Reynolds American, Inc. (RAI), MGP Ingredients Inc (MGPI), and More: Here’s What Analysts Had To Say About These Stocks in the Spotlight

Given that analysts can often affect short term sentiment, we at Insider Monkey have put together a list of recent Wall Street analyst commentary concerning five stocks, Reynolds American, Inc. (NYSE:RAI), MGP Ingredients Inc (NASDAQ:MGPI), Alkermes Plc (NASDAQ:ALKS), Cyberark Software Ltd (NASDAQ:CYBR), and Proofpoint Inc (NASDAQ:PFPT).

Let’s take a closer look at the commentary and also see how the investors from our database traded the stocks during the second quarter.

Hedge fund sentiment is an important metric for assessing the long-term profitability. At Insider Monkey, we track over 745 hedge funds, whose quarterly 13F filings we analyze and determine their collective sentiment towards several thousand stocks. However, our research has shown that the best strategy is to follow hedge funds into their small-cap picks. This approach can allow monthly returns of nearly 95 basis points above the market, as we determined through extensive backtests covering the period between 1999 and 2012 (see the details here).

Although it rallied 14% on Friday, Bonnie Herzog of Wells Fargo thinks there is a probability that Reynolds American, Inc. (NYSE:RAI) could go higher as she questions whether $56.40 per share is high enough to convince Reynolds’ board and shareholders to sell the company to British American Tobacco. If it isn’t, Herzog thinks Reynolds could ask for more. Herzog has an ‘Overweight’ rating on the tobacco sector and an ‘Outperform’ rating on Reynolds. Among the funds we track, 40 funds owned $1.47 billion worth of Reynolds American, Inc. (NYSE:RAI)’s shares, which accounted for 1.90% of the float on June 30, versus 39 funds and $1.69 billion, respectively, on March 31.

When MGP Ingredients Inc (NASDAQ:MGPI)‘s stock fell sharply on Friday afternoon due to reports of a chemical accident in Kansas, SunTrust analyst William Chappell thought the pullback was an ‘overreaction’ as apparently all the associated injuries were rather minor. Chappell said the dip was a buying opportunity and maintained his ‘Buy’ rating on the stock. It turned out that the market largely agreed with Chappell, as MGP Ingredients subsequently rallied from $34 to close at $38.81 per share. The number of funds from our database with holdings in MGP Ingredients Inc (NASDAQ:MGPI) rose by two quarter-over-quarter to seven at the end of June.

On the next page, we examine what analysts had to say about Alkermes Plc, Cyberark Software Ltd, and Proofpoint.
Alkermes Plc (NASDAQ:ALKS) received more confidence from David Risinger of Morgan Stanley on Friday, as the analyst upgraded the stock to ‘Equal Weight’ from ‘Underweight’ and hiked his price target to $62 per share from $45. After successful data from a Phase 3 trial, FORWARD-5, was released, Risinger estimated that the odds of FDA approval for the company’s lead drug candidate, ALKS 5461, had risen to around 50%. Although the stock is still risky, the market for the company’s potential later-line MDD drug could be vast. A total of 25 funds followed by our team had a bullish position in Alkermes Plc (NASDAQ:ALKS) at the end of June, down by one from the previous quarter.

Cyberark Software Ltd (NASDAQ:CYBR) received the thumbs up from Howard Smith of First Analysis on Friday, as the analyst initiated coverage on the stock with a $60 price target and an ‘Overweight’ rating. Smith is bullish because he thinks CyberArk will grow its market share and continue to expand its margins and free cash flow. The recent cyber-attacks on a certain DNS provider has also helped sentiment. The number of funds with holdings in Cyberark Software Ltd (NASDAQ:CYBR) went up by three quarter-over-quarter to 22 at the end of June.

Proofpoint Inc (NASDAQ:PFPT) received a boost from Stephens analyst Jonathan Ruykhaver, who raised his price target to $90 from $80 and maintained his ‘Overweight’ stance after Proofpoint reported better-than-expected third-quarter results on the last day of the trading week. Ruykhaver believes Proofpoint’s management will deliver a strong performance in 2017 due to the combination of cross selling, high renewal rates, and robust organic business wins. According to our data, 20 funds had a bullish position in Proofpoint Inc (NASDAQ:PFPT) at the end of June, down by two funds from the previous quarter.

Disclosure: None