The 3 Biggest Analyst Stock Calls Smart Investors Should Know

Despite all the current market uncertainty, Wall Street analyst stock calls are still happening. Between Oct. 24 and 26, MarketBeat reported that there were 53 upgrades of U.S.-listed stocks.   

Analyst upgrades and downgrades have become cannon fodder for retail investors trying to find an edge over their institutional counterparts. Google the words “analyst upgrades downgrades,” and you’ll get around 20,000 results on any given day. People can’t get enough of this stuff despite the fact they’re not very meaningful in the big picture.

MarketWatch published an article in 2018 examining the trustworthiness of analyst ratings. It highlighted that of the 505 (including multiple classes of common stocks) S&P 500 stocks, more than half (266) had buy ratings from most of the analysts covering these companies. 

MarketWatch contributor Philip van Doorn wrote that just one stock in the index in May 2018 — News Corp Class B (NASDAQ:NWS) — had exactly 50% sell ratings on the stock. A total of 10 names, including NWS, had at least 30% or more sell ratings from the analysts covering those stocks.

The next time you have an analyst’s research report available to read, scroll down to the end. You will often see the statistics about how many buy, sell and hold recommendations they’ve given on the stocks covered. As van Doorn points out, most are now and will remain rated a buy. 

So, take these three analyst stock calls with a grain of salt. Your thorough due diligence will go much further toward generating reasonable investment returns.

Symbol Company Price
NFLX Netflix $296.94
WOLF Wolfspeed $87.06
EFSC Enterprise Financial Services $51.94

Netflix (NFLX)

On a day when the S&P 500 lost 0.75%, Netflix (NASDAQ:NFLX) gained nearly 3.0%. 

Pivotal Research Group analyst Jeffrey Wlodarczak raised his rating on the video streamer from sell to buy on Oct. 26. The analyst also raised his target price from $200 to $375, an 87.5% increase, and 26% higher than where NFLX currently trades.

Highlights of the analyst’s note to clients include raising the video streamer’s net subscriber additions in 2023 to 15 million from his previous estimate of 5.5 million. The analyst sees the company’s ad-supported streaming service converting people from pirating the service to paying for it.

Between shutting down password sharing and adding an ad-supported price tier, Netflix will likely reignite its revenue growth over the next few quarters while improving its profitability. In addition, Wlodarczak sees Netflix selling itself to Microsoft (NASDAQ:MSFT) in 2024, knowing that a new administration would approve such a sale in 2025.

Analysts, in general, are still optimistic about Netflix’s future. The 43 analysts that cover its stock give it an average rating of overweight with a median target price of $288.

Wolfspeed (WOLF)

Wolfspeed (NYSE:WOLF) got an upgrade from J.P. Morgan Securities on Oct. 24. The firm’s analysts upgraded the North Carolina semiconductor company’s stock — it focuses on silicon carbide and gallium nitride technologies — from neutral to overweight with a $30 increase in its target price to $160.

J.P. Morgan believes that the company’s increased capacity and position within the electric vehicle (or EV) market make it a future winner. 

“A silicon carbide chip is capable of operating above 500 degrees Fahrenheit, and at electric voltages that are roughly ten times what a traditional piece of silicon can handle,” Protocol contributor Max Cherney wrote in September.

The 2o analysts that cover WOLF stock give it an overweight rating with a $110 target price. Fifteen out of the 20 rate it an outright buy.  However, as I write this after hours on Oct. 26, Wolfspeed reported Q1 2023 earnings that topped analyst estimates but gave unexpectedly weak guidance. Its shares have fallen by 27% in after-hours trading. 

In Q2 2023, Wolfspeed calls for $225 million in sales and an adjusted loss of 12 cents a share. Analysts are expecting sales of $252.5 million and a one-cent loss.

Long-term, the company is very excited about its opportunities.

“There is tremendous momentum for Wolfspeed across a growing number of mid- and high-powered applications, as evidenced by $3.5 billion of design-ins for the quarter, six times what it was in the prior-year period,” stated CEO Gregg Lowe in the company’s press release.

Should WOLF stock fall into the $70s, it becomes an excellent long-term play for aggressive investors.

Enterprise Financial Services (EFSC)

Enterprise Financial Services (NASDAQ:EFSC) is a financial holding company that owns Enterprise Bank & Trust, a Missouri regional bank that operates 47 branches in several states, including Missouri.

DA Davidson upgraded EFSC on Oct. 26, two days after the financial holding company reported good Q3 2022 earnings. The analyst upgraded Enterprise from neutral to buy while upping the price target by $14 to $60, 18% higher than where it’s currently trading.

The company generated $133.74 million in revenue in the third quarter, with earnings per share of $1.31. On the top line, it beat the consensus estimate by approximately 2%, while its earnings per share were eight cents higher than analyst expectations.

Highlights of the quarter included a 5% increase in total loans annually to $9.3 billion. Meanwhile, its net interest income during the quarter was 13% higher than last year to $124.3 million. The net interest margin was 4.10%, 0.7% higher than Q3 2021 and 0.55% better than Q2 2022.

EFSC stock is up more than 6% year-to-date. It’s more than doubled since the March 2020 correction.

On the date of publication, Will Ashworth 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.

Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia.

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