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Among the most significant analyst rating changes in the past week, Alibaba was given the Conviction Buy stamp on Goldman and CarMax was cut at JPMorgan. Here are all of the most significant analyst rating changes from the past week and the insights behind the moves, all covered first on InvestingPro. Sign up for fast, comprehensive coverage of market-moving analyst rating changes.
alibaba updated
Earlier in the week, Goldman Sachs added Ali Baba (NYSE:) to its Conviction Buy List, citing the belief that “the worst is over after two years of earnings downgrades.”
After InvestingPro’s real-time alert on the move, shares of Alibaba opened the regular US session at $112.24 before falling to $108 during the first 30 minutes. This 30-minute window is when market makers and ETF managers position for the day. Volatility increases, as the mathematicians behind some of the brilliant algorithms we see in trading know, and they do what is within accessible practice to achieve best execution.
From that $108 level before 10 am ET, Alibaba shares rallied over the next six hours to close the regular session at $110.99, a roughly 2.8% rally. Shares were up 6.4% for the week.
A note about Goldman’s doom buy list: This specific list, according to company disclosure, is compiled as follows: “Each region manages regional doom lists, which are selected from buy-rated stocks on the investment lists from the respective region and represent investment recommendations focused on the size of total return potential and/or the probability of return realization in their respective coverage areas The addition or removal of stocks from such Conviction lists are administered by the Investment Review Committee or other designated committee in each respective region and do not represent a change in the analysts’ investment rating for such stocks.”
Norwegian Cruise Line rated it as underweight
On Tuesday, Morgan Stanley assigned a new analyst to cover Norwegian Cruise Line (NYSE:), which issued a report on its new model for NCLH with an underweight recommendation and an $11.50 price target. The near-term monkey wrench would appear to be the analyst’s expectation that “a key component of our cautious view hinges on increased competitive bidding that limits net yield growth relative to other areas of travel.”
The market did not seem to agree. The stock opened the regular session on Tuesday at $13.38 and has never looked back all week, gaining daily to end the week at $15.63.
CarMax slips into the rebate
An easy company to pick these days is CarMax (NYSE:), and JPMorgan agreed to downgrade the stock to Underweight on Wednesday.
JPMorgan noted that CarMax simply appears to have an “unfavorable” risk/reward offer. The analyst expressed some respect for the used car vending machine company, writing: “We think KMX is likely to be a long-term share winner in the used car market and see investments in recent 3 years will finally pay off.”
Subsequently, the order books were dominated by offers from traders, from Tuesday’s close of $67.41 to Wednesday’s opening price of $66. Shares were trading at $65 as of Friday’s close.
Okta falters in trader talks
Okta (NASDAQ:) was an oddball on Thursday: Just outside, traders circulated comments from a boutique research center, Cleveland Research, known for its channel checks (i.e., collecting company customer information ). Comments like these tend to circulate in chat rooms and incoming “tip” emails in newsrooms, and are deliberately vague so that scalp traders sharing the information have action to find opportunities in stocks. .
In this case, Cleveland Research was said to comment, “Fundamentals Seems to Underperform in the Identity Category: Some Hack Source Code Concerns.” Thursday morning’s open became Okta’s bottom for the week, as after 9:30 a.m., another channel-check research outlet named Gordon Haskett noted, “stocks should be on alert 13- F for an activist, although the dual-class structure makes it a tough target. Some changes were also seen in the 10-Q risk factor,” according to InvestingPro and StreetInsider.com. An intriguing and rapidly unfolding set of developments to be sure.
Okta gained even more ground on Friday and ended the week at $69.76, almost level with its Monday open.
updated caterpillar
To end the week, Caterpillar (NYSE:) upgraded to Buy at Bank of America. BofA offered a succinct five-bullet summary of its thesis: “1. Low risk of a notable decline in Q4/Q1 earnings per share given price vs. cost tailwind; 2. The order book falls but leading indicators improve in H2, recession year higher vs. expectations 4. 2024+: as investors look for ‘new business cycle’, CAT EPS attractive 5. Events 2022 underscore the decline in secular pressure.”
Caterpillar shares gained 1% on Friday after rising $247 at midday Wednesday to Thursday’s close at $255.09. The shares ended the week at $258.46.
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