3 Beaten Down Mega Caps The Analysts Are Upgrading
2022.04.17 16:31
The Analysts Upgrade These Beaten Down Mega Caps
The market has taken a beating over the past few months and many of the leading names were beaten down with it. In many cases, as with Albertsons (NYSE:ACI), NVIDIA (NASDAQ:NVDA), and United Parcel Service (NYSE:UPS), the pressure on shares is due more to the fear of underperformance than anything else.
The takeaway is the analysts are upgrading these stocks now that share prices are at more attractive levels and these are stocks we want to own.
Albertsons Companies Is In It For The Long Haul
Albertsons Companies shares wobbled a bit in the wake of its most recent earnings report because inflation cut more deeply into earnings than expected and the outlook for the year is that inflation will continue to rise.
The analysts, however, chose to focus on the large upside revenue surprise and the fact EPS came in above the Marketbeat.com consensus despite the weak margin.
Bank of America analyst Robert Ohmes says the company has growing potential for upside revisions due to inflation and pricing. In his view, inflation will drive top-line growth while pricing will help maintain margin and set the company up for margin expansion in 2023.
Albertsons Companies has had a string of upgrades and price target increases since the first of the year including 4 since the FQ4 earnings report was released. They rate the stock at a weak Buy with a price target in line with the consensus target of $32.
The consensus continues to trail the price action but the trend of revision is gaining momentum. The consensus is up in the 12-month, 3-month, and 1-month comparison and up 8% in the last 1 month alone.
ACI Stock Chart
A Shift In Sentiment For NVIDIA
NVIDIA shares came under pressure at the end of last year on fears growth was priced in. Those fears were compounded by a string of downgrades and price target reductions that now have price action down about 35% from the high.
The interesting fact is that now, with shares at such a low level, the analyst’s sentiment is shifting. NVIDIA received not one but two upgrades from Neutral to Buy with price targets 30% above the current price action.
That target compares poorly to the consensus of $330 which implies about 50% of upside but we see price target upgrades on the horizon as well. NVIDIA Is slated to report earnings in mid-May and should be able to outperform the robust expectations of the market.
“We continue to see [Nvidia] as one of the most important growth companies in semis, perhaps in tech given its ability to grow sales in high entry-barrier computing markets at a 20-25% CAGR (3x semis industry growth), while maintaining industry leading 45%+ EBIT [margins],” wrote Bank of America analyst Vivek Arya.
NVIDIA Chart
UPS Upgraded To Buy On Valuation, Dividend
UPS was upgraded for our two favorite reasons to buy a stock, valuation, and dividend. Loop Capital upgraded UPS due to its low 15X value and its 3.2% yield, two of the reasons we ourselves like the stock.
The only bad news is that Loop Capital lowered its price target to $243 which is still above the consensus target and that target is 25% above the recent price action. UPS is set to report earnings in two weeks.
UPS Chart
