Need to Know: Why UBS thinks Amazon shares are headed to $2,100

Need to Know: Why UBS thinks Amazon shares are headed to $2,100

19 Dec    Finance News

The headlines are all about President Donald Trump’s impeachment, but the stock markets don’t care.

And unless investors begin to think a Republican-controlled Senate will vote to remove him, that attitude won’t change.

With just eight trading days left to go in the year, it’s tough to get markets excited about much right now, whereas a year ago they were pretty volatile.

How about some stock ideas for 2020? We bring you those via our call of the day from UBS, which polled its North American managers to get their most compelling ideas going forward. Read on: AMZN, -0.05%   — UBS has a $2,100 target on buy-rated Amazon — 17% upside from Wednesday’s close of $1,784.03. Analyst Eric Sheridan believes investor concerns about the high costs of one-day shipping and investments in Amazon Web Services are now reflected in share prices. And, of course, Amazon dominates in e-commerce, cloud computing, digital ad and media consumption.

Tenet Healthcare THC, +1.29%  — The investment bank rates the health care company’s shares a buy, and sees 40% upside for shares, with a price target of $53 (Wednesday’s close — $37.98). Wall Street is just too negative, says analyst Whit Mayo, who expects management to announce another cost reduction program next year. That would be another boost for shares.

Coca-Cola KO, +0.48% — “We like Coca-Cola for stable earnings growth to ride out defensive times,” says analyst Sean King, who has a $63 price target on the buy-rated drinks giant (a 16% gain from Wednesday’s close of $53.91. And the company is on the way to improving its free cash flow productivity, a long concern of investors. Bet on Coke over Pepsi PEP, +0.07%,  he says (Morgan Stanley said the same recently).

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United States Steel X, +0.29%  — UBS is convinced that investors should sell the steel group, laying out a price target of $7 per share — a 48% drop from Thursday’s close of $13.61. Analyst Andreas Bokkenheuser says the company is set to lose market share in an environment where pricing is competitive, and will probably burn cash over the next two years to invest in key assets.

Other stocks they like? Telecommunication company T-Mobile TMUS, +0.14%, multinational conglomerate General Electric GE, +0.78%, transport company Norfolk Southern NSC, +0.12%, investment bank Citigroup C, +0.35%, retailer Lowe’s LOW, -0.08%  and toy company Hasbro HAS, +0.14%.  

Read: Hedge fund luminary Stanley Druckenmiller on what could trigger a bear market

The market

It’s a lackluster start for the Dow DJIA, +0.24%  , S&P SPX, +0.18%    and Nasdaq COMP, +0.28%. European stocks SXXP, -0.03% are slipping and Asian markets ADOW, -0.14% mostly fell. The Bank of Japan didn’t change its interest rates, and neither did the Bank of England, which is probing an alleged hacking incident. The pound and U.K. stocks climbed as the Queen laid out the government’s Brexit plan.

But Sweden’s central bank has become the first central bank to exit negative rates.

The chart

Our chart from investment management company BlackRock (via The Daily Shot blog) gives a pretty good visual on this year’s big winning sectors in the U.S., and puts global equity performances in perspective.

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The buzz

Facebook FB, +0.63%  will run its first commercial in the National Football League Super Bowl championship in February.

Shares of Micron MU, +3.03%  are up. The memory-chip maker posted a huge drop in net income, but Chief Executive Sanjay Mehrotra said the company’s worst times may be over. Shares of rivals Western Digital WDC, +2.04%  and Nvidia NVDA, +2.64%  are also climbing.

Sportswear brand Nike NKE, -0.70%  will report earnings after the close.

The economy

Weekly jobless claims came in higher than expected, the Philadelphia Federal regional manufacturing index fell well short of expectations, and the current-account deficit shrank. Existing home sales and leading economic indicators are still to come.

Random reads

Russian President Putin’s marathon press conference is under way

Absurdist and beloved comic strip featuring talking cows and mad scientists is back

Once highly sought-after, thousands of giant dogs are now roaming Tibet and China

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