Review Of Analyst Upgrades Last Week - Part XI

by: The Value Investor

Analysts have been sending out their research reports to their clients again. The following is a review of the most important upgrades for the week of June 18th to June 22th.

Applied Materials (NASDAQ:AMAT)

Barclays Capital raised its advice for Applied Materials from Equalweight to Overweight with a $15 price target. Analysts see 35% upside potential for the global semiconductor manufacturer, as they note that the appointment of Gary Dickerson as President is an "important inflection point" for the shares. Barclays sees the new President as a:

strategic thinker which should enable him to formulate a winning strategy and turn around the company.

Shares of Applied Materials have returned 5% so far in 2012.

Onyx Pharmaceuticals (NASDAQ:ONXX)

R.W. Baird raised its advice for Onyx Pharmaceuticals from Neutral to Outperform, with a $70 price target. Analysts see a limited 7% upside for the shares following the positive FDA panel favoring the approval of its Kyprolis treatment for Multiple Myeloma. According to analysts:

Given Monday's negative briefing documents, we think most investors viewed chances of success here as minimal.

Shares of Onyx rallied more than 43% to all-time highs, on the back of the FDA ruling on Thursday. On Friday, shares added another 3% to $66 per share.

Laboratory Corp of America (NYSE:LH)

Canaccord rated its advice for Laboratory Corp of America with a new Buy rating and a $100 price target. Analysts see a 12% upside for the clinical laboratory company, as it:

succeeds on what we believe are keys to a successful commercial laboratory business: price, volume and efficiencies.

Furthermore, the company continues to integrate automation into testing procedures, and consolidation among its 50 laboratory sites is expected. Analysts see the potential for share repurchases in the coming years. Shares are trading flat so far this year, in a $85-$95 trading range.


Morgan Stanley raised its advice for Groupon from Equalweight to Overweight with a $18 price target. Analysts see 75% upside potential for shares in the daily deals company:

Groupon has emerged as the leading local e-commerce company in an industry with significant barriers to scale ... Scale and technology has enabled Groupon to accelerate North American revenue growth while improving its margins.

Improved technology, which allows for personalization of its deals, will boost the potential of the company. So far in 2012, shares have fallen 50%.

EOG Resources (NYSE:EOG)

UBS raised its advice for EOG Resources from Neutral to Buy with a $120 price target. Analysts see 37% upside potential for the developer and producer of crude oil and natural gas after exploration and production shares have fallen significantly on the back of a 23% pullback in oil prices. Analysts note that the pullback provides an opportunity to buy a:

high quality transition into oil exploration and production

as oil prices are near the bottom. Shares in EOG have fallen 11% year to date to levels around the $88 mark after peaking at $118 around February and March.

Facebook (NASDAQ:FB)

Nomura initiated its advice for Facebook with a Buy rating and a $40 price target. Analysts see 20% upside potential for the social networking website as its:

engaged user base, and comprehensive user dataset enables the company to continue to grow and take share in the display market. Analysis of strategies to improve results underscore the favorable risk/reward at current levels, and the optionality for substantial long-term earnings upside as Facebook continues developing its still-young monetization model.

While shares have returned over 25% from their lows set in the beginning of the month, shares still trade about 15% below the offering price of $38.

Jack in the Box (NASDAQ:JACK)

Bank of America/Merrill Lynch raised its advice for Jack in the Box from Underperform to Buy with $32 price target. Shares in the restaurant owner known for the franchises of Jack in the Box and Qdoba Mexican Grill have at least 20% upside, according to analysts:

Better sales at the flagship Jack in the Box brand and much more modest food cost inflation create a magnifying effect on margins.

Furthermore, on the enterprise value/EBITDA multiple, Jack in the Box trades at a 30% discount to its peers. Year to date shares have returned 27%, and are now trading around $27 per share.

Valero Energy (NYSE:VLO)

UBS raised its advice for Valero Energy from Neutral to Buy with a $26 price target. Shares in the refining and marketing company have around 10% upside after a recent drop in share prices makes Valero "an attractive investment." UBS expects Valero to cut capital expenditures by 35% next year, boosting free cash flows, which allow the company to pay more dividends in 2013. The company recently announced a first quarter loss due to charges from the closure of a refinery. So far this year, shares have returned 11%, trading between the $20 and $28 price range.

PPG Industries (NYSE:PPG)

R.W. Baird raised its advice for PPG Industries with a Outperform rating and a $120 price target. Analysts see some 15% upside for the supplier of protective and decorative coatings, as the company is:

...well-positioned for a domestic housing recovery - whenever that eventually happens.

Shares in PPG industries have returned 25% already year-to-date, trading close to its all-time high of $108 per share.


Stock markets ended the week roughly flat. Investors were waiting for final outcomes regarding the uncertainty in Europe. Despite consolidation in share prices, 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.