3 Notable Large-Cap Upgrades: Anheuser-Busch InBev NV (ADR) (BUD), Target Corporation (TGT), Walgreen Company (WAG)

We saw a number of market-moving analyst calls today, in particular with large-cap stocks. Let’s look at the top three to determine if value exists.

Anheuser-Busch InBev NV (ADR) (NYSE:BUD)

After a five-year 108% return, analysts at Stifel Nicolaus believe there is even more upside potential in shares of Anheuser-Busch InBev NV (ADR) (NYSE:BUD). The firm raised its price target from $94 to $112, which would be a nice premium on its current price of $95.35. The firm specifically points to the Grupo Modelo purchase and believes that there is still room for domestic growth along with international growth. The firm believes that new advertising initiatives will create an emergence of new brands, which should produce further gains from the stock.

While I agree with all of the points made by Stifel Nicolaus, we must also consider the valuation aspect of the trade. This is a non-cyclical stock, yet trades with a price/sales ratio of 3.85 and a P/E ratio of 21.45, which is high above the S&P average of 16. Last quarter the company saw top line growth of 4.2%, and is projecting growth that is consistent with GDP. As a result, I don’t believe it is worth the premium, and with a yield of 1.64%, I think there is better value elsewhere.

Walgreen Company (NYSE:WAG)

UBS upgraded shares of Walgreens from Neutral to a Buy, and set a price target of $48. As a result, the stock is currently trading with gains of 4%, which has also pushed the industry higher. The firm believes the impact of the Alliance Boots transaction is now “clear” and that it will produce a meaningful impact to the fundamentals of the company. Furthermore, the firm reiterates the belief that gross margins could improve in 2013. This has been whispered over the last several months as generic exposure increases in its stores.

Despite a three-month 17% return, shares of Walgreen Company (NYSE:WAG) are still attractive. The stock trades with a price/sales of just 0.55 and has a forward P/E ratio of 11.59, which is consistent with the market. I wouldn’t go as far to say that shares are cheap, because when you compare its price/sales to that of Rite Aid Corporation (NYSE:RAD), 0.06, I think it’s clear that there is better value in the industry. WAG has been the stock of choice in the space, therefore it could see additional gains, although I do think there is better value.

Target Corporation (NYSE:TGT)

While both Walgreen and Anheuser-Busch InBev NV (ADR) (NYSE:BUD) saw upgrades, Target Corporation (NYSE:TGT) was downgraded on Wednesday to Neutral from Buy by Buckingham Research, with a price target of $69. According to the firm, the stock is getting too expensive after its 13.4% run higher in 2013. Furthermore, the firm adds that there could be fundamental problems after the company has gotten off to a slow start in the new year.