In this article, the focus will be on the stocks upgraded by Wall Street analysts in their recent coverages!
Don’t you think that listing out the stocks upgraded by Wall Street analysts will be the silver lining given the recent downturn in the equities? What prompted analysts to upgrade these stocks amidst some level of uncertainty?
Asian stocks saw a strong downturn on 8th January, and this was mainly because of losses in Hong Kong and China. Analysts believe that announcement regarding tougher regulations on gaming sector and questions regarding adequacy of Chinese government’s economic stimulus took all the attention.
Hang Seng Tech Index saw a sharp fall of up to ~3.5%, hinting its lowest closing level since the month of November 2022. Among significant contributors to this negative trend in MSCI Asia Pacific Index included the major Chinese tech companies, such as Tencent Holdings Ltd. and Alibaba Group Holdings Ltd.
But why Chinese markets are not able to cope up with their Asian counterparts? Even in 2023, Chinese equities underperformed against other global indexes. What are the main reasons?
We believe that current investor sentiments in the country are pessimistic as Nomura indicated negative outlooks. Tensions about the regulatory uncertainties and concerns about effectiveness of economic support measures which have been announced by Chinese government are taking the centre stage, thereby, impacting market confidence. Over the past 1 year, Hang Seng Index saw a massive decline of ~24%, with Shanghai Composite Index eroding investors’ wealth by ~9% in the same period.
Even now, investors continue to eye critical inflation reports from the US, China, and Japan. All these reports continue to add additional layer of uncertainty to global financial community.
Amid these uncertainties, we will allow our readers to take a sigh of relief as we list out stocks upgraded by Wall Street analysts in their recent coverages.
1. Yum! Brands, Inc.
The company is US-based restaurant operator which features a portfolio of 4 brands: KFC, Pizza Hut, Taco Bell, and The Habit Burger.
It has released its 3Q results for the period ended September 30, 2023, with worldwide system sales growing ~10%, excluding foreign currency translation, with KFC at 12%, Taco Bell at 11% and Pizza Hut 4%.
Unit count saw an increase of ~6% as a result of 1,130 gross new units, which was the record for the said quarter. It saw record digital sales which surpassed ~$7 billion, with digital mix of more than 45%. GAAP operating profit saw an increase of 12% and core operating profit went up by ~16%. KFC Division opened ~664 gross new restaurants throughout 57 countries. Taco Bell US system sales went up by 11% and Taco Bell International system sales (excluding the foreign currency) saw an increase of ~16%.
In its taco bell division, the company-owned restaurant margins came at ~23.8%, approximately flat year-over-year. Foreign currency translation positively impacted operating profit to the tune of $1 million.
Growth in its system sales was supported by 6% increase in same-store sales and ~6% unit growth with 3Q record of more than 1,100 gross new units. Twin growth engines i.e., KFC International and Taco Bell U.S., led this way, as KFC saw overall strength throughout both developed and emerging markets.
Given its strong YTD performance, the company continues to expect that its FY23 results should be able to outperform on all aspects of the long-term growth algorithm.
On January 5, Oppenheimer analyst covered this stock and has increased its rating from Market Perform to Outperform. He has given the price target of $154.00 for the company’s stock.
2. Boot Barn Holdings, Inc.
The company operates specialty retail stores. It sells western and work-related footwear, apparel, and accessories in the US.
It has announced its financial results for fiscal 2Q23, with net sales increasing 6.5% in comparison to prior-year period to $374.5 million, exhibiting ~12.4% net sales growth in prior-year period.
Same store sales saw a fall of ~4.8% in comparison to prior-year period, cycling ~64% same store sales growth. This was on 2-year stack basis. The 4.8% fall in consolidated same store sales was made up of decline in retail store same store sales of ~3.8% and fall in e-commerce same store sales of 11.7%.
Net income came in at $27.7 million, or $0.90 per diluted share in comparison to $32.1 million, or $1.06 per diluted share in previous-year period. It opened ~10 new stores, which led to total store count to 371. Its results consisted strong sales growth, merchandise margin expansion and earnings achievement that remained at high-end of guidance range.
Higher net sales was due to incremental sales from newly-opened stores in previous past twelve months. This was partially offset lower consolidated same store sales.
On January 5, UBS has upgraded the company’s stock from Neutral to Buy as a result of positive outlook on its future growth prospects. UBS has increased its price objective to $108, a significant rise from prior target of $75.
3. Dynatrace, Inc.
The company is a cloud-native company which focuses on assessing machine data.
It has announced its financial results for 2Q24 ended September 30, 2023, in which its total ARR came in at $1,344 million. This exhibits a rise of 24% on constant currency basis. Total revenue was $352 million, which was up 24% on constant currency basis.
For 3Q24, it expects total revenue in the range of $356 million – $359 million.
Jefferies analyst upgraded the company’s rating from Hold to Buy, exhibiting optimism regarding the company’s future. Analyst has adjusted price target which has been increased to $70.00.
While above are some of the stocks upgraded by Wall Street analysts in their recent coverages, there are several other scrips on which Wall Street analysts are optimistic about.
Not only equities, uncertainties prevail in commodities too. Despite geopolitical tensions in Middle East, which includes attacks by Yemeni Houthis and statements from the US Secretary of State Antony Blinken, the affect on oil prices got offset by higher OPEC output together with several other fundamental factors.