In this article, we will take a look at the 10 stocks recently upgraded by analysts.
Bond traders are increasingly betting on the possibility that the Federal Reserve will lead the U.S. economy into a recession. The short-term Treasuries, sensitive to policy changes, experienced a sell-off on June 14, while longer-term bonds rallied. According to Bloomberg, this shift occurred after Fed officials indicated their readiness to raise interest rates by another half-point this year, following a temporary pause in the central bank’s 15-month hiking campaign. Consequently, as measured by the gap between two-year and 10-year securities, the yield curve inverted by more than 90 basis points, nearing the extreme level of 109 basis points last observed in March. On June 15, gold experienced a decline, reaching a nearly three-month low, due to the strengthening of the U.S. dollar and Treasury yields following indications from the U.S. Federal Reserve about potential interest rate increases in the near future, reported Reuters. The price of spot gold dropped by 0.7% to $1,929.99 per ounce, marking its lowest level since March 17. Similarly, U.S. gold futures fell by 1.4% to $1,941.50. However, following the Federal Reserve’s decision to hold off on a rate hike during its recent meeting, U.S. stock futures showed little change. However, there were indications that two more rate hikes could potentially take place later in the year.
The Federal Reserve’s latest economic projections suggested that the economy is performing better than expected, and inflation is declining at a slower rate, indicating the likelihood of a half-percentage point increase in borrowing costs by the end of this year. The U.S. inflation rate has remained consistently higher than the Federal Reserve’s target of 2% per year. However, inflation eased to 4% in May, marking the lowest rate in two years, following a peak of 9.1% in June of the previous year. In light of the progress made in curbing inflation, the Federal Reserve decided to forgo a rate hike during its recent meeting.
On the Asian side, Morgan Stanley predicts that Asia’s economic growth will surpass that of the United States and Europe by the end of this year. According to the investment bank’s Chief Asia Economist, the region was less affected by interest rate shocks compared to its Western counterparts, leading to a projected outperformance of approximately 450 basis points in the fourth quarter. However, the annual exodus of millionaires from China is on the rise. According to CNBC, China experienced a net outflow of 10,800 high-net-worth individuals in 2022; this year, an additional net outflow of 13,500 is anticipated. This ongoing trend of wealthy individuals leaving China is not exclusive to the COVID-19 pandemic period but has persisted over the past decade. Notably, Australia is poised to surpass the United Arab Emirates in 2023 as the country attracting the highest net influx of millionaires.
On the stock market front, Stifel analyst Chris O’Cull has raised his recommendation on Domino’s Pizza, Inc. (NYSE:DPZ) from Hold to Buy. At the same time, Berenberg has upgraded The Estée Lauder Companies Inc. (NYSE:EL) from Hold to Buy. Meanwhile, notable stocks, including Accenture plc (NYSE:ACN) and Oracle Corporation (NYSE:ORCL) were spotted gaining value after receiving upgrades from analysts. Check out the complete article to see some other stocks recently upgraded by analysts.
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10. Braskem S.A. (NYSE:BAK)
Number of Hedge Fund Holders: 5
Braskem S.A. (NYSE:BAK) is a Brazilian company that produces and sells chemicals, including ethylene, polymer, and chemical grade propylene, butadiene, butene-1, benzene, toluene, and xylenes products. The company also produces and commercializes thermoplastic resins, fuels, intermediates, and other specialty chemicals.
On June 14, HSBC analyst Sriharsha Pappu upgraded Braskem S.A. from Hold to Buy. Following HSBC’s decision to upgrade Braskem S.A., the company experienced a 3.5% surge in its stock value. HSBC analyst Sriharsha Pappu emphasized Braskem S.A. favorable position, citing higher profit margins in Brazil, protective tariffs, and a dominant presence in the domestic market. HSBC believes that a potential bidding war could arise and finds the stock appealing due to positive mid-cycle earnings and the approaching end of the chemical cycle downturn.
9. D-Market Elektronik Hizmetler ve Ticaret A.S. (NASDAQ:HEPS)
Number of Hedge Fund Holders: 6
D-Market Elektronik Hizmetler ve Ticaret A.S. (NASDAQ:HEPS) was established in 2000 and is based in Istanbul, Turkey. It is an e-commerce platform operator based in Turkey. Their main website offers a wide range of products, including electronics, books, toys, cosmetics, and furniture. They also provide additional services such as HepsiExpress for on-demand grocery delivery, HepsiJet for last-mile delivery, and HepsiLojistik for storage and fulfillment. Other offerings include advertising services, international product purchasing through HepsiGlobal, e-money and payment services through Hepsipay and online airline ticket purchases through Hepsiburada Seyahat. On June 14, D-Market Elektronik Hizmetler ve Ticaret A.S. was upgraded by Citi analyst Maksim Nekrasov from Neutral to Buy. The analyst has also raised the price target from $0.90 to $2.00.
