With the markets under pressure, we are beginning to see more downgrades and fewer upgrades. However, there were several upgrades on Monday, and I believe three of which are right on target. Let’s look at those calls..
Moving Forward With New Leadership
I’m not sure what happened when Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ:ULTA) invited a number of analysts to tour its headquarters, but several have come out with bullish outlooks and upgrades. After a very rough first quarter, Ulta has now crossed into positive territory for the year, following a 2.3% move higher on Monday behind a Jefferies upgrade.
Jefferies analyst Randal Konik came away pleased, raising his target to $110 from $100 after his trip to company headquarters on Friday, stating that the company “is in a very favorable position.” The analyst said that the stock’s risk/reward profile is favorable, and that the company is proceeding with its store expansion plan.
Finally, after the sudden departure of the company’s previous CEO and fears of slowed growth, the company is back on track. Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ:ULTA) also announced a new CEO on Monday, signaling leadership and that the company is in fact ready to move forward. With it trading at 2.6 times sales, I tend to agree with Jefferies, as this still is a growth play, one that has significantly underperformed the market.
Global Success Being Discounted Ahead of Earnings
At this point, buying Research In Motion Ltd (NASDAQ:BBRY) ahead of earnings on Friday is a crapshoot at best. However, there have been a lot of analysts to come to the company’s defense as of late, predicting a solid beat.
On Monday, Goldman and UBS both reiterated their EPS expectations of $0.16 and $0.10, respectively, which is far above the consensus of $0.06. The consensus for BB10 sales during the quarter is 3.1 million units. Yet, these two firms, combined with both William Blair and BMO, are expecting 3.5 million units (on average).
As a result, these firms are calling for an upswing following earnings, and shares of Research In Motion Ltd (NASDAQ:BBRY) have responded with gains of 2.7% on Monday. I agree with these four firms, because I believe that the market is discounting BB10’s global success. Sure, sales have been weak in the U.S., but in Canada and Europe sales have been solid. As a result, I think this is one crapshoot that might pay off big for those who are long now.
A Surprise
ISIS Pharmaceuticals, Inc. (NASDAQ:ISIS) has seen its valuation increase more than 130% over the last year behind the approval of its drug Kynamro. However, on Monday it was impressive Phase 2 results from its pipeline candidate ISIS-APOCIIIRx that produced gains of almost 30% and impressed Needham analyst Chad Messer, along with BMO.
Messer stated that “improved measures of glucose control and insulin sensitivity in a diabetic population is particularly important.” BMO’s Jim Birchenough simply said that results from the study are “stunning,” as he maintains his $31 price target on the stock.
