24/7 Wall St. Top Analyst Calls of the Week (T, ADP. BBY, CHK, DNDN, ETFC, JCP, JPM, GS, MS, JEF, KLAC, LIFE, MCD, KORS, NFLX, VPRT, ZNGA)January 28, 2012 by Jon C. Ogg
The 24/7 Wall St. Top Analyst Calls of the Week were in shares of the following: AT&T Inc. (NYSE: T); Automatic Data Processing, Inc. (NYSE: ADP); Best Buy Co., Inc. (NYSE: BBY); Chesapeake Energy Corporation (NYSE: CHK); Dendreon Corporation (NASDAQ: DNDN); E*TRADE Financial Corporation (NASDAQ: ETFC); J.C. Penney Company, Inc. (NYSE: JCP); J.P. Morgan Chase & Co. (NYSE: JPM); Goldman Sachs Group Inc. (NYSE: GS); Morgan Stanley (NYSE: MS); Jefferies Group, Inc. (NYSE: JEF); KLA-Tencor Corporation (NASDAQ: KLAC); Life Technologies Corporation (NASDAQ: LIFE); McDonald’s Corporation (NYSE: MCD); Michael Kors Holdings Limited (NYSE: KORS); Netflix, Inc. (NASDAQ: NFLX); Vistaprint NV (NASDAQ: VPRT); and Zynga Inc. (NASDAQ: ZNGA).
We have covered these in more detailed summaries below and some of these will have links to broader coverage calls.
AT&T Inc. (NYSE: T) has been a bit under pressure and frankly its earnings did not help the situation for the bulls despite some positive metrics. Now there is a bit more caution as the stock was reinstated in coverage on Friday at Credit Suisse: with a NEUTRAL and a mere $30.00 price target. This was one of Jim Cramer’s 4 FAVORITE DJIA PICKS FOR 2012 and it is the highest yield of the DJIA.
Automatic Data Processing, Inc. (NYSE: ADP) met its second quarter earnings estimates this last week but apparently there are some valuation concerns despite the CFO seeing some continued positive trends in the economy. On Thursday there were two downgrades: Cut to NEUTRAL at Citigroup and Cut to MARKET PERFORM at Wells Fargo. Shares were around $57.oo pre-earnings and ended the week down at $55.34 and that may be another failed break-out attempt on the chart as the year high is $57.10.
Best Buy Co., Inc. (NYSE: BBY) is supposed to be down and out with absolutely nothing going for it. In fact, its real risk is that no one under 30 or so may ever go there again. Not so fast, according to Credit Suisse as the firm reinstated coverage with an OUTPERFORM rating and with a call of almost 30% upside to its $32.00 price target (versus $28.21 target from Thomson Reuters. This drove shares up 1.7% on Friday when the broad market was down.
Chesapeake Energy Corporation (NYSE: CHK) is the pure-play when it comes to investing in natural gas. It is no secret that nat-gas is in the tank. Apparently J.P.Morgan just couldn’t take the pressure any longer. The analyst team there cut Chesapeake to UNDERWEIGHT on Thursday… That is just a “Sell” masqueraded by vocabulary.
Dendreon Corporation (NASDAQ: DNDN) was given two calls of caution or at least calls with no enthusiasm despite its shares having more than doubled from the lows. Zacks maintained a NEUTRAL rating with a $14.00 target, while the team at Cantor Fitzgerald started it with only a HOLD rating. Both calls came on Wednesday and Wednesday’s was Dendreon’s highest price of the week.
E*TRADE Financial Corporation (NASDAQ: ETFC) is still supposed to be a buyout target according to the great analyst predictions of 2012, even though the company’s review ended with nothing. Earnings stank up the joint and the promise (or forecast) of exceptionally low rates through 2014 offers no comfort for earnings at online brokers. The stock was cut to NEUTRAL at Goldman Sachs this week. Keep in mind that Goldman Sachs was the firm hired to go find a buyer for E*TRADE. Not promising at all.
