The Morning Brief: Credit Suisse Reduces Target in Three Popular Hedge Fund Stocks

Credit Suisse trimmed its price targets on three of the four so-called FANG stocks — hotshot internet companies favored by many hedge funds. In fact, they were three of the four most widely-held stocks among hedgies as of the end of the third quarter, according to portfolio intelligence platform Novus.com. The investment bank tells clients it made the changes ahead of the companies’ quarterly earnings reports due out over the next few weeks. In each case, it maintained its outperform rating on the stock.

For example, Credit Suisse reduced its price target on social media pioneer Facebook, the most widely-held hedge fund stock, from $170 to $165. It also lowered the company’s earnings estimate but added, “now is the time to accumulate” the shares. It tells clients the shares are mispriced “and present favorable risk/reward on the long side.” Its downside price for the stock is $93. The bank stresses its estimates do not figure in contributions from products such as Messenger and WhatsApp. Shares of Facebook closed Wednesday at $126.09, up 1.4 percent.

Credit Suisse also cut its target on e-commerce giant Amazon.com, from $1,000 to $950, and lowered its estimates.

“The strategic and product-driven rationale behind Amazon’s decision to invest into content, fulfillment centers, and data centers should now be well-familiar to investors,” the bank writes in a note to clients. “We were puzzled to see Amazon lead with Prime Video as a standalone subscription product first prior to launching e-commerce operations, but we believe this will be the new beachhead product for what should be global e-commerce expansion.” The stock climbed 0.39 percent, to close at $799.02.

Finally, the investment bank cut its price target on the voting shares of Alphabet, the parent of search giant Google, from $1,120 to $1,100, noting it made “a significant number of changes to the underlying assumptions across the company’s multiple products.” It also believes there is less controversy and “higher investor sponsorship” for the stock versus other large-cap internet stocks. The stock closed at $829.86, up 0.47 percent.

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Easy come, easy go. Shares of Valeant Pharmaceuticals International fell about 6.5 percent on Wednesday, to close at $15.33, short-circuiting what seemed like an early-year rebound in the very depressed stock of the embattled drug company. It didn’t help that president-elect Donald Trump criticized the pharmaceutical industry at his press conference that day.