The week of September 28, 2019, was a volatile one due to headlines about climate change discussions, the ongoing trade war with China and a potential presidential impeachment. It happened to be a slow week for earnings, and the Dow Jones industrials closed down less than 0.5% and the S&P 500 closed down about 1% for the week. That said, the year-to-date gains of 15% for the Dow and 18% for the S&P 500 have continued to be impressive, considering the slowing global growth story.
With all the news creating a whirlwind for investors, and with the markets still incredibly close to all-time highs, there is no doubt that investors need to figure out how they want their assets positioned for the long haul. Treasury yields are also very low, with not even 1.7% for 10 years and barely 2.1% for 30 years.
24/7 Wall St. reviews dozens of analyst research reports each day of the week to find new ideas for traders and long-term investors alike. Some of the daily analyst calls cover stocks to buy. Other calls cover stocks to sell or to avoid. At the end of each week, we review all these calls and find some patterns that investors might want to pay attention to. The week of September 28 saw many analyst upgrades and positive calls in the so-called blue-chip stocks; that is, large-cap and mega-cap industry leaders.
Investors should only use analyst research reports as a starting place for any investment decision, and investors should be warned that chasing bullish analyst calls during broad sell-offs can be quite painful. Also note that most analyst calls at this stage of the more than 10-year-old bull market come with an implied total return (upside to targets plus dividends) projections of 8% to 10%.
Investors looking for above-market returns are those who are looking for “alpha” in their overall returns. Here are six blue-chip stocks that received very favorable analyst coverage with above-consensus upside projections in the past week. Consensus estimates and price target data come from Refinitiv.
AbbVie Inc. (NYSE: ABBV) was raised to Buy from Neutral at Citigroup on September 26, and the firm raised its price target on the pharmaceutical giant to $90 too. The analysts’ consensus target is $86.47. AbbVie peaked at just over $115 in early 2018, and it has only recovered since its lows this summer. The stock closed out the week at $74.85, after a 1.1% gain on Friday, and it has a 52-week range of $62.66 to $96.60. This call implied upside of about 20%, but AbbVie still has a very high yield of 5.7%. Despite ongoing long-term concerns about generics, it is still expected to grow on revenues and earnings in 2019 and 2020. AbbVie also has a $110 billion market cap.
Apple Inc. (NASDAQ: AAPL) is no stranger to analysts talking its shares up, but on September 24 its analyst coverage was transferred at Jefferies. The consumer electronics and tech giant saw its shares raised to a Buy from a Hold. The firm also boosted the price target to $260. The driving force here has been the iPhone 11, skirting around tariffs and not blowing it in China, and now Apple is planning full-length feature films for mainstream movie theaters.
The consensus target was $224.74 ahead of the call, and the stock ended the week trading at $218.82. If Jefferies is right, that is about 19% upside that can be had, and there is that 1.4% dividend yield to add on for total return expectations. The street-high target is just $10 higher than the new Jefferies target, and it is important to consider that Apple has a $988 billion market cap.