Wall Street Analysts Are Bullish on Top Services Picks


There’s a lot to be optimistic about in the Services sector as 2 analysts just weighed in on Cedar Fair (NYSE:FUN) and L Brands (NYSE:LB) with bullish sentiments.

Cedar Fair (FUN)

In a report released yesterday, Barton Crockett from B.Riley FBR maintained a Buy rating on Cedar Fair, with a price target of $60. The company’s shares opened today at $53.54, close to its 52-week low of $50.10.

Crockett noted:

“Cedar Fair (Buy, $60 PT) pre-open, 9/6, announced revenue trends through Labor Day. The company highlighted a 6% rise in revenues for the last five weeks of the summer theme park season ending on Labor Day that allowed it to deliver a slight increase in revenues for the year- to-date, reversing a 2% decline for the first seven months of the year that had been announced with the Aug. 1 earnings report. This is broadly consistent with our stance — that the early year pressure had been weather related, and that when weather improved attendance would, too, and that bad weather would tend to push a catch up in attendance into later in the year. With the revenue update, Cedar Fair is updating its full year revenue and EBITDA guidance range to a level that includes Factset consensus, easing fears of downside risk and deeper fundamental issues.”

According to TipRanks.com, Crockett is a 4-star analyst with an average return of 5.0% and a 55.0% success rate. Crockett covers the Services sector, focusing on stocks such as Liberty Media Corporation Series A Liberty SiriusXM Common Stock, Lions Gate Ent Corp Cl A, and Qurate Retail Group Inc.

Cedar Fair has an analyst consensus of Moderate Buy, with a price target consensus of $62.17, which is a 16.1% upside from current levels. In a report released yesterday, Stifel Nicolaus also reiterated a Buy rating on the stock with a $64 price target.

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L Brands (LB)

B.Riley FBR analyst Susan Anderson reiterated a Buy rating on L Brands yesterday and set a price target of $44. The company’s shares opened today at $26.52, close to its 52-week low of $25.89.

Anderson wrote:

“L Brands (LB) reported August SSS of +1.0%, below the B. Riley FBR/consensus estimates of +2.2%/+0.5% and –4.0% LY . August’s merch margin declined significantly Y/Y , driven by more promotional activity at VS, slightly offset by better merch margin performance from BBW. Inventories per square foot increased +15% Y/Y . BBW significantly outperformed expectations, posting a +15% comp, following +10% SSS growth the prior three months. We note that the strong result came despite a pullback of promotional activity. For VS, Pink continues to underperform mainly due to loungewear weakness, but was in line with original expectations. We expect BBW to continue to outperform in September while VS remains a work in progress. However, at current valuations, we believe VS is practically free as LB’s stock valuation just represents the BBW business. We reiterate our Buy rating and $44 price target.”

According to TipRanks.com, Anderson is a 4-star analyst with an average return of 5.9% and a 54.3% success rate. Anderson covers the Services sector, focusing on stocks such as Lululemon Athletica Inc, Ascena Retail Group, and Abercrombie Fitch.

Currently, the analyst consensus on L Brands is a Hold with an average price target of $30.53, a 15.1% upside from current levels. In a report issued on August 23, Robert W. Baird also maintained a Buy rating on the stock with a $40 price target.

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