The stock market moved higher on Wednesday morning, and the Nasdaq Composite (NASDAQINDEX:^IXIC) was one of the best performing markets on Wall Street. As of 11 a.m. EDT, the Nasdaq was up half a percent and doing its best to a third of a percent even as some other market benchmarks were down on the day.
Wall Street analysts often have dramatic short-term impacts on stocks. On Wednesday, a couple of well-known stocks were beneficiaries of positive comments from professional investors. Below, we’ll look more closely at lululemon athletica (NASDAQ:LULU) and American Airlines Group (NASDAQ:AAL) to see why they’re headed higher and what Wall Street’s finest expect from them.
Goldman loves Lululemon
Shares of Lululemon were up 2.5% on Wednesday morning. The yoga and athletic apparel specialist got a huge vote of confidence from one of Wall Street’s most-followed companies.
Goldman Sachs put Lululemon on its conviction list, accenting its buy rating on the retailer. Goldman’s price target of $447 per share offers about 18% more upside even after accounting for the rise thus far on Wednesday.
The argument favoring Lululemon is one that shareholders have seen before. On one hand, Lululemon did a good job during the pandemic of building out its digital distribution channel, and the experience helped boost brand awareness among consumers. However, as retailers recover from the pandemic, Lululemon has a new opportunity to capture people coming back to brick-and-mortar retail, especially given its strong customer loyalty and close-knit community of brand ambassadors and devoted fans.
With the move, Lululemon is getting close to its all-time high from September 2020. From there, the sky could be the limit for the yoga apparel retailer.
American gains altitude
Elsewhere, shares of American Airlines Group picked up 4%. The airline stock has faced huge challenges over the past year and a half, but at least one Wall Street analyst thinks that the worst might be over for American.
Analysts at Citi upgraded American from sell to neutral, citing a more balanced risk-reward proposition after the stock’s recent decline. Citi has had a price target of $21.50 per share on the stock, and the drop below that level has made the airline more attractive from a valuation perspective.
Investors also got some positive business news from American. The airline upgraded its assessment of how revenue is likely to have fared in the second quarter, with new predictions calling for a 37.5% drop in sales compared to pre-pandemic levels two years ago. Obviously, that looks terrible, but it’s better than previous guidance for a 40% decline.
Losses won’t end anytime soon for American, but airlines appear to be moving in the right direction. It’s unclear how long that will last, especially if new fears about the potential for COVID-19 variants prolong border closures for international travel and even bring back lockdown measures. For now, though, airline stock investors seem to be hoping for the best even as they make plans for what could be worst-case scenarios going forward.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.
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