In this article, we will discuss the 10 stocks whose price targets were recently raised by analysts. If you want to see more such stocks on the list, go directly to Analysts Are Increasing Price Targets of These 5 Stocks.
A prominent bearish strategist on Wall Street has expressed concerns about the US equity market, suggesting that a wave of apprehension among investors could trigger a significant downturn in the near term. Michael Wilson, a strategist at Morgan Stanley, who had previously predicted a market decline in 2023 that has not yet materialized, now believes that the S&P 500 is vulnerable to a potential pullback. He forecasts that the benchmark index could reach 3,900 by the end of this year, representing a decline of approximately 10% from Friday’s closing price, before rebounding to 4,200 in the second quarter of the following year.
According to Reuters, portfolio investors made modest purchases of crude oil and distillates during the previous week. However, their overall positions have remained largely unchanged over the past three months due to apprehensions regarding the global economic outlook, which outweighed the impact of reduced inventories. During the seven-day period ending on June 20, hedge funds and other money managers acquired approximately 25 million barrels through the most significant petroleum futures and options contracts. This activity reflects a cautious approach in the market. While there was some buying activity, the overall sentiment among portfolio investors remained subdued, with concerns about the health of the global economy acting as a significant deterrent. Despite the purchases made by hedge funds and money managers, the lack of significant changes in their positions over the past few months indicates a cautious stance and an ongoing focus on economic uncertainties.
According to a Reuters report on June 25, speculators faced the need to close out additional short positions in Chicago grains and oilseeds due to worsening crop conditions in the United States caused by an unprecedented dry period. In the four-day trading week ending on June 20, money managers eliminated a total of 100,000 gross short positions across various commodities such as CBOT corn, wheat, soybeans, soy products, Kansas City wheat, and Minneapolis wheat. This marked the highest weekly reduction in short positions since August 2020. Moreover, money managers increased their long positions by 45,000 contracts during the same week, which was the most substantial increase seen in four months. The rise in long positions was primarily driven by corn, as the number of new longs exceeded the amount of short covering. These changes in speculative positions reflect the impact of deteriorating crop conditions and the resultant concern among market participants. The dry spell has led to increased uncertainty in the agricultural markets, prompting speculators to adjust their positions accordingly.
On the stocks market front, analysts are bullish on technology stocks such as Uber Technologies, Inc. (NYSE:UBER) and Apple Inc. (NASDAQ:AAPL) along with airline stock Delta Air Lines, Inc. (NYSE:DAL). Barclays analysts raised the price target on Uber (NYSE:UBER) after its stock surged 75% year-to-date. Tigress analysts raised its target price for Apple Inc. (NASDAQ:AAPL) due to the expectation of renewed growth in the near future, primarily driven by progress in emerging markets and Asia. Also, Barclays increased Delta Air Lines, Inc. (NYSE:DAL) price target stating that the company’s investor day is expected to emphasize potential earnings growth in the near term. Check out the complete article to see the details of these upward revisions in price targets.
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10. Restaurant Brands International Inc. (NYSE:QSR)
Upside Potential: 10%
Restaurant Brands International Inc. (NYSE:QSR), a major player in the global fast-food industry, is the owner of well-known restaurant chains like Burger King, Popeyes, and Tim Hortons. With its headquarters based in Ontario, Canada, the company recently released its Q1 2023 financial results on May 2. The earnings report revealed impressive figures, including a revenue of $1.59 billion, surpassing estimates by $30 million. The non-GAAP EPS stood at $0.75, exceeding expectations by $0.11. Furthermore, the company achieved an adjusted EBITA of $588 million, showcasing a substantial 15.8% organic growth compared to Q1 2022.
On June 23, Evercore ISI increased the price target for Restaurant Brands International Inc. (NYSE:QSR) to $83 from $80. The stock’s closing price on June 23 was $75.35; thus, with a new target price of $83, it has an upside potential of 10%.
9. D.R. Horton, Inc. (NYSE:DHI)
Upside Potential: 12%
D.R. Horton, Inc. (NYSE:DHI) is a Texas-based home construction company that is one of the largest homebuilders in the country by volume. On June 23, analyst Chris Graja from Argus has raised the price target for D.R. Horton, Inc. (NYSE:DHI) from $120 to $135. The stock’s closing price on June 23 was $120.40; thus, with a new target price of $135, it has an upside potential of 12%.
Third Avenue Management mentioned D.R. Horton, Inc. (NYSE:DHI) in its Q1 2023 investor letter. Here is what the firm has to say:
“The primary contributors to performance during the quarter included the Fund’s investments in leading US-based homebuilders (Lennar Corp. and D.R. Horton, Inc. (NYSE:DHI)), UK-centric real estate holdings (Berkeley Group and Savills plc), and Industrial and Logistics REITs (Prologis, First Industrial and Segro plc).
The Fund’s other activity during the period was modest in nature and included slight reductions to certain holdings for portfolio management purposes (Lennar Corp., D.R. Horton, FNF Group, Wharf Holdings, and AMH).
After factoring in this activity, the Fund had 41% of its capital invested in Residential Real Estate companies with strong ties to the U.S. and U.K. residential markets—where there remain supply deficits after years of under-building. In conjunction with near record-low inventory levels, there also remains significant demand for new products at affordable price points (both for-sale and for-rent). Therefore, these Fund holdings seem positioned to benefit from a multi-year recovery in residential construction and ancillary activities, particularly as mortgage rates stabilize for conforming loans. At the end of the quarter, these holdings included a diversified set of businesses including homebuilding (Lennar Group and DR Horton), timberland ownership and management (Weyerhaeuser and Rayonier), planned development (Berkeley Group and Five Point Holdings), the ownership and development of rental properties (AMH, Grainger plc, and Ingenia Communities), as well as other ancillary businesses (Lowe’s and Trinity Place Holdings).”
