Stocks get upgraded every day, but some are more impactful and meaningful than others, which is why I’m looking at those that may have the most meaning. These are upgrades where analysts provide reason for their call, and base their opinions on fundamental factors, rather than simply providing a price target with no note. Thus, let’s look at these four calls!
A High-Flyer With More Upside Coming
Santarus, Inc. (NASDAQ:SNTS) saw gains of almost 7% on Monday, following Stifel Nicolaus’ price target hike from $22 to $24. According to Stifel, physicians are “very satisfied” with the company’s new drug Uceris, with gastroenterologists prescribing the drug for several off-label indications; according to channel checks and surveys.
During the company’s last quarter, total scripts written increased 44% year-over-year for its five marketed drugs. While this is great, it was Uceris that really shocked everyone.
Uceris is used to treat a form of ulcerative colitis – it launched last quarter – and analysts had originally expected just $3 million in first quarter sales; peak sales around $250 million. However, the drug actually produced $6.6 million and the company estimated that sales could reach $300 million.
Now, with off-label use, the upside for this drug might be even higher. When you combine this fact with the $700 million in peak sales from its other approved drugs, and its pipeline, then it seems logical that Santarus, Inc. (NASDAQ:SNTS) still has a great deal of upside potential!
Company Transformation Leads to “Buy” From “Sell”
Goldman Sachs has had a major change of heart, upgrading Cytec Industries Inc (NYSE:CYT) from “Sell” to “Buy” and upping its price target from $68 to $93. So, why the sudden change of heart? Goldman believes that in light of Boeing’s battery problems, Cytec’s aerospace division is undervalued and has room to run higher.
Cytec Industries Inc (NYSE:CYT) reported revenue of $1.8 billion over the last 12 months, but aerospace was a fairly small piece. The company significantly strengthened its aerospace division last year with the acquisition of Umeco, which produces composite and process materials primarily for the aerospace and defense segment.
Goldman’s call appears right on, as although Cytec Industries Inc (NYSE:CYT) does not build planes, it does benefit from the construction and development of aircrafts. Over the last couple years, the company has undergone a massive restructuring, increasing presence in aerospace and decreasing its presence in chemical and coating.
Thus, Goldman, like many investors, weren’t sure how to asses or value the company. But now, with many of its pieces beginning to fit together, a clearer vision is being seen, and that vision suggest a “Buy” worthy stock.
Are Fears Overdone?
Citigroup upgraded TD Ameritrade Holding Corp. (NYSE:AMTD) to “Buy” with a price target of $29 from $25. The firm believes that the interest rate scare was overdone and that higher rates will boost the company’s bottom line; creating an earnings surprise!
TD Ameritrade Holding Corp. (NYSE:AMTD) has rallied 55% in 2013. The reasons are quite simple: As the markets trade higher there is a belief that more trading activity will lead to higher revenue. However, there has been a dull spot, as many feared that interest rates would fall, which would cut into the company’s revenue for many of its interest rate dependent services.
Citi says this isn’t a worry. Personally, at 5.3 times sales with just 1% top-line growth, I fall into the category of those who are beginning to worry.
More Room For This Engine To Grow?
Priceline.com Inc (NASDAQ:PCLN) is like the “big” engine that could. It’s the $45 billion stock that has rallied 730% over the last five years (almost 4% on Monday), which people keep thinking has reached its peak. However, Morgan Stanley believes there is yet more upside, upgrading it from “Neutral” to “Overweight”.