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After looking through the flow of daily analyst upgrades and downgrades, it turns out that during earnings season there are almost always a few companies scoring multiple analyst upgrades and seeing price target hikes. 24/7 Wall St. reviews dozens of analyst calls each day, and several which out in the upgrade cycle.
Not all these stocks are trading higher, but most were up on the news despite another down-day in the equity markets. We have included trading data and some reference to its trading history, as well as named several firms issuing upgrades or price target hikes.
Tuesday’s full analyst coverage universe included ADT, CBOE, Celgene, JPMorgan, 3M, NetApp, Total, Tyson Foods, Weatherford and many more. After refining that list and revisiting the additional calls, here are the top five stocks receiving multiple analyst upgrades or price target hikes on Tuesday.
Mimecast Ltd. (NASDAQ: MIME) was last seen trading up 3.2% at $34.28 on Tuesday, after closing up 4.2% on Monday after reporting three-cent adjusted earnings per share.
BMO Capital Markets reiterated its Outperform rating on Mimecast and raised its target to $38 from $35. Oppenheimer reiterated it as Outperform and the price target was raised to $38 from $35. Deutsche Bank reiterated its Buy rating and raised its price target to $40 from $35, while Jefferies reiterated its Buy rating and raised its target to $40 from $38. Needham reiterated its Buy rating and raised its target to $40 from $38. And Barclays reiterated its Overweight rating and raised its target price to $36 from $34.
Mimecast now has a 52-week trading range of $19.12 to $35.05, and its prior consensus target price was closer to $36.00.
NetApp Inc. (NASDAQ: NTAP) closed up 2.8% at $57.73 on Monday and was last seen up 1.8% at $58.75 on Tuesday, though it had been indicated up over 3% before the open.
Merrill Lynch raised NetApp to Buy from Neutral with a $74 price objective. Loop Capital raised its rating to Buy from Hold with a $69 price target. NetApp’s target was raised to $62 from $53 at Citigroup, and Maxim Group raised its target from $61 to $69.
NetApp has a 52-week range of $37.43 to $64.06 and it had a consensus target price of $59.41 prior to these hikes.
Qualys Inc. (NASDAQ: QLYS) was last seen trading down 0.4% at $62.35 on Tuesday morning, after Monday’s $0.07 per share earnings report and issuing adjusted earnings guidance for 2018 of $1.39 to $1.44, but the stock had hit a new high of $65.90 earlier on Tuesday morning.
Northland has an Outperform rating and raised its target to $70 from $60. JPMorgan has a Neutral rating but it still raised its Qualys target price to $70 from $65, and Morgan Stanley has an Equal Weight rating but raised its target from $61 to $65. Robert W. Baird raised its target to $67 from $61, and RBC Capital Markets raised its target to $65 from $59. Susquehanna also has a Neutral rating, but the firm raised its price target to $58 from $46.
Qualys has a 52-week range of $33.75 to $65.90 and it had a consensus target price of $60.69.24/7 Wall St.
8 Stocks Under $10 Analysts Want Investors to Buy Into the Sell-Off Carnage
RingCentral Inc. (NYSE: RNG) was last seen trading up 8.6% at $57.95, after beating earnings estimates and raising guidance, and its shares hit a new high of $58.45 on Tuesday.
Jefferies reiterated its Buy rating on RingCentral and raised its target to $64 from $60. Oppenheimer reiterated its Outperform rating and raised its target to $66 from $60. Morgan Staley reiterated its Overweight rating and raised its target to $60 from $50. RingCentral saw several other target price hikes as well: SunTrust Robinson Humphrey to $60 from $50, Craig-Hallum to $65 from $50, Dougherty to $66 from $60, and JPMorgan from $52 to $60.
RingCentral has a 52-week range of $22.55 to $58.60, and it had a $52.30 consensus price target prior to the report and the waves of upgrades.
Varonis Systems Inc. (NASDAQ: VRNS) was last seen trading up 2.4% at $55.20 on Tuesday, after beating earnings estimates on Monday.
Oppenheimer reiterated Varonis as Outperform and the price target was raised to $60 from $57. RBC Capital Markets has an Outperform rating but raised its target to $63 from $55. Other target hikes were seen as follows: Barclays to $58 from $54, Stifel to $60 from $55, and Summit to $63 from $45.
Varonis shares were close to a new high, with a 52-weeek range of $26.35 to $55.85. Its consensus target price prior to these hikes was $55.42.
Monday’s top analyst calls were in shares of American Express, Cisco, First Solar, Goldman Sachs, Nasdaq, Shopify, SunPower, Workday and many more..
WALL ST RETREATS
The Mortgage Bankers Association (MBA) released its weekly report on mortgage applications Wednesday morning, noting an increase of 0.7% in the group’s seasonally adjusted composite index for the week ending February 2. Mortgage loan rates rose again last week on four of five loan types that the MBA tracks. Three popular loan types posted multiyear highs last week.