8. Virgin Galactic Holdings, Inc. (NYSE:SPCE)
Number of Hedge Fund Holders: 12
Virgin Galactic Holdings, Inc. (NYSE:SPCE) is an aerospace and space travel company focused on developing, manufacturing, and operating spaceships and related technologies to conduct commercial human spaceflight. Its main spacecraft, the SpaceShipTwo, travels supersonically to the boundary between Earth and space after being released from the launcher aircraft. In October 2019, Social Capital Hedosophia, the SPAC led by Chamath Palihapitiya, took Virgin Galactic Holdings, Inc. public, valuing the firm at around $2.3 billion. The stock has nosedived since then, and Palihapitiya has stepped down from his role on the firm’s board of directors. However, Alembic Global revised its assessment of Virgin Galactic Holdings Inc on June 14, upgrading its previous rating from Underweight to Neutral.
7. HSBC Holdings plc (NYSE:HSBC)
Number of Hedge Fund Holders: 13
HSBC Holdings plc (NYSE:HSBC) provides banking and financial services worldwide, operating through Wealth and Personal Banking, Commercial Banking, and Global Banking and Markets segments. HSBC Holdings plc (NYSE:HSBC) was founded in 1865 and is based in London, the United Kingdom. HSBC Holdings plc (NYSE:HSBC) has a prominent presence in over 63 countries across the globe. HSBC Holdings plc (NYSE:HSBC) is leveraging its global presence to optimize its non-essential operations while maintaining a strong core business that defies negative investor sentiment. On May 2, HSBC Holdings plc (NYSE:HSBC) reported Q1 financial results with a GAAP EPS of $0.52 and revenue of $20.2 billion, reflecting a substantial 64% YoY growth. Additionally, HSBC Holdings plc (NYSE:HSBC) saw positive growth in its net interest margin and common equity tier 1 capital ratio, while credit losses and impairment charges decreased significantly. On June 14, CICC analyst Dekai Hou raised their rating on HSBC Holdings plc (NYSE:HSBC) from Market Perform to Outperform.
6. IPG Photonics Corporation (NASDAQ:IPGP)
Number of Hedge Fund Holders: 24
Founded in 1990, IPG Photonics Corporation (NASDAQ:IPGP) is headquartered in Oxford, Massachusetts. IPG Photonics Corporation is a global leader in developing, manufacturing, and selling high-performance fiber lasers, amplifiers, and diode lasers for diverse applications in materials processing worldwide. Their laser product portfolio includes a range of innovative offerings, such as hybrid fiber-solid state lasers, pulsed lasers, tunable lasers, and optical fiber delivery cables, among others. They also provide integrated communications systems, specialty fiber amplifiers for broadband networks, and laser systems and tools for welding, cutting, and precision applications. IPG Photonics Corporation serves various sectors, including materials processing, communications, and medical fields, and distributes its products through direct sales, independent representatives, and distributors.
IPG Photonics Corporation saw a 16.8% increase in its share price during the morning session on June 14 following an upgrade from a Raymond James analyst. The stock’s rating was upgraded from Market Perform to Outperform while maintaining a price target of $170. Notably, the price target set by the analyst was 27% higher than the market price at the time of the upgrade announcement.
05. Shift4 Payments, Inc. (NYSE:FOUR)
Number of Hedge Fund Holders: 32
Shift4 Payments, Inc. (NYSE:FOUR) is a prominent company that offers comprehensive payment processing and technology solutions. Their offerings go beyond traditional payment services and encompass a diverse range of commerce-related tools, forming a complete omnichannel ecosystem. Their advanced technologies are utilized by more than 350 software providers across various industries, such as hospitality, retail, food and beverage, e-commerce, lodging, gaming, and numerous others. Shift4 Payments, Inc. aims to enable businesses in these sectors by providing the necessary tools and services to enhance their operations and streamline their payment processes. On June 14, MoffettNathanson revised their outlook for Shift4 Payments, Inc. from Market Perform to Outperform.
Artisan Small Cap Fund made the following comment about Shift4 Payments, Inc. in its Q1 2023 investor letter:
“Shift4 Payments, Inc. (NYSE:FOUR) provides integrated payments and commerce-enabling software to industries with complex payments workflows. The company’s business is built on three key components. First, its payments platform can be broadly integrated to over 400 software suites. Second, it has industry-tailored technology solutions such as SkyTab for the food and beverage industry (35% market share) and VenueNext for sports and entertainment industry (50% of NFL stadiums). And last, its products are distributed through a vast network of independent software vendors and value-added resellers. We believe the company will continue to generate attractive growth as it continues gaining market share within its core restaurant and hospitality verticals, converts payment gateway customers to end-to-end commerce solutions and enters new verticals.”
