4 big analyst picks: Citi upgrades Verizon, sees better days for telecom stocks
Here is your Pro Recap of the biggest analyst picks you may have missed since yesterday: upgrades at Verizon Communications, NextEra Energy, Rockwell Automation, and First Bancshares.
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Verizon gains on Citi upgrade
Verizon Communications (NYSE: NYSE:VZ) shares rose more than 3% yesterday after Citi upgraded the company to Buy from Neutral and raised its price target to $40.00 from $39.00, as reported in real-time on InvestingPro.
The bank noted that the competitive environment in the wireless industry is showing signs of stabilization, which should contribute to improved operational performance.
“We see a few factors that point towards a stabilizing wireless competitive landscape. Cable share gains have not been a zero-sum game,” stated Citi, highlighting the recent targeted pricing increases and longer device holding periods, which contribute to reducing upgrade costs and stabilizing churn.
According to Citi, better forward FCF is expected to help lower net debt leverage and support high dividend yields.
NextEra Energy surges following Raymond James upgrade
NextEra Energy Partners (NYSE:NEP) shares surged more than 4% yesterday after Raymond James upgraded the company to Outperform from Market Perform with a price target of $60.00.
The key driver behind the upgrade is the company's current dividend yield of 7.0%, which is notably higher than the 10-year Treasury yield by 290 basis points. This substantial spread is wider than the long-term median of 170 basis points.
"Only once during NEP’s decade-long history as a public company did this spread ever surpass 300 bp, and only briefly – this was, in fact, during the initial COVID crisis. We are mindful that the macro interest rate environment may continue to pressure all rate-sensitive equities, but this stock is not priced for perfection."
Two more upgrades
Wells Fargo upgraded Rockwell Automation (NYSE:ROK) to Equal Weight from Underweight and raised its price target to $317.00 from $290.00.
DA Davidson upgraded The First Bancshares (NASDAQ:FBMS) to Buy from Neutral with a price target of $34.00.
"The bank boasts solid defensive characteristics, including favorable comps vs. peers on funding and liquidity, while capital and credit quality remain solid. At the same time, FBMS seems incrementally upbeat on loan pipelines, and appears poised to continue demonstrating above-peer core profitability."
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