Investing

5 Surprisingly Strong Dow Stock Upgrades, Plus Berkshire Hathaway

This past week was an incredible one, but not on the overall weekly market performance. The big news is that stocks closed out the first quarter with a slight gain. Not many people — like almost nobody — expected that during the 2016 selling climax in mid-February.

Now investors have to consider whether they should be back to buying the dips or selling the rallies. Buying the dips worked for the second half of the first quarter in 2016, after the first six weeks of selling into every rally. Still, buying the dips had been the theme for more than four years.

24/7 Wall St. reviews dozens of analyst upgrades and downgrades each day of the week. This becomes hundreds of analyst calls each week. It turns out that there were five big Dow Jones Industrial Average components that received key analyst upgrades this last week.

Some upgrades were on the price targets rather than on the official ratings, but these were very important in their scope. These are the top five analyst upgrades for Dow stocks in the week ending April 1, 2016. Also included is a huge thumbs-up for none other than Warren Buffett.

Apple

While Apple Inc. (NASDAQ: AAPL) has moved beyond the FBI unlock issue, its shares have risen. After analysts were positive for different reasons the prior week, Cowen came in mid-week and raised its official rating on Apple to Outperform from Market Perform. This was after having been on the sidelines for some time. Cowen also raised its price target to $135 from $125 in the upgrade.


24/7 Wall St. covered this upgrade in detail and also covered which next company might become a huge Apple supply winner (again, might). RBC Capital Markets has also forecast that Apple may be on the verge of an even larger buyback and dividend hike.

Apple’s shares briefly hit $110.00 during the week before some profit taking came in. That put Apple at almost the midpoint of its 52-week range of $92.00 to $134.54. Apple shares had been down 18.0% from the peak, and were up about 20% from the low. Shares closed around $109.99 on Friday, and the new consensus analyst target price is $134.35.

IBM

International Business Machines Corp. (NYSE: IBM) is perhaps one of the easiest tech stocks to hate and pick on. After all, there has been no growth, and even the earnings per share growth engineering fell short. Still, it seems that everyone just became too negative against Big Blue, but shares have rallied from under $120 at the lows in early 2016 to back over $150.00

Morgan Stanley’s Katy Huberty reiterated an Overweight on Thursday, but the big call was that the price target was raised to $168 from $140 — with a caveat that the most bullish IBM scenario under Watson and other growth initiatives could take shares back up to $195 or so.

And in the “just one more thing” presentation that has become popular these days: RBC Capital Markets maintained its Sector Perform rating but raised its price target to $155 from $135. IBM now has even outperformed on the 2016 bullish and bearish case above the $148.85 consensus price target at the start of this year.

Verizon

On Wednesday, Verizon Communications Inc. (NYSE: VZ) got a big nod, with RBC Capital Markets maintaining its Outperform rating. What stood out here was that the price target went up to $58 from $50 in the call. It is unusual for analysts to raise their price targets by 16% for Dow stocks in general, and even more rare to see that for established telecom behemoths. RBC was positive on rival AT&T as well, but the big price target upgrade for Verizon should speak for itself.

Now let’s consider what the $58 target really looks like on Verizon. Thomson First Call has a consensus analyst target price of $51.40, but this is now a match for the highest official price target on Verizon by all analysts covering the stock.

If you want a tempering view for Verizon here, S&P Capital IQ gave only a $48 target last week. It discussed flat sales for 2016 and 2017, after sales rose 3.6% in 2015. Verizon’s shares were trading at $54.01 on Friday’s close, but the 52-week high of $54.37 was just seen on Wednesday, and the chart represents this as a 10-year high if you don’t factor in dividends. Keep in mind that Verizon’s yield is north of 4%.

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