This content is from: Portfolio

Morning Brief: Investors Jump Back into Facebook’s Stock

The hedge fund favorite surged on Thursday after the company reported strong results and revealed a stock buyback plan.

  • By Stephen Taub

Investors have rekindled their love affair with Facebook. Shares of the controversial social media pioneer surged more than 9 percent on Thursday, to close at $174.16, after the company reported very strong quarterly results and announced a $9 billion stock buyback. In response, Credit Suisse raised its price target on the most popular hedge fund stock, from $230 to $240. It also raised its earnings estimate.

“Sky begins to clear and the comeback begins,” the investment bank proclaimed in a note. It also retained its outperform rating, asserting that its “thesis remains.” It added that Wall Street earnings models “continue to underestimate the long-term monetization potential of upcoming new products.” For its part, UBS trimmed its price target from $214 to $212 but maintained its buy rating. “We think this earnings report should continue the climb of the wall of worry,” the bank stated in its note.

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What a day for Chipotle Mexican Grill, the activist target of Bill Ackman’s Pershing Square Capital Management. Shares of the casual dining chain surged nearly 25 percent on Thursday, to close at $422.50, after the company reported quarterly earnings that blew away consensus forecasts on revenues that roughly met expectations. The stock is now up about 46 percent for the year alone and 66 percent from its February 12 low. Investors are very excited about the company’s prospects under its new chief executive officer, Brian Niccol.

Wall Street’s analyst community was less ebullient. For example, UBS raised its price target from $275 to $300 but maintained its sell recommendation. Barclays raised its price target from $305 to $320 but maintained its neutral rating. “While there are lots of sales driving initiatives being considered, it’s more evolution than revolution,” it tells clients in a note. “We found the CEO enthusiasm contagious, though execution will prove more difficult, especially as competition further intensifies.”

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Saba Capital Management cut its stake in Credit Suisse Asset Management Income Fund to about 3.7 million shares, or 7.08 percent of the closed-end mutual fund.

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