Analysts have been sending out their research reports to their clients again this week. In the following, a review of the most important upgrades for the week of April 16-20.
Nomura raised its advice for Linear Technology (LLTC) from neutral to buy with a $37 price target. According to the Japanese bank there is some 14% upside for the designer and manufacturer of linear analog integrated circuits. Shares have traded flat over the last year and the last week after the company reported its quarterly results. Nomura points out that the forward guidance of the company is good and Linear Technology is "a quality name trading at an attractive valuation".
QR Energy Limited Partners
Baird raised its advice for QR Energy Limited Partners (QRE) from neutral to outperform with a price target of $24, indicating that there is 24% upside for the oil and natural gas producer. Shares have fallen 10% over the last year, thereby outperforming the natural gas sector which has seen a very tough year amidst falling natural gas prices. Baird points out that the recent issue of new shares removes the overhang of a possible sale which has worried the markets. Furthermore the company is valued "attractively".
Deutsche Bank raised its advice for NRG Energy (NRG) from hold to buy with a target price of $18, indicating that the German-based bank thinks there is some 17% upside for the integrated power and retail electricity company. Shares gained 5% on the back of the upgrade and strong quarterly earnings after losing over 30% during the last year. Shares have fallen after the company lowered its full year 2011 EBITDA guidance.
Mid-Con Energy Partners
Baird raised its advice for Mid-Con Energy Partners (MCEP) from neutral to outperform with a target price of $24. This would indicate that shares still have some 7% upside according to the analysts. Despite the upgrade, shares in the developer and producer of oil and natural gas have fallen 4% over the last week.
The Blackstone Group
Both Stifel Nicolaus and Deutsche Bank are positive about the prospects of Blackstone Group (BX). Stifel Nicolaus initiated a buy advice with a price target of $20, while Deutsche Bank sees upside towards $17. The target prices indicate 43% and 22% upside, respectively. Shares in the manager of private capital which includes private equity, real estate, hedge funds and credit-oriented funds have fallen 4% during the week after the company reported a revenue miss on Thursday. Despite the fact that revenues missed estimates, analysts point out that asset under management growth was healthy which justifies the upgrade.
C.H. Robinson Worldwide
Deutsche Bank raised its advice for C.H. Robinson Worldwide (CHRW) from hold to buy with a $79 price target. Deutsche Bank sees 19% upside potential in the provider of third party logistical services which focuses on freight transport for corporate customers. The bank thinks that the underperformance of the stock (shares have fallen 13% on the year) is not justified as investors undervalue the returns, free cash flows and growth opportunities. Shares gained almost 4% during the week on the back of the upgrade.
Freeport-McMoRan Copper & Gold
Citigroup raised its advice for Freeport-McMoRan (FCX) from neutral to buy with a $45 price target, indicating that there is 20% upside potential in the international mining company focused on copper and gold extraction. Shares have fallen 26% over the last year which has caught Citi's attention. Analysts point out that the underperformance relative to copper prices is the main reason for the upgrade which send shares 2% higher on the week.
Bank of America/Merrill Lynch raised its advice for Caterpillar (CAT) from neutral to buy with a $134 price target which leaves 24% upside according to the bank. The upgrade comes ahead of the earnings release in the coming week. Analysts point out that the recent pull-back provides investors with an attractive entry point as channel checks, dealer surveys and site visits indicate that the first quarter will be strong. Shares have risen 2% during the last week in anticipation of the earnings report and on the back of the analyst upgrade.
Piper Jaffray raised its advice for Home Depot (HD) from neutral to overweight with a $62 price target. Piper Jaffray sees 20% upside potential for the home improvement retailer. Analysts anticipate a surge in home-remodeling activity as "homeowners are tired of delaying projects" which could spur spending at home retailers such as Home Depot. Shares have already risen 35% on the year and gained 1% over the last week.
Citigroup raised its advice for PPG Industries (PPG) from hold to buy with a $114 price target. Coating and natural gas exposure will propel the shares forward according to Citigroup. Its research report indicates that shares have 13% more upside potential. Shares rallied 6% over the last week, trading at all time highs just over $100 per share, as the company beat on first quarter earnings.
Goldman Sachs upgraded Transdigm (TDG) from neutral to buy with a $144 price target, indicating that there is 18% upside for the designer and producer of aircraft components for commercial and military uses. Shares have risen some 55% over the last year and trade around all time highs. Driven by a strong earnings report and the upgrade from Goldman Sachs, shares added another 5% over the last week. Goldman is enthusiastic about the strong niche positions in the aerospace supply chain which results in superior pricing power and thereby profitability.
Despite a correction in the general stock market analysts see plenty of upside potential in some names. While many recommendations were made after the release of earning reports, the recommendations of analysts can surely move stocks on the day of the announcement and the days thereafter.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.