In this article, we will take a look at the 10 stocks recently upgraded by analysts. If you want to see some more stocks on the list, go directly to Analysts are Upgrading These 5 Stocks.
US stock markets are wavering as politicians continue their talks about the debt ceiling problem. The beginning of the week on May 22 saw a cautious tone in equity markets as President Joe Biden and Republican House Speaker Kevin McCarthy scheduled a meeting to address obstacles in the debt-ceiling negotiations. The discussions have been characterized by fluctuations between progress and deadlock, with time running out to reach an agreement. Stocks relinquished their gains on May 19 when Republicans temporarily withdrew from the talks. The urgency of the situation was emphasized on Sunday by Treasury Secretary Janet Yellen, who expressed a low probability of the US being able to meet all its financial obligations by mid-June, reported Bloomberg.
According to Bloomberg, oil prices stabilized in London on May 22 as financial markets remained uncertain while US lawmakers engaged in final negotiations to reach a resolution on the debt ceiling. Brent crude traded close to $75 per barrel, experiencing a decline of nearly 2% over the previous two sessions.
Meanwhile, on the stock market front, financial services provider The Charles Schwab Corporation (NYSE:SCHW), luxury fashion holding company Tapestry, Inc. (NYSE:TPR), and technology company Meta Platforms, Inc. (NASDAQ:META) recently came into the spotlight after receiving upgrades from analysts.
Raymond James turned bullish on The Charles Schwab Corporation (NYSE:SCHW), citing the tapering of client cash outflows at Schwab, which is expected to stabilize the company’s balance sheet and net interest margin. On the other hand, Bernstein upgraded Tapestry, Inc. (NYSE:TPR) after the company regained control over its inventory and strong demand for Coach products in China. Check out the complete article to see some other stocks recently upgraded by analysts.
10. PlayAGS, Inc. (NYSE:AGS)
Number of Hedge Fund Holders: 23
PlayAGS, Inc. (NYSE:AGS) designs and supplies gaming products and services for the gaming industry in the United States and internationally. On May 15, Jefferies analyst David Katz raised his rating on PlayAGS, Inc. (NYSE:AGS) from Hold to Buy and increased the price target from $7 to $10, citing the company’s Q1 report. According to the analyst’s research note, PlayAGS, Inc. (NYSE:AGS) has been experiencing a growing momentum in its products over the past few quarters, and this trend is expected to continue. The firm views PlayAGS, Inc. (NYSE:AGS) and its competitors as undervalued, presenting an opportunity for investors in a small-cap stock. Furthermore, the firm states that PlayAGS, Inc. (NYSE:AGS) operations have improved compared to the past three years, overcoming the challenges faced in 2019 and during the COVID-19 pandemic.
09. Teva Pharmaceutical Industries Limited (NYSE:TEVA)
Number of Hedge Fund Holders: 29
Teva Pharmaceutical Industries Limited (NYSE:TEVA) is a global pharmaceutical company that produces and distributes generic and specialty medicines and biopharmaceutical products in North America, Europe, Israel, and other parts of the world.
On May 18, Umer Raffat, an analyst at Evercore ISI, upgraded Teva Pharmaceutical Industries Limited (NYSE:TEVA) from In Line to Outperform without providing a specific price target. According to the analyst, Teva Pharmaceutical Industries Limited (NYSE:TEVA) has made significant progress in recent years, with a 50% reduction in net debt and resolving its opioid lawsuits. Furthermore, the company’s core business has generally stabilized. Raffat points out that an intriguing opportunity has emerged for Teva Pharmaceutical Industries Limited (NYSE:TEVA), as two branded programs are approaching important clinical milestones. Specifically, TL1A for ulcerative colitis and Crohn’s disease are expected to see key results next year. At the same time, long-acting olanzapine is anticipated to have a Phase 3 readout in the same timeframe. The analyst suggests that if either TL1A or long-acting olanzapine proves successful, the resulting upside would disproportionately benefit equity holders.
08. Sabre Corporation (NASDAQ:SABR)
Number of Hedge Fund Holders: 30
Sabre Corporation (NASDAQ:SABR) is a travel services firm headquartered in Westlake, Texas. The firm operates a digital marketplace that enables cruise companies to list their tours and products and the general public to select the products they like. It has 16 different cruise lines on its platform.
According to a research note issued on May 15, Bernstein upgraded Sabre Corporation (NASDAQ:SABR) rating from Underperform to Market Perform and set a price target of $3.50. The analyst acknowledges that the company still faces structural challenges but believes that a downside catalyst, in the form of a guidance cut, is now in the past. When initially covering Sabre Corporation (NASDAQ:SABR) earlier this year, Bernstein expressed concerns about the company’s 2025 targets, considering them overly ambitious. However, according to Bernstein, the company subsequently implemented a cost-saving program of $200 million, which partially offset the impact of the guidance cut.
07. Nevro Corp. (NYSE:NVRO)
Number of Hedge Fund Holders: 30
Oppenheimer upgraded Nevro Corp. (NYSE:NVRO) rating from Perform to Outperform on May 15, setting a price target of $40. The firm highlights that the stock trades at a discount of 2 times its sales compared to the overall industry. Oppenheimer believes that if the new CEO can implement positive changes in the sales and marketing strategies, it could help stabilize the Nevro Corp. (NYSE:NVRO) market share and potentially exceed expectations, which would be favorable. Additionally, the firm suggests that any complementary acquisitions or introducing new products could present interesting growth opportunities akin to call options.
06. AvalonBay Communities, Inc. (NYSE:AVB)
Number of Hedge Fund Holders: 30
AvalonBay Communities, Inc. (NYSE:AVB) is a real estate investment trust that owns and operates apartments in cities such as New York and Seattle. On May 15, AvalonBay Communities, Inc. (NYSE:AVB) was upgraded by BofA from Neutral to Buy, with a revised price target of $212, up from its previous target of $199. BofA is adjusting its ratings for residential real estate investment trusts (REITs). Demographic trends indicate that the market has reached or surpassed the peak demand for urban apartments. Considering AvalonBay Communities, Inc. (NYSE:AVB) portfolio, which is more focused on suburban properties, the firm believes that the REIT’s strategic approach to its portfolio and development aligns well with the ongoing shift in demand, positioning it favorably to capitalize on this rotation.
Here is what Baron Real Estate Fund has to say about AvalonBay Communities, Inc. (NYSE:AVB) in its Q2 2022 investor letter:
“We recently re-initiated a position in AvalonBay Communities, Inc. The company is a REIT that owns and operates a $43 billion portfolio of high quality apartment assets, located primarily in the east and west coasts of the U.S. We believe its concentration in high-barrier-to-entry coastal markets and its mix of urban and suburban properties should lead to strong cash flow growth over time. AvalonBay’s investment grade rating provides it with a cost of debt advantage compared to private developers. Management has proven to be a capable acquirer and developer of apartment assets. We believe AvalonBay’s shares are trading at an attractive 25% discount to its private market value.”
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Disclosure: None. Analysts are Upgrading These 10 Stocks is originally published on Insider Monkey.
