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Dec. 19, 2019, 10:12 a.m. EST

Why UBS thinks Amazon shares are headed to $2,100

Critical information for the U.S. trading day

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By Barbara Kollmeyer, MarketWatch


AFP via Getty Images
Up and up for Amazon shares.

The headlines are all about President Donald Trump’s impeachment, but the stock markets don’t care.

And unless investors begin to think a Republican-controlled Senate will vote to remove him, that attitude won’t change.

With just eight trading days left to go in the year, it’s tough to get markets excited about much right now, whereas a year ago they were pretty volatile.

How about some stock ideas for 2020? We bring you those via our call of the day from UBS, which polled its North American managers to get their most compelling ideas going forward. Read on:

Amazon.com /zigman2/quotes/210331248/lastsale AMZN -2.16%   — UBS has a $2,100 target on buy-rated Amazon — 17% upside from Wednesday’s close of $1,784.03. Analyst Eric Sheridan believes investor concerns about the high costs of one-day shipping and investments in Amazon Web Services are now reflected in share prices. And, of course, Amazon dominates in e-commerce, cloud computing, digital ad and media consumption.

Tenet Healthcare /zigman2/quotes/207964487/lastsale THC -9.65%  — The investment bank rates the health care company’s shares a buy, and sees 40% upside for shares, with a price target of $53 (Wednesday’s close — $37.98). Wall Street is just too negative, says analyst Whit Mayo, who expects management to announce another cost reduction program next year. That would be another boost for shares.

Coca-Cola /zigman2/quotes/209159848/lastsale KO -4.81% — “We like Coca-Cola for stable earnings growth to ride out defensive times,” says analyst Sean King, who has a $63 price target on the buy-rated drinks giant (a 16% gain from Wednesday’s close of $53.91. And the company is on the way to improving its free cash flow productivity, a long concern of investors. Bet on Coke over Pepsi /zigman2/quotes/208744353/lastsale PEP -1.65% , he says (Morgan Stanley said the same recently).

United States Steel /zigman2/quotes/200069642/lastsale X +1.27%  — UBS is convinced that investors should sell the steel group, laying out a price target of $7 per share — a 48% drop from Thursday’s close of $13.61. Analyst Andreas Bokkenheuser says the company is set to lose market share in an environment where pricing is competitive, and will probably burn cash over the next two years to invest in key assets.

Other stocks they like? Telecommunication company T-Mobile /zigman2/quotes/204659678/lastsale TMUS +1.47% , multinational conglomerate General Electric /zigman2/quotes/208495069/lastsale GE -11.34% , transport company Norfolk Southern /zigman2/quotes/200877725/lastsale NSC -4.10% , investment bank Citigroup /zigman2/quotes/207741460/lastsale C -8.57% , retailer Lowe’s /zigman2/quotes/205563664/lastsale LOW -6.54%  and toy company Hasbro /zigman2/quotes/201249319/lastsale HAS -2.05%

Read: Hedge fund luminary Stanley Druckenmiller on what could trigger a bear market

The market

It’s a lackluster start for the Dow /zigman2/quotes/210598065/realtime DJIA -4.44%  , S&P /zigman2/quotes/210599714/realtime SPX -4.41%    and Nasdaq /zigman2/quotes/210598365/realtime COMP -4.41% . European stocks /zigman2/quotes/210599654/delayed XX:SXXP -2.90% are slipping and Asian markets /zigman2/quotes/211618636/realtime XX:ADOW -0.80% mostly fell. The Bank of Japan didn’t change its interest rates, and neither did the Bank of England, which is probing an alleged hacking incident . The pound and U.K. stocks climbed as the Queen laid out the government’s Brexit plan.

But Sweden’s central bank has become the first central bank to exit negative rates.

The chart

Our chart from investment management company BlackRock (via The Daily Shot blog ) gives a pretty good visual on this year’s big winning sectors in the U.S., and puts global equity performances in perspective.

