These Monday Upgrades Are Moving Markets

Upgrades Are Leading The Market Higher

There are a lot of reasons why the stock market continues to creep higher but they all add up to one thing. Earnings. The outlook for S&P 500 (NYSE:SPY) and Russel 2000 (INDEX:RUT) earnings is not only positive but it also has an upward trajectory and the analysts continue to raise their forecast. This is a tailwind the market has not seen in several years and one that has several quarters to play out, at least. While Apple (NASDAQ:AAPL) and the Semiconductor manufacturers are among the most obvious of today’s upgrades, both are moving higher on the news, they are not the only stocks benefiting from the trend, or that investors should pay attention to.

JP Morgan Gets Bullish On Constellation Brands

JP Morgan began to get interested in Constellation Brands (NYSE:STZ) over the summer. The company made it onto JPM’s Analyst Focus List as a growth idea after it reported 2Q earnings. The analysts at JPM upped the stock from a Reduce to OverWeight positioning with a healthy price target increase as well. The firm upped the price target by $30 or 13% to come close to hitting the Wall Street high.

The average rating is a hold and hasn’t changed much over the last 90 days. The consensus target is $206.50 or a 6% downside to recent price action but the most-recent activity is far more bullish. The more-recent action shows analysts warming up nicely to the stock and pushing the consensus target upward. The high price target of $250 is held by Wells Fargo when it initiated coverage at OverWeight earlier in December. The consensus of analysts ratings since the last earnings report is closer to $240 or about 10% upside.

Shares of STZ gained about 1.5% following the JPM upgrade and are now trading at a two-year high. The price action is supported by bullish signals in the indicators that suggest a retest of the all-time high is on the way. The all-time high is near $236 or about 7.75% upside. And that’s not counting STZ’s 1.4% in dividend yield or outlook for dividend growth.

Nike Price Target Hikes Flood Wall Street

The analysts have been bullish on Nike (NYSE:NKE) all year and that sentiment is only getting stronger. The company is the best-in-breed when it comes to shoes and is killing it with eCommerce sales. Earlier in the month, the stock received a flurry of upgrades and price target hikes that was echoed in this week’s news. This week the stock got not one but five price-target hikes that suggest at least 17% of upside for this stock.

The average rating is a buy but the consensus is still too low. Even with the new flood of targets the consensus is only $154 compared to the Wall Street high of $170. Looking at the charts, a move to $165 looks a little hopeful but there is something to consider. According to research from Argus, Nike is benefiting from a new trend within the market. Retailers looking to boost their gross are turning to Nike because of brand recognition and market dominance.

Paychex, Inc Is A 2021 Growth Story

Paychex, Inc (NASDAQ:PAYX) is well-positioned as a reopening play and the analysts are taking notice. The company reported earnings a little over a week ago beating the consensus and providing a positive outlook. Since then, no fewer than 7 analysts have come out with price-target increases that are all above the consensus target. The consensus target of $83.75 is up 10% in the last 30 days but still too low relative to the market’s valuation and the more-recently set targets. The consensus implies about 12% of downside relative to recent price action while the freshly-set high-price target of $105 projects an equal amount of upside.

Shares of PAYX popped on the Q3 release but fell hard from the new high on profit-taking. Now, with the uptrend still intact, it looks like the stock has entered a consolidation. A trading range may dominate price action in the near-term but a long-term upswing is expected to begin by early spring in tandem with the vaccine-supported economic reopening. Based on the company's ability to increase its client base during the pandemic, earnings growth is expected to resume and accelerate.