The three major indexes are flat this morning as many traders look for a sense of market direction before jumping in. Many eyes will also be on tonight’s Vice Presidential debate to see where Tim Kaine and Mike Pence stand on the issues.
In this article, we will find out why five stocks, Darden Restaurants, Inc. (NYSE:DRI), Kinder Morgan Inc (NYSE:KMI), Ophthotech Corp (NASDAQ:OPHT), Wells Fargo & Co (NYSE:WFC), and Telefonaktiebolaget LM Ericsson (NASDAQ:ERIC), are in the spotlight today. We will also take a look at the last 13F filings of smart money investors from our database to see what they collectively think about the companies in question.
At Insider Monkey, we track around 740 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on, can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see the details here).
Darden Restaurants, Inc. (NYSE:DRI)’s stock is in the green after the company reported better-than-expected earnings for its fiscal first quarter. For the period ended August 28, Darden posted earnings of $0.88 per share, versus estimates of $0.82 per share. Corresponding revenue was $1.71 billion, up by 1.2% year-over-year, and just $10 million under the Street’s estimate. Same-restaurant sales inched up by 1.3%, led by a 2% jump in Olive Garden revenue and the company bought back around $196 million worth of its own shares. Darden Restaurants, Inc. (NYSE:DRI) also increased its fiscal 2017 EPS outlook to between $3.87 and $3.97 from the previous $3.80-$3.90 range. Full-year same store sales growth is still seen coming in the range between 1% and 2%. Jeffrey Smith‘s Starboard Value Lp cut its stake in Darden Restaurants, Inc. (NYSE:DRI) by 42% to just under 3.9 million shares during the second quarter.
Traders are watching Kinder Morgan Inc (NYSE:KMI) after Selman Akyol, analyst at Stifel, downgraded the stock to ‘Hold’ from ‘Buy’, citing valuation for the ratings change. Due to improved sentiment and a rebound in oil prices, Kinder Morgan’s shares have been one of the best major stock performers this year, rising by 57% year-to-date and the rally in the infrastructure giant’s shares have brought Kinder Morgan stock close to Akyol’s target price of $24 per share. Unlike what other analysts do at times when the price of a company approaches the target price, Akyol didn’t bump up his price target, at least not yet. Of the 749 funds in our database, 53 of them amassed $1.77 billion worth of Kinder Morgan Inc (NYSE:KMI)’s stock, which accounted for 4.20% of the float on June 30, versus 58 and $2.29 billion, respectively, on March 31.
On the next page, we take a closer look at Ophthotech Corp, Wells Fargo & Co, and Telefonaktiebolaget LM Ericsson.Ophthotech Corp (NASDAQ:OPHT) is up by around 5% after Anupam Rama, analyst at JPMorgan, hiked his price target on the biotech stock to $110 from $95 per share. Although the market sold off Ophthotech shares on the news that peer Regeneron Pharmaceuticals Inc (NASDAQ:REGN) reported disappointing results last week from a Phase 2 study of the combination of aflibercept and rinucumab versus the control of aflibercept for the potential treatment of wet AMD, Rama thinks the news means that there is one less potential competitor for the space. The analyst considers there are important differences in mechanisms of actions between Regeneron’s REGN2176-3 and Ophthotech’s Fovista that the market is overlooking in its sell off. According to our data, 27 funds were long almost one quarter of Ophthotech Corp (NASDAQ:OPHT)’s float at the end of the second quarter.
David Long of Raymond James is the latest analyst to lose some faith in Wells Fargo & Co (NYSE:WFC), at least in the near term. Long downgraded the bank’s stock to ‘Underperform’ from ‘Market Perform’, noting that the shady sales tactic scandal could result in a period of under-performance for the stock. The various lawsuits, investigations, and fines mask Wells Fargo’s fundamentals, and could cause some investors to stay away from the bank for an extended period of time. A total of 88 funds tracked by us held shares of Wells Fargo & Co (NYSE:WFC) at the end of June, down by two funds from the previous quarter.
Telefonaktiebolaget LM Ericsson (NASDAQ:ERIC) is in the spotlight after the company announced that it will trim about one-fifth of its workforce in Sweden in addition to several hundred consultants to improve its competitiveness. The roughly 3,900 job cuts are part of Ericsson’s cost-efficiency initiatives to improve returns on capital. Shares of the company are down 22% year-to-date. At the end of June, 12 investors from our database held 3.5% of Telefonaktiebolaget LM Ericsson (NASDAQ:ERIC)’s float.