The Best Stocks to Watch Following Analyst Updates News ad

Investors should often take analyst ratings with a grain of salt, as there are often hidden interests and agendas behind each rating and price target. In reality, these analysts are ordinary people with normal jobs. If they are wrong in their decision on a particular stock, then there is a very real risk of losing their job, not to mention tarnishing their reputation in the future.

Knowing this, investors should place even more weight on analysts’ views outside this consensus, anomalous opinions. Since there is always a consensus that significantly influences the rest of Wall Street’s leniency in rating a stock, those analysts who set a price target or estimate outside of that consensus range are now on the hook for a very good reason. for this.

That’s why three stocks whose prices have recently risen beyond consensus could be great picks for investors today. They can reverse engineer the reasons for these aggressive updates and understand why they are now forcing these analysts to do their homework twice. These shares CVS Health Company. New York Stock Exchange: CVS, Kroger Company. New York Stock Exchange: KRand even Chewie Inc. New York Stock Exchange: WH.

Why Wall Street Analysts Are Rating CVS Stock as a Strong Buy Today

After the recent roller coaster in stocks Walgreens Boots Alliance Inc. NASDAQ: WBAthe brand closes underperforming stores and loses market share. The only remaining brand that will operate in the health care retail sector is CVS.

There are alternatives, but none are as versatile as CVS offers in this niche. Now that Walgreens is exiting the market, analysts may view CVS as a potential alternative for future growth and higher valuations based on this trend.

While the consensus price target for CVS stock today is set at $70.50, implying 23.9% upside to the stock, some analysts have decided to go a little further. In late November 2024, TD Cowen executives decided to maintain a Buy rating on CVS stock, although this time they raised their estimate to $80 per share, representing 41% upside from today’s price.

What’s more, State Street institutional investors recently increased their holdings in CVS shares by 3.6%, bringing their net position to a maximum of $3.5 billion, or 4.5% ownership in the company, so investors could consider another vote of confidence.

Kroger Stock Gaining Momentum: Why Institutional Buyers See Even More Upside Potential in the Future

Now that Kroger stock is attempting to reach a new 52-week high, investors can safely assume that the bullish momentum is more than in the name and will likely continue to reach new highs in the coming months. Despite the fact that the price is already trading near the highs, some agents in the market are ready to increase it even further from today’s price.

According to Wall Street analysts, the consensus price target is now set at $62.6, with upside potential of just 3.4%. However, for analysts at Jefferies Financial Group, this is not enough and not fair enough. These analysts upgraded their ratings on Kroger shares from Hold to Buy for early December 2024, setting a price target of $73 for a 20.5% upside and a new 52-week high for a strong end to the year.

Knowing that the stock has a good chance of getting there despite its already high price today, some institutional buyers decided to back the new ratings and lock in the upside potential inherent in Kroger stock. As with CVS shares, State Street allocators decided to increase their holdings of Kroger shares by 6.8% as of November 2024, netting $1.9 billion, or another 4.5% ownership in the company.

Chewy shares hold premium as analysts upgrade growth ratings

Compared to the rest of the retail sector, Chewy stock now commands a huge premium with a price-to-book (P/B) ratio of up to 28.4x, while its peers trade at just 5.5x. While some investors may call this expensive, others will recognize that the market is often willing to pay a premium for stocks that are believed to be growing at an above-average rate.

Analysts now have Chewy stock priced at a consensus price of $33.3 per share, implying only 5% upside from today’s price. However, Royal Bank of Canada decided to justify the market premium on Chewy shares by reaffirming its Outperform rating on the company, this time along with a $42 price target that represents 32.5% upside from today’s levels.

The company’s business model also justifies the growth potential expected today. It doesn’t matter whether the economy is booming or busting; people will likely always find room in their budget to take care of their furry family members. This non-cyclical nature has and will likely continue to justify the premiums seen in the stock today.

Before you consider Kroger, you might want to hear this.

MarketBeat tracks Wall Street’s top-rated and best-performing analysts daily and the stocks they recommend to their clients. MarketBeat identified five stocks that top analysts were quietly telling their clients to buy now, before the broader market caught on… and Kroger wasn’t on the list.

While Kroger currently has a Moderate Buy rating among analysts, the top-rated analysts think these five stocks are Strong Buys.

View five stocks here

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