Deep Dive

Philip van Doorn

June 9, 2020, 10:09 a.m. EDT

These 22 buy-rated stocks have gotten as much as 36% ahead of Wall Street’s price targets. Something has got to give

Analysts will need to raise their price targets or cut their ratings

By Philip van Doorn, MarketWatch


Bloomberg
Shares of Norwegian Cruise Line Holdings were up 71.5% for the week through June 8. The stock had majority ‘buy’ ratings among sell-side analysts, but the share price was 36% ahead of the analysts’ consensus target.

Some stocks that are heavily favored by sell-side analysts have gotten ahead of consensus price targets. This means analysts will need to cut their “buy” ratings or push price targets higher.

It’s worth taking a breath and a hard look at portfolios, index fund and ETF holdings if you are focused on the short term. When the benchmark S&P 500 Index (S&P:SPX)  fell to this year’s closing low March 23, it was down 30.7% for 2020. From the March 23 low, the index soared 44.5% through June 8. It was then flat for 2020. Remarkable.


FactSet
After a swift ride, the S&P 500 was flat for 2020.

Hundreds of MarketWatch readers commented about this list of stocks that fell at least 60% during the first quarter, all of which have gained tremendously so far in the second quarter — but were still down big for 2020 (through June 5).

Many of the comments attributed the broad market recovery to actions by the Federal Reserve and investors’ over-enthusiasm as the U.S. economy began to reopen after the COVID-19-led shutdown.

In response to those concerns, here’s another list. Starting again with the S&P 500, there are 22 stocks with majority “buy” or equivalent ratings among analysts polled by FactSet, with consensus price targets that are at least 10% lower than the closing prices June 8:

Company Ticker Price change - one week through June 8 Price change - 2020 Share 'buy' ratings Closing price - June 8 Consensus price target Implied 12-month upside potential
Norwegian Cruise Line Holdings Ltd. (NYS:NCLH)   71.5% -54.0% 56% $26.86 $17.10 -36%
Royal Caribbean Cruises Ltd. (NYS:RCL)   44.8% -43.7% 58% $75.12 $50.64 -33%
PVH Corp. (NYS:PVH)   52.8% -33.9% 52% $69.46 $54.25 -22%
TransDigm Group Inc. (NYS:TDG)   16.5% -11.6% 57% $494.94 $393.86 -20%
Schlumberger NV (NYS:SLB)   28.0% -41.2% 56% $23.65 $18.89 -20%
Alaska Air Group Inc. (NYS:ALK)   46.9% -25.8% 71% $50.24 $42.14 -16%
Discover Financial Services (NYS:DFS)   29.0% -27.7% 58% $61.29 $51.60 -16%
Lennar Corporation Class A (NYS:LEN)   3.6% 12.3% 62% $62.66 $53.80 -14%
Synchrony Financial (NYS:SYF)   31.9% -25.4% 75% $26.87 $23.08 -14%
Align Technology Inc. (NAS:SLGN)   18.0% 3.8% 65% $289.75 $249.57 -14%
Skyworks Solutions Inc. (NAS:SWKS)   13.7% 11.5% 59% $134.74 $116.08 -14%
Fifth Third Bancorp (NAS:FITB)   27.7% -19.4% 58% $24.77 $21.47 -13%
Live Nation Entertainment Inc. (NYS:LYV)   16.1% -20.1% 64% $57.09 $49.60 -13%
Wynn Resorts Ltd. (NAS:WYNN)   30.6% -21.7% 67% $108.80 $94.65 -13%
Lincoln National Corporation (NYS:LNC)   31.9% -15.2% 54% $50.04 $43.58 -13%
Aptiv PLC (NYS:APTV)   16.1% -7.9% 78% $87.50 $77.67 -11%
Hess Corporation (NYS:HES)   26.4% -10.2% 62% $59.98 $53.70 -10%
Federal Realty Investment Trust (NYS:FRT)   28.3% -20.3% 53% $102.54 $92.00 -10%
Adobe Inc. (NAS:ADBE)   2.9% 20.6% 67% $397.78 $357.41 -10%
Roper Technologies Inc. (NYS:ROP)   2.1% 13.5% 54% $401.90 $361.55 -10%
Accenture PLC Class A (NYS:ACN)   4.8% 0.3% 63% $211.28 $190.12 -10%
SVB Financial Group (NAS:SIVB)   9.9% -6.0% 57% $236.04 $212.72 -10%
Source: FactSet

Scroll the table to see all the data, including the price targets. Click on the tickers for more about each company, including news and business profiles.

Fourteen of the listed stocks were still down by double-digit percentages for 2020 (through June 8.)

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