Analyst Upgrades: 7 Stocks Wall Street Is Loving in June
Perhaps one of the most controversial topics, on surface level, the concept of analyst upgraded stocks should seem a no-brainer. In our heads, we have fantastical ideas that analysts are nothing more than equity market nerds that eat and sleep publicly traded securities. So, their advice is as good as gold, right? Well, to be honest, not really.
According to an article by the Financial Post, analysts’ target prices rarely ring accurate, per a global study in 2012. Further, Investopedia points out that the accuracy rate among Wall Street experts sits at around 30% for price targets featuring 12 to 18-month horizons. Again, that’s not a great endorsement of top stocks with analyst upgrades.
Nevertheless, investors need to be careful about reading into such studies with either a pessimistic or optimistic bias. As constantly evolving cycles, the equities market may – based on underlying conditions – be more or less predictable. Therefore, we shouldn’t necessarily throw Wall Street’s favorite stocks in June out the window.
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Instead, we’ll take a look not just at the assessment hikes themselves but some of the underlying reasons. On that note, below are high-potential stocks with upgrades.
Petrobras (PBR)
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According to data from MarketWatch, Brazilian petroleum specialist Petrobras (NYSE:PBR) received an upgrade from Goldman Sachs. Technically, it’s not difficult to see why. Since the beginning of this year, PBR gained over 57% of equity value, a blistering performance. Just in the past month, shares skyrocketed over 29%.
From a Reuters report, PBR ranks among the analyst upgraded stocks as Brazil’s state-run oil firm appears to be aligning its forward policies with principles that should be somewhat favorable to investors. Looking at the bigger picture, the consensus view for PBR is strong buy. This assessment breaks down as four buys and one hold. Overall, the experts’ price target lands at $16.02, implying over 7% upside potential.
On the financials, Petrobras posts strong operational stats. For example, its three-year revenue growth rate (on a per-share basis) pings at 27.6%, above 80.87% of its peers. At the same time, the market prices shares at a forward multiple of only 4.71. Not surprisingly, then, it’s one of Wall Street’s favorite stocks in June.
Avis Budget (CAR)
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Another one of the recent analyst upgraded stocks, Avis Budget (NASDAQ:CAR) has been on a tear lately. Since the start of the year, CAR gained over 33% of equity value. However, just in the past month, it swung up to just under 33%. Morgan Stanley analyst Adam Jonas upgraded CAR to “overweight” from “equal rate.” In addition, he hiked his price target to $230 from $182.
“With the backdrop of normalization in the rental industry, we look for operational execution to preserve what could now be a higher floor for the industry,” Jonas said in a note to clients. “With its proven track record of fleet risk management and lower opex as % of sales, we upgrade CAR to OW.”
Overall, analysts peg CAR a strong buy. Their average price target comes in at $238.25, implying over 8% growth potential. So far, Avis’ financials look enticing, with a three-year revenue growth rate of 30% and an EBITDA growth rate of 42.7% over the same period. But it also trades at a discount to trailing-12-month earnings. That makes it one of the top stocks with analyst upgrades.
EQT (EQT)
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An energy firm, EQT (NYSE:EQT) engages in hydrocarbon exploration and pipeline transport. According to its public profile, EQT represents the largest natural gas producer in the Appalachian Basin with 19.8 trillion cubic feet equivalent of proved reserves. Thanks likely in part to its overarching relevance, Tudor Pickering analyst Jeoffrey Lambujon hiked EQT to a buy.
Overall, analysts remain optimistic about EQT despite growing emphasis in the energy sphere toward renewables. Per TipRanks, EQT carries as moderate buy consensus view. This assessment breaks down as 11 buys, five holds and zero sells. Overall, the experts’ average price target clocks in at $43.33, implying nearly 9% upside potential.
Financially, EQT justifies its inclusion as one of the analyst upgraded stocks thanks to its operational prowess. Its three-year revenue growth rate pings at 26.1%, above 79.46% of competitors. During the same period, its free cash flow growth rate printed 73.2%, above 89.58% of its peers. As well, its trailing-year net margin jumps off the page at 39.25%. Given its resilience, EQT symbolizes one of the high-potential stocks with upgrades.
