Costco Wholesale Corp. (NASDAQ: COST) shares were up 1.3% at $289.00 ahead of earnings on Thursday, but despite being down initially on less robust sales, the stock traded up 0.7% at $291.00 late on Friday. Multiple firms raised their target prices on the continued belief that Costco’s higher-income base customers can handle the slower economy and that the big-box retailer can survive and thrive in the Amazon/Walmart-run retail economy.
Merrill Lynch reiterated its Buy rating and raised its price objective to $320 from $310. BMO Capital Markets reiterated its Outperform rating and raised its target to $320 from $275, and RBC Capital Markets reiterated its Outperform rating and raised its target to $329 from $321. Costco’s consensus target price was $292 ahead of these target hikes.
Here are how two of the already-bullish calls were looking ahead of earnings: JPMorgan had an Overweight rating with a $330 target, and UBS had a Buy rating with a $335 target.
PepsiCo Inc. (NYSE: PEP) managed to closed up 3% at $137.93 a share on Thursday after earnings, and it rose another 1% to $139.40 during Friday’s trading session. With a 52-week range of $104.53 to $139.75 and a prior consensus target price of $136.00, PepsiCo saw multiple target hikes after its report.
Merrill Lynch reiterated its Buy rating with a $142 price objective. While Citigroup only maintained its Neutral rating, it still lifted its target price to $143 from $139 in the call. Morgan Stanley had the big-bull call, reiterating its Overweight rating and raising its target to $154 from $149. CFRA reiterated its Buy rating and raised its target to $150 from $145.
United Technologies Corp. (NYSE: UTX) is set to merge with Raytheon Co. (NYSE: RTN). While some already view this merger positively, and with UTC being more than twice the size of Raytheon, Credit Suisse issued a very positive view on both stocks. The firm gave UTC a new Outperform rating and assigned a $164 target price. Raytheon was started as Outperform with a $230 target price in the same call. Its share price was $193.00 late on Friday.
UTC was at $133.79 ahead of the October 3 analyst call, but the sell-off in the market acted as a load and the 1.2% pop late on Friday still had shares at $132.87. This implies more than 25% upside, if you add in the 2.2% dividend yield, and the call is about $9 higher than the consensus price target.
Here is the post-merger summary, adding up the parts: Pratt & Whitney’s wave of deliveries is laying a foundation for long-term growth. Collins Aerospace is well positioned for aftermarket upside. Carrier is seeing more excitement after a product refresh. Otis is seen with a sustainable margin profile that has growth under peers. And the new earnings estimates are $8.84 EPS for 2020 and $9.92 EPS for 2021.
The mega-cap and blue chip picks from the prior week included AbbVie, Apple, Comcast, Danaher, Disney and Kimberly-Clark. Also worth a looking, here were the 11 big dividend hikes from September that were just too large to ignore.
Friday’s (October 4) top analyst upgrades and downgrades included Ambarella, Apple, Comcast, Costco, CSX, Domino’s, Dish Network, Etsy, HP, 3M, Nike, PepsiCo, Snap and many more. Full ticker list: AMBA, AAPL, CMCSA, CLR, COST, CSX, DISH, DPZ, DOVA, SATS, ETSY, FIVE, HPQ, PODD, JHG, MMM, NKE, PEP, SNAP, TNDM, VMW.