Investing

The Fed's Front-End Inflation Fighting Plan; Analysts Upgrade or Downgrade Electronic Arts, Kroger, Union Pacific and More

Chris Lange

Published: April 22, 2022 1:10 pm

Markets were crumbling on Friday afternoon, with each of the major averages down well over 1% for the day. It has been a steady decline since the open, and the bottom for the day may not even be in sight. This all comes after Federal Reserve Chair Jerome Powell made some hawkish comments on the future of interest rates.

The Fed’s next meeting is on the books for May, and these comments suggest that a 50-basis-point rate hike is on the way as well. At an International Monetary Fund panel on Thursday, Powell suggested that this rate hike was “on the table” and further that the Fed was committed to fighting inflation via “front-end loading” methods.

Even though inflation has crept up to its highest level in over 40 years, and the Fed previously dismissed it as “transitory,” it seems a little late for “front-end loading.” The question now becomes what the impact will be on the markets in general and how much of this move has been priced in already. Considering this, it makes for a real stock-picker’s market.

24/7 Wall St. is reviewing additional analyst calls seen on Friday. We have included the latest call on each stock, as well as a recent trading history and the consensus targets among analysts. Note that analyst calls seen earlier in the day were on Alcoa, JetBlue, Lululemon, Netflix, Tesla and many more.

Alkermes PLC (NASDAQ: ALKS): Goldman Sachs resumed coverage with a Buy rating and a $35 price target. The 52-week trading range is $20.76 to $33.00, and shares were trading near $28 apiece on Friday.

Callaway Golf Co. (NYSE: ELY): J.P. Morgan resumed coverage with an Overweight rating and a $30 price target. Shares were near $22 on Friday. The 52-week range is $20.45 to $37.75.

Canadian National Railway Co. (NYSE: CNI): Raymond James downgraded the stock to a Market Perform rating from Outperform. The 52-week trading range is $100.66 to $137.19, and shares were trading near $125 on Friday.

Electronic Arts Inc. (NASDAQ: EA): Bernstein initiated coverage with an Outperform rating and a $157 price target. Shares were trading near $125. The 52-week range is $117.58 to $148.93.

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Kroger Co. (NYSE: KR): Exane BNP Paribas upgraded the shares to a Neutral rating from Underperform and has a $60 price target. The stock traded near $57 on Friday. The 52-week trading range is $35.60 to $62.78.

Lands’ End Inc. (NASDAQ: LE): Craig Hallum lowered its Buy rating to a Hold and cut the $35 price target to $15. The stock traded near $14 on Friday. The 52-week trading range is $13.95 to $44.40.

Paylocity Holding Corp. (NASDAQ: PCTY): Wolfe Research upgraded it to Outperform from Peer Perform and raised the $220 price target to $240. The stock traded near $193 on Friday. The 52-week trading range is $154.26 to $314.49.

Union Pacific Corp. (NYSE: UNP): UBS’s downgrade was to Neutral from Buy and included a price target cut to $267 from $283. The 52-week trading range is $195.68 to $278.94, and shares traded near $238 apiece on Friday.

Investors can expect more inflation and rising interest rates, and it makes sense now to stay clear from the momentum and meme stocks. Five Dow Jones industrial average stocks are solid ideas in what could continue to be a very challenging year for stock investors.

Semiconductor stocks has fallen sharply since a December peak. Analysts at Jefferies believe the bottom is near and that AMD, Marvell Technology, Nvidia and these other semiconductor stocks will be big winners.