This Week’s Top Wall Street Upgrades: VMW, NXPI, PM

Stocks go up, stocks go down — and so do analysts’ opinions of them. This series looks at which upgrades investors should act on. Specifically, we’ll find out why analysts are revving their engines for VMware, NXP Semiconductors NV and Philip Morris.

Let’s take a closer look:

VMware (VMW)

First up, 5-star Wells Fargo analyst Philip Winslow upped his rating on VMware to ‘buy’ Tuesday. According to Winslow, the company behind everything from cloud to networking and security to digital workspace is worth about 17% more than it’s currently selling for, and should hit $180 within the next 12 months. (To watch Winslow’s track record, click here)

Winslow wrote, “Although VMware’s core server virtualization business (vSphere) has performed well recently as existing customers continue to invest in their VMware infrastructure and the traction of newer products (NSX, vSAN, and vRealize) and services has been impressive, many investors have been concerned that the growing interest in deploying cloud-native and containerized applications into Kubernetes-centric environments will eventually reduce the relevancy of and customer demand for VMware’s virtualization-centric product portfolio. Conversely, we believe the acquisitions of Bitnami, Heptio, and Pivotal Software, combined with the release of VMware Tanzu (particularly Project Pacific), will position VMware to emerge as the leader in the market for Kubernetes-based, multi-cloud platform solutions.”

Overall, the word on the Street rings largely bullish on this cloud computing giant, backing Winslow’s confident move, with TipRanks analytics demonstrating VMW as a Buy. Out of 23 analysts polled in the last 3 months, 16 are bullish on VMware stock, 9 remain sidelined, and only one is bearish on the stock. With a return potential of nearly 14%, the stock’s consensus target price stands at $175.83. (See VMW’s price targets and analyst ratings on TipRanks)

NXP Semiconductors (NXPI)

Investors may have better luck investing in our second stock of the day, NXP Semiconductors, which was upgraded to ‘buy’ this week by 5-star analyst Weston Twigg at KeyBanc. According to the analyst, this chip stock with the $110 stock price will rise to $130 a share within a year. (To watch Twigg’s track record, click here)

Twigg commented, “We believe demand trends at NXPI have bottomed and channel inventories for the Company have begun to normalize. While we had previously had concerns regarding the impact of the pending QCOM acquisition on the Company’s design pipeline, we believe these concerns are already reflected in the Company’s current valuation (12x P/E 2020) and also believe NXPI’s pending acquisition of MRVL’s connectivity assets will partially offset this. While demand trends in automotive remain weak, we like the Company’s outsized exposure to this segment (50% of revenues) longer term, and see opportunities for the Company to offset weak end demand via content growth associated with design wins within: 1) ADAS; 2) BMS (battery management systems) and the associated electrification of autos; and 3) Infotainment.”

All in all, cautious optimism circles this semiconductor player, as TipRanks analytics exhibit NXPI as a Moderate Buy. Out of 12 analysts polled in the last 3 months, 7 are bullish on NXP Semiconductors stock, while 5 remain sidelined. With a return potential of 5.5%, the stock’s consensus target price stands at $115.91. (See NXPI’s price targets and analyst ratings on TipRanks)

Philip Morris (PM)

A third stock worthy of consideration — at least, Wall Street thinks so — is Philip Morris. This week, BofA/Merrill Lynch analyst Lisa Lewandowski upgraded the tobacco titan from ‘neutral’ to ‘buy’, predicting PM shares will hit $96 a share a year from now. (To watch Lewandowski’s track record, click here)

Lewandowski explained, “While vaping issues may drag on the industry as whole near-term, they think PM will eventually rise above the noise given their lack of US vaping exposure. while merger talks shook investors, they see see PM’s underlying fundamentals as strong with upside potential as consumers look for alternatives as vaping products remain in the eye of the media storm. Given its attractive valuation, pricing power, IQOS’ growth trajectory & commitment to shareholder returns (yield 6.2%), we are upgrading PM from Neutral to Buy.”

The Street largely seems to echo Lewandowski positive sentiment, considering TipRanks analytics showcase PM as a Buy. Out of 12 analysts polled in the last 3 months, 9 are bullish on Philip Morris stock, 2 remain sidelined, and only one is bearish on the stock. With a potential upside of about 20%, the stock’s consensus target price stands at $94.17. (See PM’s price targets and analyst ratings on TipRanks)


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