The Analysts Upgrade… Retail Stocks? 

The Analysts Upgrade… Retail Stocks?  thumbnail

It is Not All Carnage in The Retail Sector

There is carnage within the retail sector , but not all are suffering. Retailers are poised to outperform in the next year, regardless of branding, positioning, DTC sales or a combination thereof. All three stocks that we are focusing on today have recently reported earnings and all have exceeded their expectations. Analysts are paying attention to all three stocks. We believe that the retail sector is facing headwinds that will help it shake out the weak hands and put the winners in better positions than they are right now. – MarketBeat

JPMorgan Says Ulta Is A Winner!

Ulta Beauty (NASDAQ: ULTA) is one of the more prominent victors in the Mall space having gained market share from traditional cosmetics companies like Revlon. The company is on the right track to grow amid a darkening consumer background. JPMorgan sees the stock as a winner and one the two favourites in the sector.

“We expect the stock to continue to look forward to a strong ‘cyclical upswing’ as COVID-19 fades and event-starved Americans immerse into social gatherings/experiences with beauty (and apparel) benefiting from this surge. ‘

Ulta Beauty has received at least 10 shout-outs from 22 analysts since the Q1 report including two from JPMorgan. In the first, the company raised its price target to $490 compared to the $458 consensus, and the other is a doubling-down of that same sentiment. JPMorgan has an Overweight rating, compared to the wider consensus of weak Buy. However, that sentiment and the price target are trending up. The consensus implies about 16% of upside for the stock and it is trending higher in the 30 and 90-day comparisons.
The Analysts Upgrade… Retail Stocks?

Morgan Stanley Takes a Stand With Dollar General

Morgan Stanley upgraded Dollar General (NYSE: DG) to Overweight from Equal Weight stating it is one of the more undervalued names in its defensive-stocks coverage universe. According to them, the company is a quality defensive name with some offensive characteristics. This includes the potential for material margin improvements despite economic downturns.

” It is undoubtedly our most defensive and counter-cyclical stock. However, the stock has not outperformed the market in the year to date. However, it has performed in line with other defensive stocks covered in our coverage. “

Morgan Stanley’s Overweight rating is in line with the broad consensus of Firm Buy. The new price target also compares well. The new price target of $250 is $5 ahead of the consensus which is up versus last year, 3 months ago, and last month and implies about 5% of upside for share prices.
The Analysts Upgrade… Retail Stocks?

Autozone Upgraded on “Durable” Revenue and Earnings Growth

Morgan Stanley also upgraded Autozone (NASDAQ: AZO) to Overweight from Equal Weight stating the company has a more durable revenue and earnings growth outlook. The firm thinks the stock has at least 20% of upside ahead of it which is well above the current consensus target of $2,142. Wells Fargo also has Autozone as a top pick. It holds an Overweight rating and Wall Street’s 2nd highest. price target.

“AZO can be described as a self-help story. The business has a track record of prudent expense management and DIY Auto is a defense category. These factors increase AZO’s earnings visibility in an uncertain macro environment. We are also confident in AZO’s pricing power and believe there is more DIFM upside to the mega hub strategy. “
The Analysts Upgrade… Retail Stocks?

Read More