Macy’s was given a theoretical value of $125 per share by Starboard if it could sell off or unlock the value in some of its prime real estate assets. With a share price of $69.06 currently, investors should consider that the consensus analyst price target is $68.53 and the highest analyst price target is up at $82.00. In short, this is far more aggressive than Wall Street analysts will go. Activist math is sometimes very different from the math the rest of the planet uses.
Vital Therapies, Inc. (NASDAQ: VTL) is unknown to many investors and its market cap is under $400 million. Canaccord Genuity reiterated its Buy rating on the last day of July with a whopping $35 price target. Vital Therapies closed at $16.22 on Friday, up 18% from the $13.73 close after its loss was reported.
Canaccord Genuity said it expect positive top-line data in the third quarter of 2015. Its analyst John Newman said:
We continue to expect positive Phase 3 data for ELAD in Alcohol Induced Liver Decompensation (AILD) and believe ELAD will show a statistically significant Overall Survival benefit at day 91 vs. placebo. Importantly, the Phase 3 study includes strict entry criteria in order to make sure patients are not too healthy to recover without treatment, but also not too ill such that they have no chance of benefit regardless of treatment. We believe the study is properly powered to show a positive result.
California Resources Corporation (NYSE: CRC) is another swing for the fences call from BofA Merrill Lynch. The firm maintained its Buy rating in early July, and kept a $15.00 price objective. That compares to a $4.23 share price at the end of the month – down from $5.50 right after the call was made. Needless to say, the price of fossil fuels here is simply grinding against what a research report can highlight as value.
Merrill Lynch’s draw here is that the annuity value shows at the simplest level a $15 value, and we gave this one more in-depth coverage at the time. Will that ‘annuity value’ hold up at lower energy prices? Well, we’ll leave that verdict up to you but we would highlight that California Resources has a consensus price target of $8.75 and that $15.00 target is of course the highest target of the six analysts following the stock. If you want more doubt here, what does a short interest of 30.3 million shares tell you against an average daily volume of about 6 million shares?
Its 52-week range is $3.75 to $9.87. California Resources is and oil and natural gas exploration and production company which focuses its efforts in the State of California, with 68% of its reserves in the San Joaquin Basin and 22% of its reserves in the Los Angeles Basin.
RISKS ABOUT STOCK CALLS TO DOUBLE OR RISE MASSIVELY
As of August 1, only one member of the S&P 500 has doubled so far in 2015 – and only 2 members of the S&P 500 are up over 100% from this time a year ago. That is your proof that it is very rare for a stock to double. Now consider that the bull market is nearly six and a half years old – stocks have already run higher, so finding a stock called on to double is even that much more tricky.
Another consideration about analyst calls for a stock to double is that it generally is the most aggressive analyst of peers that has the call for a double. Analysts are often wrong, and many have no more real information to base their calls on than the other most sophisticated investors have on their own.
Needless to say, there are many risks above and beyond traditional market risk to consider here. 24/7 Wall St. has presented the other side of the coin here as well, in some cases pointing out the risk or the caveats. We wouldn’t want our readers thinking we believe every analyst call just because someone else said so.