This last week had several key analyst research calls which stood out from the pack and went against the grain. The top research calls we tracked after going through the week’s upgrades and downgrades were seen as follows: Ciena Corporation (NASDAQ: CIEN); Green Mountain Coffee Roasters Inc. (NASDAQ: GMCR); Molycorp, Inc. (NYSE: MCP); Netflix, Inc. (NASDAQ: NFLX); and NVIDIA Corporation (NASDAQ: NVDA). Also noted in these are Starbucks Corporation (NASDAQ: SBUX), Advanced Micro Devices Inc. (NYSE: AMD), Broadcom Corporation (NASDAQ: BRCM), Micron Technology Inc. (NYSE: MU), NVIDIA Corporation (NASDAQ: NVDA), and Semiconductor HOLDRs (NYSE: SMH).
Ciena Corporation (NASDAQ: CIEN) saw a complete change of heart. Raymond James had an Underperform rating, which it took a 180-degree turn on with an upgrade all the way up to “Strong Buy” based upon carrier backbone upgrades in their optical transport and switching systems. It called concerns of a slowing optical market temporary. This call helped it gain 5.5% to $24.93 on Friday versus a close of $28.81 the Friday before. Sector-related weakness was the reason for the drop and this kept the stock from looking even worse for the week.
Green Mountain Coffee Roasters Inc. (NASDAQ: GMCR) went from under $45.00 to over $60.00 before closing at $58.86 on news of its pact with Starbucks Corporation (NASDAQ: SBUX). One analyst had called this one rightly ahead of time was Scott Van Winkle of Canaccord Genuity who stuck his neck out calling for a definite partnership back on February 14… Van Winkle raised his target after the news this week up to $65.00 as he is still bullish. One other call stood out even more sharply this last week after the news was released: Janney Capital raised its target from $62.00 up to $90.00. If Janney is right, there is still 50% more upside left on top what is currently an $8.3 billion market cap.
Molycorp, Inc. (NYSE: MCP) released its results this last week and the stock held up remarkably well. The company will need roughly an additional $118 million of capital for construction but the company highlighted all of its great opportunities and circumstances. Gabelli & Co. noted, “We maintain our BUY recommendation for MCP with a 2013 private market value of $63 when the company should come online with it’s full Phase 2 production of 40,000 metric tons.” Dahlman Rose maintained a Buy rating and $85 target. Molycorp did still close down marginally for the week at $46.82 (from $49.26 the Friday before) despite having briefly challenged the $50.00 mark again.
Netflix, Inc. (NASDAQ: NFLX) saw a rather interesting analyst duel this week. Now that Facebook is getting into movie streaming and as any outfit under the sun can sign streaming movie pacts with movie studios, the fight is picking up on just how much upside is there on Netflix after the monumental move it has made. Gabelli & Co. noted that Netflix already traded at projected forward 2011 multiples of 27-times EBITDA and 52-times earnings, so it reiterated a “Sell” rating. The duel is from Bank of America Merrill Lynch, which reiterated a “Buy” rating and a $275 price target this last week. This is one of those instances where someone will be very right and someone will be very wrong. The stock is so volatile that both analysts could see their way come true over the course of the year.
Semiconductors…. You have to go all the way back to Monday to a tech analyst call from Wells Fargo that put heat on the chip stocks. Wells Fargo cut the semiconductor sector to “Neutral” from “Overweight.” While the move was not on single stocks, it still hit shares and it was interesting that Wells Fargo said 2011 could be at the top of its semiconductor sales. Valuation and performance were noted. The moves on Monday and the moves of the week are listed as well:
- Advanced Micro Devices Inc. (NYSE: AMD) fell 4.2% Monday and fell 6.3% for the week;
- Broadcom Corporation (NASDAQ: BRCM) fell 3.1% Monday and fell 4.5% for the week;
- Micron Technology Inc. (NYSE: MU) fell 5.2% Monday and fell 12% for the week;
- NVIDIA Corporation (NASDAQ: NVDA) fell 1.3% Monday and fell 13.2% for the week;
- Semiconductor HOLDRs (NYSE: SMH) fell 2.8% Monday and fell 6.7% for the week.
Separately from the Wells Fargo call on the sector is a deserved group of analyst notes on NVIDIA Corporation (NASDAQ: NVDA). NVIDIA held its analyst meeting and analysts were grossly under-impressed. One call did standout as a short-term buy rating at Zacks Investment Research.
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JON C. OGG