Merrill Lynch Changes to Small and Mid-Cap Alpha List

Jon C. Ogg

Bank of America Merrill Lynch is making changes to its Small and Mid Cap Alpha List, a list of companies that have $1 billion to $5 billion market caps at the time of inclusion. The firm believes these stocks will outperform the market — hence “alpha” in the name.

The Merrill Lynch team is making key changes to the Smid-Cap Alpha list, adding three names and deleting two names.

Ubiquiti Networks Inc. (NASDAQ: UBNT) was added as Merrill Lynch analyst Tal Liani recently increased his price target to $60 (versus a $47.19 close now). He also highlighted his bullish case for Ubiquiti. The consensus price target is almost $50, and $60 is the street-high target.

Tessera Technologies Inc. (NASDAQ: TSRA) was added as analyst Krish Sankar believes that there are positive upcoming catalysts for the company. The team said that Tessera is an intellectual property company that receives a royalty payment for every chip-scale package its customers ship. After shares closed at $22.91, the consensus price target is up at $28, and Merrill Lynch also has a $28 price target.

IBERIABANK Corp. (NASDAQ: IBKC) was added to the Smid Alpha list as analyst Ebrahim Poonawala recently raised his estimates and price target. The stock was called an out-of-consensus long idea, with several reasons why clients should own it. It is called a growth story trading at value multiples. Merrill Lynch has a $77 price target, versus a consensus price target of closer to $71 and a closing price of $68.47.

The two stocks removed from the Smid Alpha list are Children’s Place Retail Stores Inc. (NASDAQ: PLCE) and Aegerion Pharmaceuticals Inc. (NASDAQ: AEGR). There are simply no expected catalysts to drive these higher, according to the calls, although Children’s Place was maintained as an official Buy rating by analyst Lorraine Hutchinson. Aegerion was also maintained as Buy in the official rating system by analyst Steve Byrne.