24/7 Wall St. Top Analyst Upgrades & Downgrades of the Week (AVL, BRK-B, CRZO, DPZ, GILD, GT, GOOG, GMCR, HPQ, LULU, RIMM, SINA, WDC)

Source: Jon Ogg

This last week had some very interesting and influential analyst calls.  We compile summaries of many top analyst upgrades, downgrades, and initiations each morning from Wall Street research calls and we then review these at the end of each week.  Those calls which stand out the most become the Top Analyst Upgrades & Downgrades of the Week. This was a wild week and ended up being a massive gainer due to the coordinated central banking efforts meant at keeping liquidity in the capital markets in Europe. 

The top calls of the week were seen in the following companies: Avalon Rare Metals Inc. (AMEX: AVL); Berkshire Hathaway Inc. (NYSE: BRK-B); Carrizo Oil & Gas (NASDAQ: CRZO); Domino’s Pizza, Inc. (NYSE: DPZ); Gilead Sciences Inc. (NASDAQ: GILD); Goodyear Tire & Rubber Company (NYSE: GT); Google Inc. (NASDAQ: GOOG); Green Mountain Coffee Roasters Inc. (NASDAQ: GMCR); Hewlett-Packard Co. (NYSE: HPQ); Lululemon Athletica Inc. (NASDAQ: LULU); Research In Motion Ltd. (NASDAQ: RIMM); Sina Corporation (NASDAQ: SINA); and Western Digital Corporation (NYSE: WDC).

We have outlined the research summaries here on each, and we have added color or linked to more details on the calls if applicable. 

Avalon Rare Metals Inc. (AMEX: AVL) is considered the speculative step child in the field of rare-earth metals.  Still, this week came coverage from Citigroup with a “Buy” rating this last Monday. The prior closing price had been $2.63 and the stock ramped mid-week.  The high close was $3.34 on Wednesday even though it closed down over 5% on Friday at $3.05.  The high close in the week would have given a gain of 27% and the gain for the week was still up 16%.  The 52-week range is $2.29 to $10.11, making this a leveraged call with huge upside if things work out at the company.

Berkshire Hathaway Inc. (NYSE: BRK-B) very rarely shows up in research calls, so it was a surprise when Zacks came out and named Warren Buffett conglomerate as the Bull of the Day with a $91.00 target for the next six-months.

Carrizo Oil & Gas (NASDAQ: CRZO) was only a reiterated Buy rating on Thursday by Canaccord Genuity but the implications offer huge upside if the firm is right.  The firm called it a top small cap idea with multiple ways to win and with a “valuation too tepid.” The new $49.00 price target implies upside of 71%. 

Domino’s Pizza, Inc. (NYSE: DPZ) was a cautious call because of valuation, but it may offer insight into how much investors should be willing to pay for the pizza delivery leader.  The stock was started as Hold at KeyBanc on Friday, which was also the day that this hit a 5-year high.  24/7 Wall St. originally went out with the “buy the value here” call early in 2011 when shares were under $20.00 and we had already taken this one off the list because of value concerns.  Friday’s call may point to more and more peak-values here.

Gilead Sciences Inc. (NASDAQ: GILD) was raised this last Monday to the prized Conviction Buy List with a $46.00 price target at Goldman Sachs.  What is interesting about this research call is that it is after the stock dropped because of a very expensive acquisition and it was after three upgrades the prior week from Argus, BMO, and Citigroup. 

Goodyear Tire & Rubber Company (NYSE: GT) is not widely followed by analysts any longer, so it makes coverage stand out when it is covered.  At only about 7-times expected earnings, this was named the value stock of the day at Zacks on Wednesday. The close was $12.81 for the entry the prior day and shares closed up at $14.12 for the week.  Not bad.

Google Inc. (NASDAQ: GOOG) was raised to BUY with a $680 price target by Citigroup this last Monday, after shares had closed at $563.00 the Friday before.  Shares closed just above $620.00 on Friday, making for a price gain of 10% for the week.

Green Mountain Coffee Roasters Inc. (NASDAQ: GMCR) was reiterated as a Buy with $94.00 price target at Canaccord Genuity on Wednesday.  Shares were down around $50.00 before the call and closed at $56.32 on Friday.  The call still implies over 67% upside to Friday’s closing price, but that is assuming the stock can ever gain favor again.  This may be one of those calls that feels like hitting yourself in the forehead with a hammer. Or, maybe not.

Hewlett-Packard Co. (NYSE: HPQ) saw two different calls, one of which was lucky and one of which seems to offer very little.  On Tuesday it was Raised to Outperform at RBC right before the huge rally, but S&P also downgraded its corporate credit rating this week.

Lululemon Athletica Inc. (NASDAQ: LULU) tanked on Thursday after revenues disappointed, but shares recovered handily.  Then on Friday we saw literally three analyst upgrades in unison, helping little Lulu gain another 5.3% on Friday and all of those upgrades on valuation gave price target objectives slightly above the consensus price target.

Research In Motion Ltd. (NASDAQ: RIMM) has punished all of the analysts and investors who have tried to defend the stock or who have tried to support the stock.  This week’s warning was apparently the final straw for Scotia, which finally downgraded the smartphone maker to Sector Perform from Sector Outperform.  Shares closed down almost 10% on Friday at $16.77, but Scotia decided to raise the rating back on September 6 when shares were just north of $30.00.  Ouch!  That call didn’t work out too well, did it? Another unlucky call came on Tuesday where RIM was Raised to Market Perform at Bernstein, but that was from a prior Underperform rating.

Sina Corporation (NASDAQ: SINA) had been under pressure of late because there were rumors that Muddy Waters (short selling service) was downgrading the stock.  Ultimately, that was denied and shares recovered handily.  On Friday came word that  Raised to Buy with a price target of close to $95.00 at Deutsche Bank.
 
OK, we bashed a couple of analysts this week for very poorly timed calls.  Unfortunately, it can happen to the best of analysts and things just happen.  One call from the previous week really stood out and that was an analyst upgrade from Barclays Capital from July 21 where the firm raised the rating of Western Digital Corporation (NYSE: WDC) to Overweight due to valuation in the midst of the Thai flooding woes.  We found out this week that, as we expected, WD was gettings its Thai operations opened a bit sooner.  This research call was down 4% at the worst closing point in the last two weeks but the stock was up 20% from the listed entry by the end of this last week.  Kudos. 

JON C. OGG