Review Of Analyst Upgrades This Week - Part VIII

by: The Value Investor

Analysts have been sending out research reports to clients again this week. The following is a review of the most important upgrades for the week of May 28 till June the 1st.


Nomura raised its advice for Nordstrom (NYSE:JWN) from neutral to buy with a $55 price target. Nomura sees some 16% upside potential for the fashion retailer. Analysts point out that the company's "strong execution, enviable customer base and best class ROIC" stands out in the retail universe. Shares in Nordstrom have fallen 4% despite the fact that the company posted a 5.3% rise in same store sales for the month of May, beating expectations of 4.7%. Shares in Nordstrom are up 6% so far this year.

Foot Locker

Deutsche Bank raised its advice for Foot Locker (NYSE:FL) from hold to buy with a $38 price target. Analysts see some 25% upside potential for the retailer of athletic shoes and apparel. "Strength in the athletic footwear cycle combined with management's track record gives us confidence that impressive gains can continue", according to Deutsche's analysts. Foot Locker reported strong same store sales growth in combination with expanding margins earlier this year. Product launches coinciding with the Euro Championships and the Olympics should provide a boost as well. Shares of Foot Locker have returned 27% year to date.


R.W. Baird raised its advice for Zynga (NASDAQ:ZNGA) from neutral to outperform with a $13 price target. Shares of the social games developer hit new lows around the $6 mark this week after trading over $14 per share just three months ago. Analysts expect the company to benefit from the launch of new games over the summer and its expansion into mobile devices. Analysts are also hopeful that the company can lower its dependence on Facebook, which has been a worry for investors. Zynga's shares have lost 36% year to date.

R.W. Baird initiated its advice for Facebook (NASDAQ:FB) with an outperform rating accompanied by a $37 price target. Analysts say the firm is "uniquely positioned to capture an increasing share of the $500 billion global advertising market", by leveraging its collection of data. The company is still in the early stages of monetizing its data assets by targeted advertising. Profit margins have room to expand due to the inherent operating leverage in its model. The target price suggests 33% upside potential but is still a dollar below its offering price.


Goldman Sachs upgraded its advice for Blackrock (NYSE:BLK) to buy with a $200 price target. Goldman sees 20% upside for the independent investment firm. The diversified asset under management mix in combination with its sticky institutional client base will provide downside protection in the current volatile market. Furthermore the company has underperformed versus its peers on concerns that Barclays will sell its stake in the company, a concern which was alleviated last week. Shares have recently fallen from levels just above $200 in April to $166 at the moment.


Citigroup raised its advice for Clorox (NYSE:CLX) from neutral to buy with a $78 price target. Citigroup sees some 12% upside for the manufacturer of consumer and institutional products. The company has "strong management and is well-positioned" for growth in the coming quarters.

Shares have moved within a very tight range in the first half of 2012, trading within a $67-$71 price range.

Sprint Nextel

JP Morgan raised its advice for Sprint Nextel (NYSE:S) from neutral to overweight. Analysts think the communication company has an attractive valuation and industry prices have stabilized. Furthermore the company might see merger & acquisitions action depending on the future of T-Mobile in the US. JP Morgan is also confident in Sprint's Network Vision Plan. The company might have some 50-60% upside after shares have already returned 7% year to date, now trading at $2.50 per share.


Needham & Co initiated its advice for Ciena (NASDAQ:CIEN) with a buy rating. Analysts see some 25% upside for the provider of communication network equipment to $16 per share as the business is "comparatively robust despite rough economic conditions". The uptake of the 100G coherent and OTN switching should favor Ciena and its business model. Shares have returned 5% so far this year now trading at $12.68 after peaking at $17 per share in February this year.


Citigroup raised its advice for LinkedIn (NYSE:LNKD) from neutral to buy with a $125 price target. Shares have some 37% upside potential from its current level around $91. Investors should take advantage from the recent pull-back as the stock is a "strong asset". Shares in the professional internet network company have returned 45% so far this year, despite a 25% pull back in recent weeks. A strong guidance for the first and second quarter have driven the performance in the internet company so far this year.

Wynn Resorts

Goldman Sachs raised its advice for Wynn Resorts (NASDAQ:WYNN) from neutral to buy with a price target of $136. Analysts see some 39% upside for the developer and operator of casino resorts in Las Vegas and Macau. The "bad news is reflected in the stock, but the good news is not".

The current price does not reflect the upside to the premier US/Asian casino story, which warrants a premium valuation compared to its peers. Furthermore Goldman believes that growth fears in Asia are overblown after a field check in Macau. Shares have fallen 12% year to date trading at $97 per share after peaking at $135 in the beginning of May.


Nomura raised its advice for Broadcom (BRCM) to conviction buy. Analysts set a $45 price target, suggesting some 41% upside for the provider of multimedia connectivity equipment. According to analysts "strong iPhone and iPad shipments will provide a positive read-through to Broadcom". On the back of these predictions Nomura raised its full year revenue outlook to $8.1 billion. It expects Broadcom to earn $2.30 per share. So far this year shares have gained 8% after peaking at $39 in March.


Citigroup raised its advice for ConocoPhillips (NYSE:COP) from neutral to buy with $67 price target. Shares have some 31% upside according to analysts as the spin-off of the downstream business, now called Phillips 66 (NYSE:PSX), provides an opportunistic entry point in both names.


Stock markets have seen a strong correction this week, closing about 3.0% lower in the case of the S&P 500. Despite the slight correction, brokers have sent out favorable research reports again to clients. Many of the recommendations were made after the release of earnings reports and often come after a large move to the upside. However on the day of the announcement, analyst recommendations can still move the stock price significantly.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.