The DJIA has finally closed above 16,000 for the first time ever. With a light holiday week coming up and with year-end just around the corner, investors have to consider research ideas that will help them position themselves for 2014. 24/7 Wall St. reviews dozens of Wall Street research reports each morning of the week, looking for new ideas for our readers. Some research notes are stocks to buy and others end up being stocks to sell. Some may be thematic or sector driven. These are this Friday’s top analyst upgrades, downgrades and initiations seen from Wall Street research firms.
Gilead Sciences Inc. (NASDAQ: GILD) was maintained as Buy at Bank of America Merrill Lynch, but the firm substantially raised the outlook to $107 from $96 (versus a $71.63 close). The move is based on strong hepatitis C expectations, now potentially peaking at $10 billion. We also recently featured Gilead as one of the top six biotech growth drivers in 2014 revenues, and this call is far more bullish than the normal call. The consensus upside is closer to $80, and the highest call was already the $96 price target, so this is a street high call and then some.
Gogo Inc. (NASDAQ: GOGO) was downgraded to Neutral from Overweight with a $28 price target maintained at J.P. Morgan. The call is after the shares spiked on Thursday and are trading up yet again close to $30 on hopes of an FCC allowance for cellphone calls in flight, on top of electronic device usage.
Micron Technology Inc. (NASDAQ: MU) was downgraded to Neutral from Buy at Bank of America Merrill Lynch, although the firm’s price target remains $20.50 (versus a $19.99 close). The story has played out and the firm sees limited upside now that shares have more than doubled. Simon Woo and Jennifer Kim said that most of the positives are well priced in and that there are no new upside catalysts at a time when softening NAND pricing brings downside risk.
Target Corp. (NASDAQ: TGT) was downgraded to Underperform from an already cautious Neutral rating at Bank of America Merrill Lynch. The call is based on secular risks, and the price target was cut to $60 from $70, versus a $64.19 close and a 52-week range of $58.01 to $73.50. Merrill Lynch’s Robert Ohmes sees core comparable sales very weak with disappointing recent traffic trends. RED Card Rewards and P-Fresh remodels are adding margin risk to gross margin and operating costs at the store level. Target was also maintained as Hold but with lowered earnings estimates by Argus.
Windstream Holdings Inc. (NASDAQ: WIN) is rarely covered but was maintained as Hold at Argus after weak earnings recently, and the firm lowered 2013 earnings estimates while maintaining 2014 earnings estimates. The only reason this matters to us is because of Windstream’s incredibly high dividend yield, and Argus sees risk here by noting, “Windstream’s vulnerability to a dividend cut despite management’s protestations to the contrary.” Argus did say that its forecast calls for the dividend to remain flat in 2013 and 2014, meaning that the 12% yield is still expected. We recently listed this as one of the top dangerous dividend yields of 10% and higher. Earlier this week Windstream was also featured as one of three companies drowning in debt.
Other analyst calls of interest:
Abercrombie & Fitch Co. (NYSE: ANF) was downgraded to Market Perform from Outperform at Wells Fargo.
AMC Networks Inc. (NASDAQ: AMCX) was started as Buy with a $71 price target (versus a $62.84 close) at Goldman Sachs, and the consensus price target is actually higher at $76, based on “The Walking Dead” and other shows.
Bon-Ton Stores Inc. (NASDAQ: BONT) was raised to Neutral from Underperform and the price target was raised to $15 from $10 (versus a $15.08 close) at Credit Suisse.
Dollar Tree Inc. (NASDAQ: DLTR) was raised to Overweight from Equal Weight at Barclays. Keep in mind that this stock basically fell to $56 from $59 after earnings, and the price target at Barclays was raised to $65 from $52, versus a $60 or so consensus price target.
Nucor Corp. (NYSE: NUE) was downgraded to Market Perform from Outperform at Wells Fargo.
Take-Two Interactive Software Inc. (NASDAQ: TTWO) was downgraded to Market Perform from Outperform at Cowen & Co. The bump from Grand Theft Auto V is now priced in, according to the call.
United Continental Holdings Inc. (NYSE: UAL) was raised to Buy from Neutral and the price target was raised to $44 from $35 at Goldman Sachs.
United States Steel Corp. (NYSE: X) was downgraded to Underperform from Market Perform at Wells Fargo.
YUM! Brands Inc. (NYSE: YUM) was raised to Buy from Hold at Deutsche Bank.
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