Healthcare Business

Big Stocks, Big 'Fair Value' Upside (LOW, SONC, DFS, UNH, KLAC, AMAT, GE, DVN, APOL, NRG)

Many analysts have been updating their price targets on various key stocks, and it is always interesting to see what the truly independent research analysts have for price targets on major stocks.  Morningstar has covered many key stocks in many key sectors this week and we wanted to take a look at each sector to see which had the most upside.  Some of the names we pulled were Lowe’s Companies (NYSE: LOW), Sonic Corp. (NASDAQ: SONC), Discover Financial Services (NYSE: DFS), UnitedHealth Group, Inc. (NYSE: UNH), KLA-Tencor Corporation (NASDAQ: KLAC), Applied Materials Inc. (NASDAQ: AMAT), General Electric Co. (NYSE: GE), Devon Energy Corporation (NYSE: DVN), Apollo Group Inc. (NASDAQ: APOL), and NRG Energy, Inc. (NYSE: NRG).

We have pulled a few of the major names here to highlight the largest upside in each category, and provided a direct link for each to see the logic and reasoning behind the calls from each individual analyst.

In the consumer sector, both Lowe’s Companies (NYSE: LOW) and Sonic Corp. (NASDAQ: SONC) were both shown to have close to 50% upside to the fair value estimates.

In the bank and financial stock sector, Discover Financial Services (NYSE: DFS) was given a fair value that is nearly 80% higher than today’s prices.

Imagine healthcare stocks having upside.  Morningstar has tried to smooth out the effects of the healthcare reform and has the view that UnitedHealth Group, Inc. (NYSE: UNH) was about 50% higher to a fair value estimate.

In technology, Morningstar saw close to 50% upside to fair value in KLA-Tencor Corporation (NASDAQ: KLAC) and Applied Materials Inc. (NASDAQ: AMAT).

In the industrial sector, Morningstar sees General Electric Co. (NYSE: GE) having more than 35% upside to fair value.

In the energy patch, Morningstar showed that Devon Energy Corporation (NYSE: DVN) has almost 50% upside to an implied fair value estimate.

In the business and financial services picks, the pick of Apollo Group Inc. (NASDAQ: APOL) seems unusual considering its recent woes despite beating earnings.  But Morningstar gives close to 70% implied upside to a a fair value estimate here.

For the lagging utilities sector, Morningstar believes a fair value estimate for NRG Energy, Inc. (NYSE: NRG) is approximately 75% higher than current share prices.

Estimates fair value prices are those of Morningstar, which we used to derive the implied upside to today’s share prices.

Jon C. Ogg

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