Adobe (ADBE)
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One of the world’s biggest software companies, Adobe (NASDAQ:ADBE) recently became one of the analyst upgraded stocks. Specifically, Argus Research analyst Joseph Bonner reiterated a bullish assessment of ADBE. Also, MarketWatch reports that BMO Capital upgraded shares to buy. Both experts have similar price targets, the former at $565 (implying over 18% growth) and the latter at $570 (implying over 19% growth).
The reason why the software giant represents one of the stocks with analyst love in June centers on artificial intelligence. According to a Barron’s report, BMO’s Keith Bachman believes Adobe’s customers will be willing to spend more on generative AI additions to apps. “We think that Adobe can use generative AI to potentially increase prices of existing solutions and/or offer new SKUs, and that users would be willing to spend more for these solutions with generative AI,” Bachman said in a research note.
Financially, Adobe benefits from strong operational stats, particularly its three-year revenue growth rate of 18.1%. Also, its trailing-year net margin impresses at 26.34%, beating out over 95% of its peers. Thus, it’s one of the top stocks with analyst upgrades.
LiveRamp (RAMP)
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Headquartered in San Francisco, LiveRamp (NYSE:RAMP) is the leading data connectivity platform for the safe and effective use of data, per its public profile. A few days ago, RAMP became a highlight for analyst upgraded stocks. In particular, Benchmark’s Mark Zgutowicz upgraded RAMP to a buy. In addition, the expert forecasted shares to hit $32. If so, that would imply 16% upside potential.
Zgutowicz’s enthusiasm doesn’t appear misplaced. Craig-Hallum’s Jason Kreyer also reiterated a buy position in RAMP and for good reason: it’s on a tear. Since the January opener, shares jumped nearly 17%. Just in the trailing five sessions from the June 21 close, RAMP gained nearly 8%.
According to BestStocks.com, LiveRamp demonstrated a significant improvement in revenue compared to the consensus estimate for its most recent quarter. Just as encouragingly, Gurufucos points out that RAMP features five good signs financially and no red flags. Using indicators like the Altman Z-Score, the investment resource notes that LiveRamp enjoys broad fiscal strengths. Also, as a bonus, RAMP appears to be discounted relative to book value. Thus, it’s one of Wall Street’s favorite stocks in June.
OneSpaWorld (OSW)
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Based in the Bahamas, OneSpaWorld (NASDAQ:OSW) is one of the largest health and wellness services companies in the world. Per its corporate profile, OneSpaWorld offers its clients a comprehensive suite of premium health, wellness and beauty services onboard 163 cruise ships and at 54 destination resorts. Given that the revenge travel sentiment remains viable this year, OSW gained considerable attention, moving up over 26% since the January opener.
Even better, Loop Capital Markets’ Laura Champine hiked OSW to a buy. Moreover, the expert forecasts OSW hitting $13. If so, that would imply over 12% growth potential. Overall, OSW enjoys a strong buy unanimous view among three analysts. Further, the average price target stands at $15.33, implying over 32% upside. Therefore, it’s an intriguing idea for analyst upgraded stocks.
To be fair, the broader financial picture looks suspect due to the Covid-19 impact. However, in Q1 2023, OneSpaWorld posted revenue of $182.5 million, up 108% against the year-ago quarter’s tally of $87.7 million. If you’re willing to be patient, OSW could rank among the high-potential stocks with upgrades.
Baidu (BIDU)
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A China-based multinational technology company, Baidu (NASDAQ:BIDU) specializes in Internet-related services, products and AI. With its aggressive investments in digital intelligence, Baidu has become one of the world’s biggest AI enterprises. Further, with the recent diplomatic meeting between U.S. and Chinese officials, there’s hope that the two nations’ frayed relations can eventually mend. The market appears enthusiastic, raising BIDU to over 18% since the Jan. opener.
Just as well, BIDU ranks among the analyst upgraded stocks. Specifically, Morgan Stanley’s Gary Yu upgraded shares to buy. As well, the expert forecasts a price target of $190. If so, this projection implies nearly 35% growth potential. Overall, analysts peg BIDU as a unanimous strong buy (among 12 experts). Their average price target clocks in at $190.64, implying over 35% upside.
Financially, Baidu carries somewhat of a mixed bag. However, speculators will probably appreciate the company’s consistent profitability. Also, it’s worth pointing out that the market prices BIDU at a forward multiple of 14.63. As a discount to projected earnings, Baidu ranks better than nearly 69% of the competition.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.
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