Sometimes it’s easy to dismiss the opinion of a single stock analyst. However, a number of analysts now believe that Citigroup (C), Delta Air Lines (DAL) and LinkedIn (LNKD) all have at least 25% upside from current levels.
Citigroup (C)
The financial sector has been one of the hardest-hit sectors in the last year. Even the Federal Reserve’s highly-anticipated rate hike in December didn’t go as planned. International weakness in China and elsewhere has now put a halt to the tightening schedule, which means bank margins will continue to be under pressure.
As a result, Citigroup, which was already trading well below book value, is down another 12% this year and now trades at a forward P/E of only 8.3.
Wall Street analysts seem to recognize the value in Citigroup’s stock. The 26 analysts covering Citigroup have an average price target of nearly $57, implying roughly 25% upside from recent levels. Just one month ago, Barclays analyst Jason Goldberg reiterated his “Buy” rating on Citigroup and adjusted the firm’s price target to $60.
In Late February, Credit Suisse also reiterated its “Buy” rating and $57 target for Citigroup.
Delta Air Lines (DAL)
Airlines are another group that has had a rough go of it so far in 2016, but analysts now believe that DAL’s sell-off has been an excellent buying opportunity. On the surface, DAL’s 6.6 forward P/E sure makes the stock seem appealing from a value perspective, and Wall Street analysts agree.
Of the 13 analysts that cover DAL, the average price target for the stock is $63.21, implying 35% upside.
The market reacted positively to DAL’s modest Q1 earnings beat last week, and although it has since given those gains back, there could be plenty more upside from here. Earlier last week, Buckingham Research Group analyst Daniel McKenzie reiterated his bullish stance on airline stocks, saying “earnings could fall 40 percent on average for the Big 3 and valuations would remain attractive.”
Many investors are concerned about the possibility of an imminent U.S. recession, and airline stocks typically struggle during economic downturns. But back in February, J.P. Morgan analyst Jamie Baker said that the industry is now “capable of earning in a downturn what used to be reserved for the peak.”
LinkedIn (LNKD)
LNKD stock owners will be happy to put Q4 of 2015 behind them when the professional social media site reports Q1 earnings on April 28. The company’s Q4 earnings report in January nearly cut its market cap in half in a single day of trading as investors punished the stock for LNKD’s weak guidance.
Wall Street analysts, however, still see plenty of value in LNKD. The average target price among the 42 analysts that cover LNKD is $170, implying about 45% upside from current levels.
Cantor Fitzgerald analyst Youssef Squali is among those that see much more upside to LNKD’s stock. In a March 7 note, Squali reiterated his “Buy” rating and $210 target for LNKD and praised the company’s addressable markets and differentiated offerings.
Following the post-earnings collapse, Goldman Sachs analyst Heath Terry reiterated his opinion that LNKD will soon make it to $200. On February 9, Terry noted that the extreme market reaction to Q4 earnings surprised LNKD management given the lack of fundamental change in the business during the quarter.
Disclosure: As of this writing, Wayne Duggan had no positions in any of the stocks mentioned.