8. DraftKings Inc. (NASDAQ:DKNG)
Upside Potential: 12%
DraftKings Inc. (NASDAQ:DKNG) is a digital sports entertainment and gaming company that has outperformed expectations in recent quarters, attracting investors despite valuation and recession concerns. Its successful football season has driven a significant increase in share value. DraftKings also operates an NFT market for sports collectibles, which is popular among collectors. In Q1 2023, DraftKings Inc. (NASDAQ:DKNG) achieved impressive revenue of $770 million, an 84.7% YoY growth. Monthly Unique Payers (MUP) increased by 39% YoY, averaging 2.8 million users.
Wall Street analysts have given positive ratings to DraftKings Inc. (NASDAQ:DKNG) following its strong quarterly performance. In June, BTIG Research and Jefferies Financial Group raised their price targets for the stock to $31 and $35, respectively. The recent price target raise is given by Wells Fargo. On June 23, Wells Fargo increased the price target for DraftKings from $24 to $28. The stock’s closing price on June 23 was $25.03; thus, with a new target price of $28, it has an upside potential of 12%.
In its Q1 2023 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and DraftKings (NASDAQ: DKNG) was one of them. Here is what the fund said:
“We re-initiated a position in former Fund holding DraftKings Inc. (NASDAQ:DKNG), a leading online sportsbook, digital casino, and daily fantasy sports operator. DraftKings’ mobile applications offer consumers the ability to wager on a wide variety of sporting events and play hundreds of real-money casino games. The company has spent the past three years building a proprietary technology stack that improves the customer experience and delivers best-in-class breadth of bet types (such as parlays, same-game parlays, and player props). State-level online sports betting (OSB) and iCasino legalization, along with a multi-year consumer adoption timeline in active states, has supported a 90% revenue growth rate for DraftKings since 2020. The opportunity for OSB legalization remains significant, with under 50% of the U.S. population currently having legal mobile sports betting. We expect 65% to 80% of the population will eventually have access to OSB. ICasino is currently legal in just seven states representing roughly 13% of the population. ICasino product adoption in legalized states has been robust, with the average user spending twice as much as a sports bettor. While the pace of legalization for iCasino has been slower, we believe additional states will pass regulation in the coming years.
As U.S. states began to legalize sports betting, the DraftKings management team moved quickly to build widespread brand awareness. DraftKings is the #2 operator in both OSB and iCasino by a wide margin, and has demonstrated improving market share trends across almost all states. When a new state legalizes sports betting, DraftKings has a first mover advantage as many of its customers are converted from the DraftKings daily fantasy sports offering. The quality of their sportsbook product along with increasingly targeted promotional spending results in strong customer retention and high lifetime values. In states where iCasino is legal, DraftKings can cross-sell OSB customers. DraftKings’ scale and product advantages are creating a flywheel that will enable the company to continue to out-invest the competition in acquisition marketing, retention, and research and development. The high barriers to entry are resulting in a consolidated industry that will eventually lead to a highly profitable business. This is evidenced by older-vintage state contribution margins that are already approaching 40%. Longer term, we believe DraftKings can generate EBITDA margins between 20% and 30% with strong free-cash-flow conversion.”
7. Amphenol Corporation (NYSE:APH)
Upside Potential: 12%
Amphenol Corporation (NYSE:APH) primarily designs, manufactures, and markets electrical, electronic, and fiber optic connectors. Analyst Wamsi Mohan from Bank of America Securities reaffirmed a Buy rating for Amphenol Corporation (NYSE:APH) on June 23 while setting a price target of $90, up from $82. Amphenol Corporation (NYSE:APH) closing price on June 23 was $80.19; thus, with a new target price of $90, it has an upside potential of 12%.
TimesSquare U.S. Mid Cap Growth Strategy made the following comment about Amphenol Corporation (NYSE:APH) in its Q4 2022 investor letter:
“More positive was the 14% rise by Amphenol Corporation (NYSE:APH), a producer and supplier of electrical and fiber optic connectors. Third quarter earnings surpassed expectations, with strong demand across nearly all end markets. Despite signs of macroeconomic weakness, management increased its quarterly dividend while continuing the share repurchase program.”
6. Commercial Metals Company (NYSE:CMC)
Upside Potential: 13%
Commercial Metals Company (NYSE:CMC) is a Texas-headquartered enterprise involved in the production, recycling, and fabrication of steel and metal goods both domestically and globally. Its operations span multiple countries including the United States, Poland, and China. The company specializes in processing and marketing both ferrous and nonferrous scrap metals to various consumers such as steel mills, foundries, aluminum sheet manufacturers, brass and bronze ingot makers, copper refineries and mills, specialty steel mills, high temperature alloy manufacturers, and other related industries. On June 23, BMO Capital decided to maintain a “Market Perform” rating on Commercial Metals Company (NYSE:CMC) while increasing the price target from $56 to $58. The stock’s closing price on June 23 was $51.50; thus, with a new target price of $58, it has already crossed the analyst’s expectations.
ClearBridge Small Cap Strategy made the following comment about Commercial Metals Company (NYSE:CMC) in its Q4 2022 investor letter:
“Our holdings in the materials sector also benefited relative performance during the period. Commercial Metals Company (NYSE:CMC), a steel and metal manufacturer, was a top performer. The company exceeded analyst expectations for quarterly earnings on the back of strong fundamental drivers, which have been significantly bolstered by the prospect of further infrastructure spending by the government. We believe the company will be able to capitalize on this increased investment and generate longterm returns for the portfolio performance”.
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Disclosure. None. Analysts Are Increasing Price Targets of These 10 Stocks is originally published on Insider Monkey.
