These 3 Stocks Are Being Upgraded/Downgraded By Five-Star Analysts
The majority of the time analysts reiterate their stock recommendations. So when a stock is upgraded, or more rarely, downgraded, the market takes note. This is especially the case for a market-leading stock like Apple. We used TipRank’s Daily Analyst Recommendations tool to find the most interesting stock ratings so far this week. TipRanks scans the web for ratings from over 4,500 Wall Street analysts and then ranks these analysts based on their success rate and average return. The result: we can search for specific ratings changes from the best analysts on Wall Street.
So we used the following filters on the Daily Analyst Recommendations tool:
As you can see, this means that only upgrades or downgrades from five-star analysts will now be displayed. We also selected all sectors and all market cap sizes, but if you prefer you could limit your search to a specific sector or market cap.
The search pulled up four stocks, one downgrade and three upgrades. We take a closer look at three of these stocks here:
Downgrade - Apple (AAPL)
KeyBanc analyst Andy Hargreaves made headlines this week when he made the rare move of downgrading his Apple rating to hold. We can see from Apple’s stock analysis page that this is an unusual decision- out of 31 ratings made on the stock in the last three months only five are hold ratings and indeed, the last time the stock was actually downgraded was five months ago (by CLSA’s Avi Silver).
So what has shifted Hargreaves from his bullish position? He thinks the valuation of the stock is now super-high, leaving no room for error or disappointment: “We believe AAPL anticipates strong performance in the iPhone 8 cycle, while providing relatively little weight to risks through the cycle or the potential for iPhone sales to decline in FY19” says Hargreaves.
Potential risks exist around “gross margins, elasticity, supply issues, or the likelihood for declines beyond the iPhone 8 cycle” he adds. Hargreaves’ 12-month AAPL price target is now just $145- almost $10 below its price now of $154.45, and considerably below Apple’s average analyst price target of $167 (an 8% upside from the current share price).
Also note the timing- his downgrade came just as hype was growing for Apple’s Worldwide Developer’s Conference that is happening now in San Jose, California. You can read more about Apple’s keynote speech, its latest product releases and reactions from other top analysts here>>>
Upgrade - Yelp Inc (YELP)
Merrill Lynch analyst Justin Post is now more confident on the outlook of crowd-sourced review site Yelp. Shares in Yelp plunged last month after the stock missed first quarter consensus with revenue of $197.3 million vs the expected $198.3 million. However, Post says consensus estimates going forward are now more achievable, and better quarterly net account adds and improved execution can take shares higher. Indeed, his $35 price target predicts 25% upside for the stock over the next 12 months.
Yelp has a more muted moderate buy analyst consensus rating on TipRanks with an average analyst price target far below Post’s of $33.58- although still a 13.45% upside from the current share price of just $29.60.
Upgrade - Outfront Media (OUT)
Managing director of Loop Capital Markets, David Miller, just upgraded his Outfront Media rating to buy. He sees OUT, the billboard and transit display giant, as having substantial upside of 21% from its current $22.25 share price. After extremely poor Q1 results, the stock dropped by 13%. However with prices still depressed, Miller believes OUT (which became a REIT in 2014) now has a good risk/ reward balance.
“Investors who go long today not only pick up a discounted valuation at 11.1x 2017 AFFO and 10.3x anticipated 2018 AFFO (most Housing/Apartment REITs trade at 16.0x forward AFFO), but also get paid while they wait, as that $1.44/share dividend is only likely to be cut under the most draconian of economic conditions” says Miller.
Disclaimer: Tip Ranks is an independent cloud based service that measures and ranks digitally published financial ...
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