Christopher Raymond, analyst for Piper Sandler, told customers on Friday that he shared some of these concerns, but that he would still be a winner in Biogen’s business. Raymond upgraded the stock from neutral to overweight.
“Despite our reservations about the FDA’s handling of the Aduhelm approval, we find two new data points that are too positive to ignore, and thus believe the path of least resistance on this stock is decidedly higher,” according to the note.
Among the positive data points are a survey showing strong demand and expected uptake for the drug despite concerns about its efficacy, as well as an expectation that Medicare and Medicaid will not significantly limit the available patient base for reimbursement.
“When we combine this with what we see as a low-probability but still completely free call option that Biogen wins on appeal with the Tecfidera IP case,” the note said, “we believe the stock is likely to rise in the near term.”
The firm raised its price target to $450 from $384, representing a 17 percent increase from the stock’s closing price on Thursday.
JPMorgan analyst Michael Rehaut raised the stock from neutral to overweight, writing in a client note on Friday that the company appeared undervalued given its strategic shift and potential for share buybacks.
“At current levels, we view LEN’s valuation as effectively not assigning much value to its proposed spin-off, but we also expect the company to demonstrate further progress in its shift to an asset light model and, finally, anticipate an increased level of returning cash to shareholders over time,” the note stated.
Home sales and starts have slowed in recent months due to a lack of available homes on the market, which has coincided with sky-high lumber prices. However, JPMorgan stated that Lennar’s management appeared to be optimistic about the overall strength of the housing market.
The firm raised its price target on Lennar from $115 to $141 per share, representing a 49 percent increase. The stock has already increased by 24% year to date.
According to Morgan Stanley, high oil prices and lower capital costs should lead to oil reserves throwing out cash, and investors should add a number of winners from that sector.
“We reiterate our Attractive view of the sector and continue to favor a mix of ‘quality stocks on sale’ that offer outsized free cash flow yields and healthy balance sheets, combined with selective ‘oil beta’ exposure,” according to the note.
Morgan Stanley’s bullish stance does not necessitate further price increases. West Texas Intermediate crude is expected to trade in the low $60s on average in 2021 and 2022, according to the firm. On Friday morning, WTI was trading just above $70 per barrel.
According to the note, these prices are sufficient to generate significant cash for Occidental.
“With its high quality upstream assets, above average FCF/equity yield of 17 percent (although FCF/EV still lags peers), and unique position in a lower-carbon energy future through OXY Low Carbon Ventures,” the note said.
The firm raised its price target for Occidental from $32 to $40 per share, and for Marathon Oil from $12 to $15. These new targets represent a 42 percent and a 16 percent increase from where the stocks closed on Thursday.
Despite being bullish on the sector as a whole, Morgan Stanley did downgrade a few stocks in its Friday call. The firm downgraded Devon, EQT, and Cimarex to equal weight from overweight.