Lam Research Corp. (NASDAQ: LRCX) was another upgrade, and Credit Suisse has a $245 price target, which implies close to 18% upside. Lam also has a dividend yield of almost 0.9% to add in for total return.
Credit Suisse believes that investors and analysts in general are missing the growth and cash return potential for Lam Research, as well as mispricing the stock as it is a margin-protected way to play the big data growth. The firm sees it winning from the 3D NAND transition and sees it poised to benefit from the cyclical recovery in memory in 2017. Another boost is that roughly 20% of the company’s market cap is net cash, and it could return 50% of market cap by 2020 if it chooses to.
Lam Research shares traded at $205.46. The 52-week range is $94.89 to $210.45, and the consensus price target is $226.05.
Starwood Property Trust
Starwood Property Trust Inc. (NYSE: STWD) also was an upgrade to Credit Suisse’s number-one top picks. The firm’s $25 price target implies upside of over 16%, but Starwood Property Trust also comes with a dividend yield of almost 9%, which would generate closer to 25% total return if the firm is proven to be correct.
The firm considers this trust as having a multi-cylinder earnings stream and being the best positioned among its peers to take advantage of the current environment. Their top picks summary noted:
In our view, this diversified approach will allow the company to protect earnings and book value through the commercial real estate cycle, and warrants a premium valuation to book value. Additionally, the asset-sensitivity of the portfolio sets up Starwood Property Trust to excel in a rising rate environment.
Shares of Starwood were last seen at $21.45. The 52-week range is $21.11 to $23.01. The consensus analyst target is $23.86.
And Vertex Pharmaceuticals Inc. (NASDAQ: VRTX) was upgraded to Credit Suisse’s number-one top picks. The $195 price target at the firm implies upside of 30%, if the firm is proven to be right. This pick also seems opportunistic, considering how much biotech’s luster has worn off in the current political and social concerns about health care and drug prices.
Credit Suisse said this:
With the current biotech pullback, we think Vertex shares could see upside over next 12 months to 18 months as clinical pipeline story takes shape with label expansions, 661 data that could capture some Orkambi patient discontinuations and most importantly early proof of concept on the triplet over 2017.
Vertex shares recently traded at $147.77, in a 52-week range of $71.46 to $167.86 and with a consensus price target of $179.12.