On an unadjusted basis, the composite index increased by 4% week over week. The seasonally adjusted purchase index was unchanged compared with the week ended January 26. The unadjusted purchase index increased by 7% for the week and is now 8% higher year over year.
The MBA’s refinance index increased by 1% week over week, and the percentage of all new applications that were seeking refinancing slipped from 47.8% to 46.4%, its lowest level since last July.
Adjustable rate mortgage loans accounted for 6.1% of all applications, up 0.4 percentage points from the prior week.
The volatility in the equities markets sent investors looking to bonds last Friday and yields on the 10-year Treasury reached 2.81% on Tuesday, up nearly half a point compared with last year and up 33 basis points in the past month. But as Matthew Graham at Mortgage News Daily points out, actual movement in the mortgage market was somewhat muted:
[S]tocks and bonds are not reliable predictors of each other’s movement. Yes, we definitely saw stocks have a clear influence on bonds and rates [Monday], but that isn’t always going to be the case. It’s worth noting that 10yr bond futures prices didn’t move any more than 1.5% in response to more than a 7% drop in S&P futures.
According to the MBA, last week’s average mortgage loan rate for a conforming 30-year fixed-rate mortgage to its highest level since April 2014, up from 4.41% to 4.50%. The rate for a jumbo 30-year fixed-rate mortgage increased from 4.34% to 4.47%, also a high since April 2014. The average interest rate for a 15-year fixed-rate mortgage rose from 3.85% to 3.92%, its highest level since April 2011.
The contract interest rate for a 5/1 adjustable rate mortgage loan decreased from 3.79% to 3.77%. Rates on a 30-year FHA-backed fixed-rate loan increased from 4.40% to 4.47%
To put the 666-point drop in the Dow Jones Industrial Average in context, the index fell back to its January 11 level. From that point of view, not very much of a correction. The drop took the Dow back to 25,521.
Going forward, the next stop investors might worry about is where the Dow traded at the start of the year, at just above 25,000. It had a wild run from there to 26,616, setting an all-time peak on the last trading day of January.
The index and the broader market have been pressured from three sources:
Earnings, which have been largely good
Worry about a run-up in bond yield, which has been damaging
Strong economic data, particularly the December employment numbers
Taken one by one, earnings have for the most part been strong. This is certainly true among the major tech stocks, some of which are not in the Dow. Microsoft Corp. (NASDAQ: MSFT) is, however. Its strong earnings have driven its share price up 7.3% to $92, despite the recent sell-off. Boeing Co. (NYSE: BA), another Dow component, posted much better-than-expected earnings. Its shares are up just over 18% this year to $349. Apple Inc. (NASDAQ: AAPL), another Dow component, disappointed Wall Street. Its shares are off a little more than 5% to 161. That drop was entirely due to the major sell-off in the market.
Do stronger earnings mean more job additions? Not necessarily, as companies look for ways to improve productivity and margins.
The bond run-up is the most legitimate fear. The 10-year Treasury yields hit a four-year high of 2.85%, mostly because of the January jobs report. If that yield continues to spike up, presumably higher rates would damage an economy built in part on low interest rates.
That brings around the discussion to the jobs report. Ironically what is good for the economy is both good for it as well as bad. The good news was that the economy added 200,000 jobs and continued a nearly unprecedented run of job growth. On the worrisome side, hourly wages rose 0.3% to $26.74.
It appears that the market’s direction will be dragged up and down based on financial and economic factors that are tightly related. What is good for business and workers may end a period of almost no inflation. The arm wrestling has started.
FEBRUARY NEWSLETTER 2
Broadcom Ltd. (NASDAQ: AVGO) will raise its offer for Qualcomm Inc. (NASDAQ: QCOM). According to The Wall Street Journal:
Broadcom Ltd. plans Monday to raise its offer for Qualcomm Inc.to around $120 billion, a person familiar with the matter said, a move aimed at increasing pressure on the takeover target in what would be the largest-ever technology deal.
Apple Inc. (NASDAQ: AAPL) may pass Spotify as the number one music service in the United States. According to The Wall Street Journal:
Apple Music is on the verge of overtaking Spotify AB in U.S. paid subscribers, a sign that the music-streaming world’s dominant force is facing growing competition ahead of its hotly anticipated public stock offering.
Apple Inc.’s AAPL streaming-music service, introduced in June 2015, has been adding subscribers in the U.S. more rapidly than its older Swedish rival—a monthly growth rate of 5% versus 2%—according to people in the record business familiar with figures reported by the two services. Assuming that clip continues, Apple will overtake Spotify in the world’s biggest music market this summer.
