it as a Focus List stock with massive upside at $150 that is way above consensus. Many other analysts opined with higher and lower price targets and ratings calls, and Wells Fargo was a key analyst downgrade.

Apple’s stock closed at $103.13 on Friday, down from almost $109 just a couple of days earlier. Apple’s consensus analyst price target is $123.66, and its 52-week trading range is $89.47 to $123.82.

Upgrades and Positive Initiations

Deutsche Bank started Caterpillar Inc. (NYSE: CAT) with a Buy rating early this past week. Shares closed at $82.08 ahead of the call, and it should be noted that Deutsche Bank’s call is after a huge run up based on hope and forecasts for 2017 and beyond.

Caterpillar has a 52-week range of $56.36 to $84.73, and the consensus target price of $72.56 at the time was up to $73.94 by the end of the week. Caterpillar remains the top performing Dow stock so far in 2016, up nearly 27%, if you factor in dividends.

Intel Corp. (NASDAQ: INTC) was another upgrade that stood out above the rest of the pack, literally. Still, Intel shares are up 8.5% so far in 2016, and they are up almost 30% from this time a year ago. It was Evercore ISI that raised Intel’s rating to Buy from Hold this week, but what stood out was the firm’s $45 price target. That is actually a match for the highest analyst price target of all analysts in the Thomson Reuters universe.

Ahead of the call, Intel shares were trading at $36.08 and they put in a new 52-week high of $36.65 (versus a 52-week low of $27.68). With shares at $35.44 on Friday’s close, the $45 share price and the 2.9% yield combine for implied analyst upside of almost 28%, if this most aggressive call proves right. Intel is also on deck for a coming dividend hike before year-end.

Gilead Sciences Inc. (NASDAQ: GILD) is not quite among the Dow Jones Industrial Average, but it is a $104 billion biotech giant that trades at cheaper earnings and EBITDA multiples than major pharmaceutical stocks that are Dow stocks (Merck and Pfizer). With both Merck and Pfizer seeing so much change, there have been at least some light rumblings that Gilead might become a Dow stock if it gets another leg up and grows again.

Jefferies came out strong last week with an upgrade on Gilead to Buy from Hold, but the firm did maintain its prior $91 price target. Gilead closed at $76.89 prior to the call, and its share price was at $78.05 on Friday’s close. The stock has a 52-week range of $76.67 to $113.31. Keep in mind that Gilead shares have been sliding, and the consensus price target of $111.05 from 90 days ago is now down at $105.24, which still feels artificially high after its shares are down over 21% year to date.

Two Key Blue Chip Downgrades

On September 9, JPMorgan Chase & Co. (NYSE: JPM) was downgraded to Neutral from Outperform by Macquarie. The firm’s $70 price target (down from $72) was slightly higher than the prior $67.25 closing price.

Macquarie is concerned that the move for higher interest rate benefits and the ongoing and future cost cutting initiatives are largely priced into the shares at the current prices.

JPMorgan shares were trading at $66.65 on Friday’s close, in a 52-week range of $52.50 to $69.03 and with a consensus price target of $69.80. Jamie Dimon’s bank stock is up only 4% so far in 2016, but it is up 11% over a year ago.

Nike Inc. (NYSE: NKE) has seen its share of downgrades of late. On September 9, Nike’s price target was lowered to $70 from $75 at Barclays, despite an Overweight rating. Nike was downgraded to Neutral from Overweight at Piper Jaffray on September 8, with a $58 price target. That was versus a prior $57.72 closing price. Back on August 26, B. Riley downgraded Nike to Neutral from Buy. Will a coming expected dividend hike help Nike shares?

Nike shares were trading down more than 1% at $55.33 late on Friday. It has a 52-week range of $51.48 to $68.19 and has a consensus price target of $65.79.

Nike may have enjoyed major gains in 2015, but the 2016 picture has been much more rough, with Nike second only to Disney as the Dow’s worst stock performer of 2016, with a year-to-date drop of 9.4%. Its shares were also down about 2.3% over the past week.