J.C. Penney Company, Inc. (NYSE: JCP) is one where the analysts are playing catch-up and they are way late. Still, two calls managed to drive the short sellers to run for cover. Team Ron Johnson was raised to OVERWEIGHT at Piper Jaffray and the stock was maintained as BUY at Argus but with a new $49.00 price target (more detail). Both calls were Friday and the stock rose another 1.7% after a stellar week.
J.P. Morgan Chase & Co. (NYSE: JPM) downgraded its own brokerage firm and investment banking operations this week. At least that is how we refer to it when brokers downgrade each other. The firm cut the Goldman Sachs Group Inc. (NYSE: GS) rating down to NEUTRAL and it also cut Morgan Stanley (NYSE: MS) down to NEUTRAL as well.
Jefferies Group, Inc. (NYSE: JEF) was supposed to have its issues behind it, so we have been told and so we hope. So the stock took a hit on Friday after the equity team at S&P Capital IQ cut the “Hold” rating down to the ugly SELL rating (more details). Was the collusion between the credit team and the equity team at S&P? Standard & Poor’s Ratings Services (on the debt and credit side) placed Jefferies credit rating of “BBB” on “CreditWatch Negative” and that could make Jefferies Junk-Rated if the review results in a downgrade. Shares held up impressively with ‘only’ a loss of 2.4% to $15.81 on Friday.
KLA-Tencor Corporation (NASDAQ: KLAC) was given a an upgrade that was either luck or good, but traders who bought on the call ahead of earnings would have had a quick-money trade. Citigroup raised the rating to BUY on Tuesday. Novellus Systems, Inc. (NASDAQ: NVLS) was also part of the upgrade to BUY as well but its shares lagged.
Life Technologies Corporation (NASDAQ: LIFE) may have jumped on Illumina’s buyout offer, but the stock was also given an upgrade to OUTPERFORM by Leerink Swann this week with a new target range of $59 to $63 for the stock.
McDonald’s Corporation (NYSE: MCD) is facing three issues… valuation, a desire to move into more ‘risk-on’ trades rather than defensive stocks, and a huge gainer. We gave the details on Friday but Mickey-D’s took downgrades this week. MORE DETAILS
Michael Kors Holdings Limited (NYSE: KORS) shares rose throughout the week to $29.85 after analysts gave positive coverage after the quiet period ended. The analysts initiated new coverage as follows:
- OVERWEIGHT with $34 target at Morgan Stanley
- OVERWEIGHT with $32 target at J.P. Morgan
- OUTPERFORM with $34 target at Robert W. Baird
- OUTPERFORM with $36 target at Wedbush Morgan
- BUY with $34 target at Goldman Sachs
- BUY with $24 target at Nomura
- BUY with $35 target at Jefferies
Netflix, Inc. (NASDAQ: NFLX) had a huge week of upside after earnings, despite no earnings power and despite much concern over its future cost structure. Its rating was raised to BUY at Citigroup Raised to Buy at Citigroup with a $130 price target (shares closed at $123.79 on Friday). Gabelli raised its rating to HOLD from Sell; Credit Suisse maintained its OUTPERFORM rating and lifted its target to $125; and Oppenheimer kept its OUTPERFORM rating but raised the target to $130 from $90 on the stock.
Vistaprint NV (NASDAQ: VPRT) never even noticed an awful downgrade on Friday. Zacks Investment Research cut the rating to UNDERPERFORM but it also gave the title of the Bear of the Day to the card printing and online printing outfit. The gain was after the outfit blew past earnings estimates on Friday. Maybe this call from Zacks should have been dubbed as “The Dud of the Day.”
Zynga Inc. (NASDAQ: ZNGA) saw its quiet period end this week and the stock managed to rise back above its $10.00 IPO price throughout the week to close at $10.05 on Friday. Some analysts had started coverage already who were not in the underwriting syndicate but here is the new wave of coverage from this last week:
- OVERWEIGHT with $11 target at Piper Jaffray
- OVERWEIGHT with $11 target at Barclays
- OVERWEIGHT with $12 target at J.P. Morgan
- BUY with $13 target at Goldman Sachs
- NEUTRAL with $10.50 target at BofA/Merrill Lynch
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JON C. OGG