The week ending on Friday, November 13, 2020, was riddled with surprises. The election being contested and the surging COVID-19 cases hardly seemed to matter to the financial markets. The earnings-reporting season has more or less come to a close, but the major companies have tended to look better after earnings than was expected heading into the season. And news of a 90%-plus success rate in a COVID-19 vaccine program has created a lot of excitement that the economy can return to normal in 2021.
24/7 Wall St. has been looking beyond the election noise, beyond the choppy economic reports and even beyond the rapid rise of coronavirus cases. There is a lot of faith that has to be held to take that view at the current time, but that is what professionals are supposed to try to get right.
Our daily coverage of analyst upgrades and downgrades ends up with a tally of hundreds of analyst calls evaluated each week. Some are stocks to buy and others are stocks to sell. Investors should never just blindly follow an analyst call as the sole reason to buy or sell a stock. That said, what happens when you see a slew of analysts jump on stocks or when they keep following a trend?
The week of October 13 brought a focus on five of 30 Dow Jones industrial average stocks. Some excitement finally may be headed to some, and the upside for others may now continue. Again, that’s assuming the analysts are right. Analysts are sometimes just like the rest of the investing community in that their timing is off or they just simply misread the situation.
Here are five Dow stocks that received handy upgrades, based on catalysts, which investors might want to pay close attention to. Consensus analyst prices and estimates are from Refinitiv.
Cisco Systems Inc. (NASDAQ: CSCO) had been down 1.7% at $38.67 ahead of Thursday’s earnings report, but its shares traded up almost 7% at $41.30 late on Friday. While Cisco did beat earnings and managed to keep guidance firm, the big side of the news is that it was talking up the tech spending environment. Cisco had a $46.93 consensus target price ahead of its report.
While the firm noted that weakness persists, security was deemed to be a bright spot, and the firm also pointed out that Cisco’s orders trends had stabilized and the backlog was strong. The firm’s Buy rating also talked up Cisco’s upcoming product cycles driving growth and cited a very reasonable valuation when many tech valuations are sky high. Credit Suisse maintained its Neutral rating on Cisco, but the firm still boosted its target to $41 from $36.
Home Depot Inc. (NYSE: HD) was raised to Buy from Accumulate with a $315 target price (versus a $277.75 prior close) at Gordon Haskett on October 12. Home Depot had a $303.87 consensus price target at the time. Before thinking this was just a positive sector call, note that it was not. Lowe’s Companies Inc. (NYSE: LOW) was downgraded to Accumulate from Buy at Gordon Haskett. One issue driving the report was that Home Depot shares had fallen from about $284 last Friday down to about $270 on Monday.
The coronavirus has kept people at home, and that has driven the home improvement space into a euphoric business of late. The coronavirus vaccine might curb that, but a vaccine and the impact is still months away from keeping people from getting sick. What happens if another lockdown, which has been reported as a possibility, comes about? More projects to do at home, and Home Depot is absolutely an essential business.