Each morning we give a quick hit to the top Wall Street analyst upgrades and downgrades that we see. As you might expect, some calls are much better, are much more aggressive, or have much deeper insight than others. On Saturday we prefer to give you the biggest standout calls from the week. The top analyst research calls in the last week by our take covered shares of Chimera Investment Corporation (NYSE: CIM), Dendreon Corporation (NASDAQ: DNDN), Krispy Kreme Doughnuts, Inc. (NYSE: KKD), Lululemon Athletica Inc. (NASDAQ: LULU), Mosaic Co. (NYSE: MOS), NASDAQ OMX Group Inc. (NASDAQ: NDAQ) and VirnetX Holding Corp. (AMEX: VHC).
We have given color on each stock and the research call itself. Some of this week’s calls were bullish and some were not bullish at all. Much depends upon the market bias and this was also a week where research calls tended to become less aggressive in general as the three-day weekend neared. That makes the “top analyst calls” stand out from the pack even more.
Chimera Investment Corporation (NYSE: CIM) absorbed a downgrade from Jefferies early this last week as Jefferies cut its rating to HOLD on the high-dividend mortgage REIT with a $3.80 price target. Chimera is sort of like former-parent Annaly Capital Management, Inc. (NYSE: NLY) except that it was set up to buy more distressed mortgage loans when it first started out. The downgrade did not have much impact, maybe 2%, but why this matters so much is that Chimera is one of these mortgage REITS that yields well above 10%.
The belief of Jefferies is that defaults and lower returns from mortgages will cut its income versus expectations. Shares closed at $3.90 on Friday, its 52-week range is $3.51 to $4.36, and the Thomson Reuters consensus target is only at $4.22. As this company is forced to pay out 90% of its income as dividends, this call is one which may matter and it could impact many mortgage REITs.
Dendreon Corporation (NASDAQ: DNDN) was again given some of the most cautious coverage yet from Credit Suisse covered in more detail at BioHealthInvestor.com. Dendreon shares were reiterated as Underperform with a stinky $29.00 pricing target by Credit Suisse. The call here is more than controversial as it is based on competitive threats being underestimated and does not consider much about the competing candidate’s side-effects.
Krispy Kreme Doughnuts, Inc. (NYSE: KKD) was a reiterated call but one we felt was very aggressive considering its history and considering its gains. This one hit a new 52-week high of $8.99 on Friday and that was after a huge gain to $8.05 after earnings on Monday. Shares were at $8.80 late on Friday. What was an impressive call was not just that Zacks kept its #1 (Strong Buy) rating… It was that it still calls it a value stock. If you know the history of Krispy Kreme, this could be considered a very controversial call.