In this article, we discuss the 5 stocks that analysts are raising price targets of. If you want to read our detailed analysis of these stocks, go directly to Analysts are Raising Price Targets of These 10 Stocks.
5. Costco Wholesale Corporation (NASDAQ:COST)
Number of Hedge Fund Holders: 54
Costco Wholesale Corporation (NASDAQ:COST) is ranked fifth on our list of 10 stocks that analysts are raising price targets of. The firm operates membership warehouses that sell branded and private-label products. It is headquartered in Washington.
On September 27, investment advisory Credit Suisse reiterated a Neutral rating on Costco Wholesale Corporation (NASDAQ:COST) stock but raised the price target to $490 from $400. Robert Moskow, an analyst at the advisory, issued the ratings update.
At the end of the second quarter of 2021, 54 hedge funds in the database of Insider Monkey held stakes worth $4.3 billion in Costco Wholesale Corporation (NASDAQ:COST), down from 56 in the preceding quarter worth $4 billion.
In its Q1 2021 investor letter, Ensemble Capital, an asset management firm, highlighted a few stocks and Costco Wholesale Corporation (NASDAQ:COST) was one of them. Here is what the fund said:
“We saw these dynamics at play in the Fund. Some of the worst-performing stocks this quarter were among our best performers in Q1 2020. Another example was the market’s reaction to Costco Wholesale (1.5% weight in the Fund) during the quarter. From December 31, 2020 to March 8th, Costco shares declined 17% and dropped below their pre-pandemic high. The common rationale offered by sell-side analysts was that Costco would face difficult one-year “comps” (i.e. same-store sales, which compare sales from stores open for at least a year). Because so many consumers rushed to Costco ahead of shelter-in-place and subsequent quarantines, it will be harder for Costco to meaningfully beat those results when compared year-over-year. That may indeed be true, but we struggle to understand how Costco could be “less valuable” than it was a year earlier when it concurrently increased its membership base by over 7%, or 3.9 million members. With membership renewal rates around 90%, the vast majority of the new customers Costco brought in last year will be around for years to come.
Analysts also complained about Costco raising its already industry-leading minimum wage to $16/hour, with an average “effective” pay of $23-$24/hour when you include overtime and bonuses. Costco paying its employees “too much” has been a common gripe of Wall Street analysts for at least two decades. While the extra pay does indeed impact short-term profit margins, it also serves to make Costco more durable, as its flywheel (i.e. a virtuous value cycle) starts with happy employees. A 20-year chart of Costco stock price is evidence that this strategy works and we’re confident that it will continue to work.”
4. Okta, Inc. (NASDAQ:OKTA)
Number of Hedge Fund Holders: 57
Okta, Inc. (NASDAQ:OKTA) is a California-based firm that provides identity management platforms for enterprise clients. It is placed fourth on our list of 10 stocks that analysts are raising price targets of.
On September 28, investment advisory Morgan Stanley upgraded Okta, Inc. (NASDAQ:OKTA) stock to Overweight from Equal Weight and raised the price target to $315 from $275, noting the improved demand environment and buy-in with developers as growth catalysts for the firm.
At the end of the second quarter of 2021, 57 hedge funds in the database of Insider Monkey held stakes worth $2 billion in Okta, Inc. (NASDAQ:OKTA), up from 48 in the preceding quarter worth $1.6 billion.
3. MGM Resorts International (NYSE:MGM)
Number of Hedge Fund Holders: 59
MGM Resorts International (NYSE:MGM) is a Nevada-based firm that owns and operates casino, entertainment, and hotel resorts. It is ranked third on our list of 10 stocks that analysts are raising price targets of.
On September 28, investment advisory Bank of America maintained a Neutral rating on MGM Resorts International (NYSE:MGM) stock but raised the price target to $48 from $46, noting that a new acquisition would act as double-digit accretive for the free cash flow of the firm.
At the end of the second quarter of 2021, 59 hedge funds in the database of Insider Monkey held stakes worth $2.8 billion in MGM Resorts International (NYSE:MGM), up from 57 in the preceding quarter worth $2.7 billion.
