8 Fresh Analyst Picks Called to Rise 50% to 100%

October 24, 2015 by Jon C. Ogg

This last week was another solid week in the markets, led by promises of more quantitative easing from the European Central Bank, a rate cut in China, and strong major technology earnings here in the United States. Investors keep proving that they will buy stocks on weakness, and suddenly the DJIA and S&P 500 are back within a few percentage points each from their all-time highs.

24/7 Wall St, reviews dozens of analyst research reports each day of the week to fin hidden value and upside for its readers. Some of these analyst calls cover stocks to buy, and generally most buy ratings come with upside of 8% t 15% in the large-cap Dow and S&P stocks.

There are other analyst calls, some even in large-cap or S&P stocks, where analysts are far more aggressive — with upside nearing 50%, or even 100%. These calls are often outlier calls, or sum-of-the-parts calls that are not always based upon cash flows, dividends or just simple earnings power ahead.

The one caveat that investors cannot ignore at all is that the more aggressive analyst calls are often against the herd, and sometimes they are such outliers that they almost are hard to follow. Such is life. More implied upside almost always means more risk. None of these stocks would be deemed suitable for conservative investors or any ‘widows and orphans’ accounts. There are only for the biggest risk taking investors who can stomach severe losses if the underlying these from each analyst report turns out to be wrong or if the analysis proves to be false.

With those caveats in hand, here are eight analyst calls from this last week with upside projections of close to the 50% to 100% made in the calls.

Bluebird Bio, Inc. (NASDAQ: BLUE) was given a ‘double your money’ research call on Tuesday, but investors need to understand just how much this stock has sold off here. Oppenheimer started coverage with an Outperform rating and assigned a $162.00 price target after noting that sell-off has gone too far versus Bluebird’s upside and growth opportunity.

Bluebird’s consensus price target has started coming off drastically (from over $200 early in the week to under $190) and we would expect that to continue since shares went out at $83.10 on Friday. Its 52-week range is $35.00 to $197.35.

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Callaway Golf Company (NYSE: ELY) was reiterated as Buy with a $16.00  price target at Jefferies this week. That was versus a prior $8.94 close and versus a $9.68 close on Friday, so this is not quite a “double” prediction but well over that 50% upside threshold. Again, that is implied and far from assured.

Jefferies noted strong results and a faster turnaround – oh and the Topgolf stake isn’t hurting as it has rekindled what was a continually declining interest in golf. The report said: Going forward, we see a number of positive catalysts providing further upside potential, which keeps us positive on both the stock & the golf industry as a whole.

CIT Group Inc. (NYSE: CIT) may have said that John Thain would retire as CEO, but the lender was given some key upside based upon its value and opportunities ahead. CIT was raised to Outperform from Neutral at Macquarie on Thursday, and the firm’s price target of $65.00 compares to a prior close of $39.88 before the call and a close of $45.76 on Friday.

This was well over 50% upside when the call was made, and is now close to 50% after such a strong rally. CIT has a consensus target closer to $52.00 and a 52-week range of $39.18 to $49.98.

Clean Diesel Technologies Inc. (NASDAQ: CDTI) was started as Buy at Rodman & Renshaw and H.C. Wainwright on Tuesday, and the firms both reportedly assigned $3.00 price targets. The long and short of the matter was that this implied upside of roughly 80% from the prior $1.61 close, and the analyst calls were largely overlooked by the investment community when made.

Clean Diesel may have suffered from its name having “Diesel” in its title. The company has a 52-week range of $1.45 to $3.97. This was almost $2.00 just a month ago. Shares closed at $1.67 on Friday, even after news that it named a new CEO.

DepoMed Inc. (NASDAQ: DEPO) was reinstated as Buy at Janney Capital Markets on Tuesday. The firm issued a fair value estimate of $35.00 at the time, versus a prior close of $20.60 and versus a $16.94 share price as of Friday’s close. The $14.00 to $33.74 range of the last 52-weeks, and the sell-off this week, is a result of drug pricing coming under fire now.

Janney said that rising prescription growth for Nucynta and an improved formulary status are drivers for DepoMed as well: The buyout offer from Horizon Pharma has taken market focus off improvements in the underlying fundamentals for the business. Prescription data points to solid Nucynta relaunch and we have found evidence for positive changes in formulary status for key products in 2016.

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GoDaddy Inc. (NYSE: GDDY) was given upside of nearly 50% late in the week after the website hosting giant was started with a Buy rating and was assigned a $40.00 price target at UBS. GoDaddy’s prior close was $26.86 and it had a consensus price target of $33.00 at the time. Despite a $4.4 billion market cap, GoDaddy has a consensus estimate for a loss of -$0.82 EPS in 2015 and is expected to earn a mere $0.01 in EPS in 2016.

After closing at $28.17 on Friday, that 50% threshold is going to be only available on pullbacks and GoDaddy has a post-IPO range of $20.00 to $33.00. Investors need to keep in mind here that UBS put its price target  $4.00 higher than the prior street-high analyst price target of $36.00.

Pandora Media Inc. (NYSE: P) was absolutely gutted after a weak earnings reaction took more than one-third out of the stock. Pandora closed down 35% at $12.39 versus a prior 52-week range of $13.30 to $22.60. Most analysts were more than cautious here with downgrades seen from Oppenheimer, Pacific Crest, RBC, Piper Jaffray, and so on.

Canaccord Genuity was the outlier here, maintaining its Buy rating but with a lower target price of $24 from $26 for Pandora. Its report does acknowledge the setbacks and admitted to it challenge some of its bullishness. Still, they are more inclined to buy the stock on the weakness than to sell. Again, they were the outlier here.

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Windstream Holdings, Inc. (NASDAQ: WIN) is one of the telecom and communications mega-dividend yield stocks that is harder to evaluate on a dividend versus earnings basis. That is why the analyst community is so mixed. Still, a data center sale earlier this week brought out a “refresh view” from the BofA Merrill Lynch analyst team — with a sum-of-the-parts analysis (rather than cash flow or earnings analysis) generating a $16.00 price objective with the Buy rating. Some is due to its ownership and some is due to the exit of this business.

24/7 Wall St. would point out that the $7.18 close on Friday is versus a $7.42 consensus analyst target. We covered this analyst report in detail this week and would point out to readers that Merrill Lynch’s view is a total outlier call with the highest price objective by far. Still, back in August Windstream was one of the featured ten companies that had decided to ignore the market’s massive selling pressure.