04. Domino’s Pizza, Inc. (NYSE:DPZ)
Number of Hedge Fund Holders: 34
Domino’s Pizza, Inc. is a pizza company operating in the US and internationally. It is based in Ann Arbor, Michigan. Stifel analyst Chris O’Cull has raised his recommendation on Domino’s Pizza, Inc. from Hold to Buy, along with an increased price target of $350, up from $320. According to the analyst’s research note issued on June 14, the stock has faced challenges in recent times, including declining delivery sales, decreased franchisee profitability, and slower unit growth. As a result, Domino’s Pizza, Inc. management has adjusted its long-term revenue expectations. However, following discussions with Domino’s management, Stifel believes the company will stabilize its delivery sales and achieve new record carryout sales within the next year. Stifel also anticipates improved sales performance, reduced commodity costs, and increased labor productivity, enhancing franchisee profitability and driving further unit growth.
03. The Estée Lauder Companies Inc. (NYSE:EL)
Number of Hedge Fund Holders: 59
The Estée Lauder Companies Inc. manufactures, markets, and sells skin care, makeup, fragrance, and hair care products worldwide. It is one of the best household stocks to invest in. Berenberg has upgraded The Estée Lauder Companies Inc. from Hold to Buy in a note on June 14. The analyst, Fulvio Cazzol, has set a price target of $243. Cazzol believes that The Estée Lauder Companies Inc. is “on the cusp of a glow-up” and considers the company’s shares attractive, especially after a decline since the beginning of the year.
ClearBridge All Cap Growth Strategy made the following comment about The Estée Lauder Companies Inc. in its Q4 2022 investor letter:
“The Estée Lauder Companies Inc. (NYSE:EL), which manufactures and markets cosmetics, fragrances, skin and hair care products across a number of well-known global brands including Clinique, MAC and Bobbi Brown, adds to our group of secular growers. Estee Lauder is a global leader in the prestige beauty space, which has outgrown the broader home and personal care category since 2010 and has historically been recession resilient. The company has substantial brand and pricing power and is overindexed to the highly profitable prestige skin care category. We believe the company’s most recent earnings report and 2023 guidance update, which was cut significantly due to uncertainty over China’s zero-COVID policy (China and travel retail are key growth drivers), provided an attractive entry point. At this point, we believe the stock has been significantly derisked and could see potential upside from a China recovery.”
02. Accenture plc (NYSE:ACN)
Number of Hedge Fund Holders: 60
Accenture plc (NYSE:ACN) is an Irish company based in Dublin. It is a technology consultancy firm that enables customers to leverage advanced technologies such as artificial intelligence into their business processes and operations. On June 14, Piper Sandler analyst Arvind Ramnani revised their recommendation on Accenture plc (NYSE:ACN), upgrading it from Underweight to Neutral. Additionally, the analyst has increased the price target from $250 to $316.
ClearBridge Sustainability Leaders Strategy made the following comment about Accenture plc (NYSE:ACN) in its Q4 2022 investor letter:
“Accenture plc (NYSE:ACN) is a leading global professional services company that helps clients build their digital infrastructure and optimize their operations. We view Accenture as a resilient, high-quality business with consistent earnings and cash flow, a strong balance sheet and very attractive returns on capital. Secular drivers like cloud migration and digital transformation, as well as new, innovative technology deployments like data security, block chain, AI and machine learning position Accenture well for continued growth. It is also currently rolling out a suite of sustainability tools that offers a comprehensive view of a company’s goals, progress and performance across financial and ESG measures, so it is an enabler of ESG for its clients. We exited our position in software-as-a-service company Workday to fund the position, largely on better relative risk/reward, in our view.”
01. Oracle Corporation (NYSE:ORCL)
Number of Hedge Fund Holders: 67
Oracle Corporation is a one-stop shop for software infrastructure solutions and services. The Oracle Cloud Infrastructure (OCI) provides complete solutions for Cloud deployment, including services related to servers, storage, network, applications, and services. Some of the top companies in the world are using OCI and Oracle Cloud services, including Uber, Zoom, Toyota, Cox Automotive, Cognizant, among others.
On June 13, Goldman Sachs revised their recommendation on Oracle Corporation, upgrading it from Sell to Neutral. They have also set a price target of $120.00. The upgrade comes as the company’s earnings and guidance have addressed some of the concerns previously outlined in Goldman Sachs’ Sell thesis. These concerns mainly revolved around the increasing capital expenditure needed to sustain growth in Gen2 OCI and the continuous loss of market share in the company’s core database business.
Ariel Focus Fund made the following comment about Oracle Corporation in its Q1 2023 investor letter:
“Additionally, global leader in enterprise software, Oracle Corporation (NYSE:ORCL) traded higher in the quarter, driven by solid quarterly earnings, a material increase in the dividend as well as forward looking guidance that implies a substantial acceleration in organic cloud growth for full year 2023. We believe these results highlight ORCL’s ability to effectively cross-sell and upsell apps and infrastructure, as well as the emergence of the company’s cloud platform as a competitive offering.”
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This article is originally published at Insider Monkey.