“Jumanji: Welcome to the Jungle” was the number one movie over the weekend. According to Box Office Mojo:
Super Bowl weekend is looking mostly as expected with Sony’s Jumanji: Welcome to the Jungle returning to the weekend top spot after a one week hiatus with a domestic cume topping $350 million and a worldwide total over $855 million. Meanwhile, the weekend’s lone new wide release, the gothic thriller Winchester, delivered on expectations with a third place finish while several Oscar contenders continued to play well.
Boeing Co. (NYSE: BA) expects a surge in Asia sales. According to Bloomberg:
Asia Pacific is likely to have 3.5 billion passengers by 2036, adding more than double the forecast for North America and Europe combined, according to estimates by the International Air Transport Association. To meet that demand, Boeing estimates carriers will need 16,050 new aircraft valued at $2.5 trillion by 2036.
Bon-Ton Stores has filed for Chapter 11. According to CNBC:
Bon-Ton Stores on Sunday filed for Chapter 11 bankruptcy protection, making it the largest retailer to do so thus far in 2018.
The regional department store chain, which has dual headquarters in Milwaukee, Wisconsin and York, Pennsylvania, has been struggling to grow sales and move operations online in the face of Amazon, while hampered by a massive debt load.
Bon-Ton said it received a commitment of as much as $725 million in debtor-in-possession financing from existing asset-backed lenders to support its operations.
Tesla Inc. (NASDAQ: TSLA) is building a new kind of power plant. According to CNNMoney:
Tesla already put together the world’s biggest lithium battery in Australia. Now it’s going for another record.
The state of South Australia has announced plans to equip at least 50,000 homes with solar panels and Tesla (TSLA) battery storage units, connecting them all to the electricity grid to form the world’s largest “virtual power plant.”
More than 6,500 homes have already signed up to register their interest in participating, South Australian Premier Jay Weatherill said in a tweet Monday.
MORTAGE RATES UP
Chipmaker Qualcomm Inc. (NASDAQ: QCOM) announced Tuesday morning that it has raised its offer to acquire NXP Semiconductor N.V. (NASDAQ: NXPI) by nearly 16%, from $110.00 in cash per share to $127.50 in cash per share. The increased offer defies one of the conditions set by Broadcom Ltd. (NASDAQ: AVGO) last week when it raised its own bid for Qualcomm from $70 a share in cash and stock to $82 a share.
The increase to Qualcomm’s offer for NXP has satisfied activist investor Paul Singer’s Elliott Management, private equity firm Soroban Capital, and seven other shareholders which have agreed to vote their NXP shares (about 28% of shares outstanding) in support of the sweetened deal. The new offer also lowers the threshold for NXP shareholder approval from 80% to 70%. The offer is set to expire at midnight March 5.
For its part, Broadcom issued the following statement:
By raising its offer for NXP from $110 per NXP share to $127.50 per NXP share, Qualcomm’s board of directors and management have transferred $4.10 per Qualcomm share from Qualcomm stockholders to NXP stockholders, representing approximately $6.2 billion of value. This revised price for NXP is well beyond what Qualcomm has repeatedly characterized as a “full and fair” price. We believe any responsible board would have seriously engaged with Broadcom regarding Broadcom’s value-maximizing offer and the terms of the NXP acquisition, particularly in light of the recent recommendations from ISS and Glass Lewis. Broadcom believes the price increase demonstrates the Qualcomm board’s disregard for its fiduciary duty to maximize value for Qualcomm stockholders.
Qualcomm reaffirmed its “high confidence” that the merger will result in adjusted EPS in fiscal year 2019 of $6.75 to $7.50, excluding royalties and other revenues from Apple Inc. (NASDAQ: AAPL) and other licensees currently disputing payments to Qualcomm. The adjusted EPS figure includes a $1 billion cost reduction program and a boost of $1.50 in EPS from NXP.
The acquisition of NXP has been approved by seven of eight regulatory bodies with only an approval from China’s Ministry of Commerce (MOFCOM) still outstanding. Qualcomm said it is “optimistic it will receive MOFCOM clearance in the near term.”
Qualcomm said it raised its offer because NXP’s 2017 calendar year results exceeded Qualcomm’s model for revenue, gross margin and EBIT. Non-GAAP operating income rose 20% year over year in 2017. The company said it will pay for the acquisition with a combination of cash on hand and new debt, which Qualcomm claims the ability to de-lever over two to three years.
Shares of Qualcomm traded down about 3.5% early Tuesday morning, at $62.60 in a 52-week range of $48.92 to $69.28.
NXP shares traded up about 6% to $125.67, in a 52-week range of $102.19 to $125.93, a high set earlier this morning.
Broadcom stock traded up about 2.3%, at $254.52 in a 52-week range of $202.61 to $285.68.