In this article, we discuss the 5 stocks that recently received upgrades from analysts. If you want to read our detailed analysis of these companies, go directly to Analysts Just Turned Bullish on These 10 Stocks.
5. Chewy, Inc. (NYSE:CHWY)
Number of Hedge Fund Holders: 21
Needham upgraded Chewy, Inc. (NYSE:CHWY) from “Hold” to “Buy” and issued a price target of $55 per share for the pet food retailer on Monday, June 27, 2022. The research firm referred to the better-than-expected financial performance of Chewy, Inc. (NYSE:CHWY) in its fiscal first quarter.
Needham analyst Anna Andreeva referred to the inelastic demand for Chewy products, besides price hikes and easing of supply-chain issues. The demand for pet food usually remains stable as people have to buy food for their pets even if the economic conditions are unstable.
4. AutoZone, Inc. (NYSE:AZO)
Number of Hedge Fund Holders: 38
AutoZone, Inc. (NYSE:AZO) received an upgrade from Goldman Sachs on Monday, June 27, 2022. The research firm raised its ratings for the aftermarket automotive parts retailer from “Neutral” to “Buy,” citing non-discretionary sales of the company.
Goldman Sachs analyst Kate McShane believes that inelastic demand for AutoZone products would help the company steer through the ongoing inflationary environment. McShane also lifted her price target for AutoZone, Inc. (NYSE:AZO) from $1,969 per share to $2,296 per share.
Earlier this year, investment management firm Weitz Investment Management mentioned AutoZone, Inc. (NYSE:AZO) in its fourth-quarter 2021 investor letter. The firm said:
“The Fund’s investments in auto-related businesses were consistent top performers in 2021. Shortages of new vehicles have driven buyers into the used car market. AutoZone has won new customers who need to maintain vehicles they now plan to own longer (and federal stimulus checks have given car owners some extra cash to spend on car maintenance).”
3. Chipotle Mexican Grill, Inc. (NYSE:CMG)
Number of Hedge Fund Holders: 38
OTR Global improved its ratings for Chipotle Mexican Grill, Inc. (NYSE:CMG) from “Mixed” to “Positive” on Monday, June 27, 2022. The research firm referred to marginal improvement in the second-quarter trends over the comparable period of 2021.
Chipotle Mexican Grill, Inc. (NYSE:CMG) surpassed profit and sales expectations for the first quarter of 2022. The fast-casual restaurant operator reported adjusted earnings of $5.70 per share, topping estimates of $5.64 per share. The quarterly revenue of $2.02 billion also exceeded the consensus of $2.01 billion.
Separately, investment management firm Ensemble Capital talked about Chipotle Mexican Grill, Inc. (NYSE:CMG) in its first-quarter 2022 investor letter. The firm said:
“Chipotle (6.0% weight in the Fund): In a recent blog post called GREAT COMPANIES ARE FORGED DURING CRISIS we discussed why companies with economic moats, relevant products and services, and those that create stakeholder value are more resilient in the face of crisis than the average company. Less advantaged competitors, in turn, struggle, which creates opportunities for great companies to get even better.
We think Chipotle navigated the COVID environment better than any major quick-serve restaurant and has consequently gone from strength to strength. Indeed, from March 1, 2020 to March 31, 2022, Chipotle shares gained 106% versus the S&P 500 Restaurants Index’s 28% return, including dividends.
To be sure, going into 2020, Chipotle had some recent experience in managing through a crisis. Its self-inflicted foodborne illness crisis that occurred in 2015 and 2016 threatened to permanently impair Chipotle’s brand value and damage customer trust. While the company made some changes at the top, bringing in Brian Niccol as CEO, and reorganized its food preparation processes, it did not abandon its mission of providing customers with freshly-prepared, sustainably-sourced food. Even at the nadir of its crisis, the average revenue of a Chipotle restaurant remained in line with the average fast casual restaurant in the US.”
2. Old Dominion Freight Line, Inc. (NASDAQ:ODFL)
Number of Hedge Fund Holders: 41
Old Dominion Freight Line, Inc. (NASDAQ:ODFL) received an upgrade from Wells Fargo on Monday, June 27, 2022. The research firm upgraded the less-than-truckload (LTL) carrier from “Equal Weight” to “Overweight,” citing growth opportunities for the company within the market.
Wells Fargo analyst Allison Poliniak-Cusic said that Old Dominion Freight Line, Inc. (NASDAQ:ODFL) is boosting its presence in the LTL market. He also thinks that the company’s profitability will continue to improve. Poliniak-Cusic raised his price target for Old Dominion Freight Line, Inc. (NASDAQ:ODFL) from $280 per share to $300 per share.
Investment management firm ClearBridge Investments mentioned Old Dominion Freight Line, Inc. (NASDAQ:ODFL) in its first-quarter 2021 investor letter published earlier this year. ClearBridge stated:
“We exited our position in Old Dominion Freight Lines (NASDAQ:ODFL), in the industrial sector. While our opinion of the freight carrier’s business quality is unchanged, we believe the stock’s current price reflects less potential than some of the new opportunities we have been evaluating.”
1. Atlassian Corporation Plc (NASDAQ:TEAM)
Number of Hedge Fund Holders: 65
Goldman Sachs upgraded Atlassian Corporation Plc (NASDAQ:TEAM) from “Neutral” to “Buy” on Monday, June 27, 2022. The research firm thinks that Atlassian is ready to benefit from the rising demand for its DevOp solutions.
Goldman Sachs analyst Kash Rangan thinks that Atlassian Corporation Plc (NASDAQ:TEAM) has reached a critical point in its cloud transition. Rangan also raised his price target for Atlassian Corporation Plc (NASDAQ:TEAM) from $279 per share to $300 per share.
Earlier this year, investment management firm ClearBridge Investments mentioned Atlassian Corporation Plc (NASDAQ:TEAM) in its first-quarter 2021 investor letter, stating:
“The structural bucket has the shortest investment horizon across the spectrum of growth companies we target in the Strategy. We closely monitor the macro impacts and turnaround progress of these companies and will be disciplined sellers when the thesis for a holding plays out. We also trimmed back workflow software maker Atlassian (NASDAQ:TEAM) after a strong runup in its shares in 2021. Most of our reductions in emerging growth have involved IT or related companies where innovation is a key to their business model. That said, we remain positive on the IT sector and have largely maintained holdings in our highest-conviction ideas.”
You can also take a peek at 10 Best Recession Stocks to Buy According to Wells Fargo and 6 Defensive Stocks to Buy in 2022 According to Seth Klarman.
