We see analyst upgrades and downgrades daily, commonly coming paired with updated price targets. They can be helpful tools for investors, providing a more structured plan and helping to inject positivity surrounding future performance.
Of course, stocks don’t straightforwardly reach price targets, as unforeseen circumstances can always influence performance. Overall, the shift in sentiment can be seen as a primary takeaway from these upgrades.
And recently, three stocks – Netflix NFLX, Emerson Electric EMR, and Discover Financial Services DFS – have all seen recent upgrades among analysts. Let’s take a closer look at each.
Netflix
Loop Capital upgraded NFLX shares to buy from hold with a new $500 per share price target. The company has enjoyed positive earnings estimate revisions across several timeframes, as shown below.
Image Source: Zacks Investment Research
The company posted somewhat mixed quarterly results in its latest release, exceeding the Zacks Consensus EPS Estimate by more than 15% and modestly falling short of revenue expectations. Still, the company easily surpassed Subscriber Adds expectations, the most critical metric for the streaming titan.
Netflix’s revenue growth has been remarkable but has slightly cooled in recent quarters, as we can see below.
Image Source: Zacks Investment Research
Emerson Electric
JPMorgan recently upgraded EMR shares to Overweight from Neutral with an updated $107 per share price target. Like NFLX, Emerson Electric has seen its near-term earnings outlook shift positively across nearly all timeframes.
Image Source: Zacks Investment Research
For those with a preference for income, EMR shares have that covered; shares currently yield 2.1% annually paired with a sustainable payout ratio sitting at 44% of the company’s earnings. Dividend growth is there, too, with the payout growing by a modest 1.5% annualized over the last five years.
Image Source: Zacks Investment Research
Discover Financial Services
Wolfe Research recently upgraded DFS shares to Outperform from Peerperform with a new $104 per share price target.
Value-focused investors could likely be attracted to DFS shares, further reflected by its Style Score of “A” for Value. Shares currently trade at a 6.8X forward earnings multiple, nicely beneath the 8.6X five-year median and highs of 9.6X in 2022.
Image Source: Zacks Investment Research
Like EMR, DFS rewards its shareholders nicely; shares currently yield a sizable 3.2% paired with an 11% five-year annualized dividend growth rate. As we can see below, the company has a long history of increasingly rewarding shareholders.
Image Source: Zacks Investment Research
Bottom Line
Price targets can be helpful tools. Of course, it’s critical to note that not all stocks reach these forecasted levels, as unforeseen circumstances can always affect future performance.
Still, the positivity surrounding upgrades can be seen as a solid takeaway.
All three stocks above – Netflix NFLX, Emerson Electric EMR, and Discover Financial Services DFS – have all seen recent upgrades among analysts.
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