Keeping track of your portfolio ups and down is hard. Being on top of all the news for each stock, and analyzing its stock price targets and other data, complicates it, particularly if you have a well-diversified portfolio.
While you should take stock of your stocks at least once a quarter to make sure they remain on track with your investment thesis, you don’t have as much time as you would like to follow them day-to-day.
However, Wall Street analysts get paid to do that. The companies in their coverage universe are examined in minute detail. News that could affect their business gets factored into the ratings and the stock price targets analysts assign.
You can use that to your benefit. Analyst upgrades and downgrades are part of the news cycle for a business. While you shouldn’t act on Wall Street’s stamp of approval or its rejection of a company, it is another tool to use in your decision-making.
The three companies below just had their stock price targets increased. They also got a ratings upgrade from the analyst, too. Let’s dive in to see whether this upbeat signal could be a catalyst for additional growth.
Planet Fitness (PLNT)
It has been a long road back from the pandemic for gym operator Planet Fitness (NYSE:PLNT). The forced closure of gyms and fitness centers during the lockdown period saw revenue crater 41% that year. Planet Fitness has worked out hard to surpass those peak pre-pandemic levels again.
The gym operator reported over $1 billion in revenue for the first time in 2023. That’s 55% more than it generated in 2019. Yet last year wasn’t any easy time. Planet Fitness lost 7% of its value for the year and at one point had been down as much as 43%. It has climbed 63% from those lows, but TD Cowen analyst Max Rakhlenko thinks this is only just the beginning.
The analyst recently upgraded PLNT stock to “buy” from “hold” and raised his stock price target on the assumption raising fees on the gym’s Classic Card to $15 from $10 will give it a nice top-line jolt. He also sees improving gym economics over the next two years that will support building out more locations. A new CEO should infuse it with new life too.
However, a 50% increase in the cost of membership might not be as conducive to retaining members even if it is only $5. And the cost of building new gyms will still be expensive in the current high interest rate environment. With Planet Fitness still mired in the culture wars, there may not be as much growth coming as forecast.
Cinemark (CNK)
It doesn’t grab as many headlines as rival AMC Entertainment (NYSE:AMC) but movie theater operator Cinemark (NYSE:CNK) faces many of the same problems as its peers. Hollywood has lost its magic touch for producing blockbuster movies and people aren’t going to the movies as much as they did before.
Summers used to be filled with hits. Now theaters have to cross their fingers hoping something blows up. That is reflected in box office ticket sales that are down 23% year-to-date.
Yet Roth/MKM analyst Eric Handler sees better days ahead for Cinemark. He upgraded the cinema stock to “buy” from “hold” and raised his stock price target to $26 per share from $19, a 37% increase. While there was no apparent analysis shared with the upgrade, Cinemark is spending its time fortifying its balance sheet, not building new theaters the market can’t support. The theater operator says it hasn’t abandoned new locations but it is a process that will play out over several years.
Cinemark reported stronger than expected first-quarter results, posting a 19-cent per share profit compared to a 21-cent per share loss that Wall Street anticipated. Last year the theater stock had a 3-cents per share loss.
CNK stock is up 38% year-to-date and sits just above the Roth analyst’s previous price target. It seems possible Cinemark will be able to reach that higher level. Whether it can hold onto it if the industry doesn’t have a strong summer is doubtful.
Maplebear (CART)
After a strong start to the year, Maplebear (NASDAQ:CART) has trended lower since its April high. Better known by its Instacart brand, the third-party delivery app rallied earlier this month after announcing a $500 million stock buyback program but again could not hold all the gains.
Unlike Planet Fitness or Cinemark, Instacart thrived during the pandemic. Shopping for people and delivering their food was just what people needed during the lockdown phase of the global health crisis. The aftermath hasn’t been so kind.
People began resuming their previous shopping habits and demand for delivery has waned. Industry growth isn’t robust, with only two percentage point increases expected over the next two years, according to Brick Meets Click and Mercatus. Maplebear is changing its focus too.
Growth for the delivery company won’t come just from groceries but also ad revenue. It began inserting shoppable ads into YouTube videos for consumer products companies. That may be a viable revenue stream but it also represents a change in direction for the stock.
Yet it may be why Gordon Haskett analyst Robert Mollin upgraded Maplebear from “hold” to “buy” and raised his stock price target to $45 per share from $37, a 22% increase. With the Instacart parent trading below $32 a stub, it represents a better than 40% increase.
I’m not sure Maplebear’s outlook warrants the big boost. Investors should probably wait to see just how successful this vertical can be for the delivery company before buying in.
On the date of publication, Rich Duprey did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.