The Morning Brief: Amazon’s Surge Boosts Hedge Fund Holders

Shares of hedge fund favorite surged 9.47 percent, to close at $363.67, after the online retailer reported quarterly results that mostly beat consensus forecasts and a number of sell-side analysts raised their target price on the stock. “For the first time in many quarters, the company not only hit the high end of the guided range but also guided materially above the consensus revenue view,” states a report from Stifel Nicolaus, which increased its price target on the stock, from $335 to $400. Elsewhere, UBS also raised its target to $400 from $385, while Credit Suisse lifted its target price to $439 from $330.

Analysts also raised their target price on Microsoft after it delivered better-than-expected results. UBS and Credit Suisse now are looking for the stock to move to $40, with the latter lifting its estimates as well. In a note to clients, Credit Suisse implicitly acknowledges potential moves by the company inspired by having an activist in the stock once it names a new chief executive officer, stating: “We believe that Microsoft can return to double-digit EPS growth and that multiple options exist for a new CEO to unlock shareholder value.” Possible catalysts it identifies include increasing its buybacks and dividends and divesting or exiting underperforming non-core businesses. As we have previously reported, Microsoft is the largest investment of activist Jeffrey Ubben’s San Francisco-based ValueAct Capital. The stock closed Friday at $35.73, up 6 percent.

Wall Street’s reaction to DuPont’s decision to spin off its Performance Chemicals division was mixed. Credit Suisse has maintained its Neutral opinion on the stock and its $62 price target, despite the presence of New York-based activist investment firm Trian Fund Management, in the stock. Deutsche Bank is more optimistic, maintaining its Buy recommendation and $68 price target. “As Performance Chemicals is divested, we believe DuPont’s multiple will not only expand but could overshoot to the upside as the shares ‘trade up’ to the higher multiple Ag biz,” the investment bank states in a note to clients. The stock closed at 61.90, up nearly 1 percent.