In its Q2 2021 investor letter, Oakmark Funds, an asset management firm, highlighted a few stocks and MGM Resorts International (NYSE:MGM) was one of them. Here is what the fund said:
“We originally established our position in MGM during 2016. At that time, we believed its valuation did not reflect the improving fundamentals of the Las Vegas Strip, which was recovering from years of overbuilding. The market had also failed to recognize the quality of MGM’s assets and its potential to dramatically reduce a bloated cost structure. A long history of private market transaction activity further supported our view that the stock was materially undervalued. However, choppy execution by former management and a profit growth plan that failed to live up to expectations made this a bumpy (yet rewarding!) investment for Oakmark. Perhaps the biggest surprise relative to our initial thesis is the momentum and excitement surrounding the online sports gambling market. The company’s BetMGM platform has quickly staked the third-largest market position in online sports betting with plans to capture up to 25% of this $30+ billion market, which continues to grow rapidly. The exuberance surrounding digital gaming, coupled with expectations for a strong post-pandemic recovery in Las Vegas, has lifted the stock price to our estimate of intrinsic value. Therefore, we sold our shares in favor of more attractively priced alternatives.”
2. Morgan Stanley (NYSE:MS)
Number of Hedge Fund Holders: 69
Morgan Stanley (NYSE:MS) is placed second on our list of 10 stocks that analysts are raising price targets of. The firm provides financial services and is headquartered in New York.
On September 28, investment advisory Berenberg downgraded Morgan Stanley (NYSE:MS) stock to Hold from Buy but raised the price target to $95 from $91, noting that the shares for the firm now seemed fairly valued.
At the end of the second quarter of 2021, 69 hedge funds in the database of Insider Monkey held stakes worth $5.3 billion in Morgan Stanley (NYSE:MS), down from 79 in the preceding quarter worth $5.2 billion.
In its Q1 2021 investor letter, Artisan Partners Limited Partnership, an asset management firm, highlighted a few stocks and Morgan Stanley (NYSE:MS) was one of them. Here is what the fund said:
“Top three contributor Morgan Stanley, a leading global financial services company, came into the portfolio in Q4 as a result of its purchase of E*TRADE. E*TRADE is a great fit on Morgan Stanley’s wealth management platform and provides a considerable amount of non-interest-bearing deposit funding. James Gorman, chairman and CEO, has steadily de-risked Morgan Stanley’s business by adding less volatile fee streams and deemphasizing the risk-obtuse culture of prior management. We believe the market will come to appreciate this mix shift over time.”
1. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 86
NVIDIA Corporation (NASDAQ:NVDA) is ranked first on our list of 10 stocks that analysts are raising price targets of. The company operates as a visual computing firm and is headquartered in California.
On September 28, investment advisory Susquehanna maintained a Positive rating on NVIDIA Corporation (NASDAQ:NVDA) stock and raised the price target to $250 from $220. Christopher Rolland, an analyst at the advisory, issued the ratings update.
At the end of the second quarter of 2021, 86 hedge funds in the database of Insider Monkey held stakes worth $9 billion in NVIDIA Corporation (NASDAQ:NVDA), up from 80 the preceding quarter worth $6 billion.
In its Q1 2021 investor letter, Vulcan Value Partners, an asset management firm, highlighted a few stocks and NVIDIA Corporation (NASDAQ:NVDA) was one of them. Here is what the fund said:
“NVIDIA Corp. is the dominant supplier of Graphics Processing Units (GPUs) worldwide. NVIDIA’s GPUs are at the intersection of a number of important computing trends including the movement to the Cloud, artificial intelligence, autonomous vehicles, edge computing, gaming, and more. We previously owned NVIDIA and sold it in the third quarter of 2020 as the price to value gap closed and our margin of safety was reduced. As with all our MVP companies, we continued to follow NVIDIA closely. Since that time, NVIDIA reported excellent results and its value has compounded rapidly. The technology selloff at the beginning of the year negatively affected the stock price while our estimate of NVIDIA’s value per share increased. This happy combination of events created a margin of safety and an opportunity to once again add NVIDIA to the portfolio.”
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