/zigman2/quotes/210331248/lastsale
US : U.S.: Nasdaq
$ 1,907.70
-42.02 -2.16%
Volume: 4.12M
April 1, 2020 4:00p
P/E Ratio
82.88
Dividend Yield
N/A
Market Cap
$970.68 billion
Rev. per Employee
$359,671
loading...
/zigman2/quotes/207964487/lastsale
US : U.S.: NYSE
$ 13.01
-1.39 -9.65%
Volume: 4.13M
April 1, 2020 6:30p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$1.50 billion
Rev. per Employee
$158,554
loading...
/zigman2/quotes/209159848/lastsale
US : U.S.: NYSE
$ 42.12
-2.13 -4.81%
Volume: 21.94M
April 1, 2020 6:30p
P/E Ratio
20.37
Dividend Yield
3.89%
Market Cap
$189.98 billion
Rev. per Employee
$506,342
loading...
/zigman2/quotes/208744353/lastsale
US : U.S.: Nasdaq
$ 118.12
-1.98 -1.65%
Volume: 6.87M
April 1, 2020 4:00p
P/E Ratio
22.74
Dividend Yield
3.23%
Market Cap
$166.85 billion
Rev. per Employee
$242,172
loading...
/zigman2/quotes/200069642/lastsale
US : U.S.: NYSE
$ 6.39
+0.08 +1.27%
Volume: 30.25M
April 1, 2020 6:30p
P/E Ratio
N/A
Dividend Yield
0.63%
Market Cap
$1.07 billion
Rev. per Employee
$489,379
loading...
/zigman2/quotes/204659678/lastsale
US : U.S.: Nasdaq
$ 85.13
+1.23 +1.47%
Volume: 11.02M
April 1, 2020 4:00p
P/E Ratio
21.14
Dividend Yield
N/A
Market Cap
$71.90 billion
Rev. per Employee
$832,885
loading...
/zigman2/quotes/208495069/lastsale
US : U.S.: NYSE
$ 7.04
-0.90 -11.34%
Volume: 99.53M
April 1, 2020 6:30p
P/E Ratio
95.52
Dividend Yield
0.57%
Market Cap
$69.41 billion
Rev. per Employee
$429,735
loading...
/zigman2/quotes/200877725/lastsale
US : U.S.: NYSE
$ 140.01
-5.99 -4.10%
Volume: 2.07M
April 1, 2020 6:30p
P/E Ratio
13.67
Dividend Yield
2.63%
Market Cap
$40.50 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/207741460/lastsale
US : U.S.: NYSE
$ 38.51
-3.61 -8.57%
Volume: 29.22M
April 1, 2020 6:30p
P/E Ratio
4.79
Dividend Yield
5.30%
Market Cap
$88.38 billion
Rev. per Employee
$479,167
loading...
/zigman2/quotes/205563664/lastsale
US : U.S.: NYSE
$ 80.42
-5.63 -6.54%
Volume: 8.11M
April 1, 2020 6:30p
P/E Ratio
14.70
Dividend Yield
2.74%
Market Cap
$65.96 billion
Rev. per Employee
$230,029
loading...
/zigman2/quotes/201249319/lastsale
US : U.S.: Nasdaq
$ 70.08
-1.47 -2.05%
Volume: 2.34M
April 1, 2020 4:00p
P/E Ratio
17.52
Dividend Yield
3.88%
Market Cap
$9.79 billion
Rev. per Employee
$848,083
loading...
/zigman2/quotes/210598065/realtime
US : Dow Jones Global
20,943.51
-973.65 -4.44%
Volume: 508.31M
April 1, 2020 5:09p
loading...
/zigman2/quotes/210599714/realtime
US : S&P US
2,470.50
-114.09 -4.41%
Volume: 3.67B
April 1, 2020 5:09p
loading...
/zigman2/quotes/210598365/realtime
US : U.S.: Nasdaq
7,360.58
-339.52 -4.41%
Volume: 3.23M
April 1, 2020 5:16p
loading...
/zigman2/quotes/210599654/delayed
XX : STOXX
310.77
-9.29 -2.90%
Volume: 0.00
April 1, 2020 5:50p
loading...
/zigman2/quotes/211618636/realtime
XX : Dow Jones Indices
2,669.83
-21.53 -0.80%
Volume: 0.00
April 1, 2020 8:05p
loading...
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