Morgan Stanley raised to Peerperform, Merck a Buy at UBS: 4 big analyst picks

Investing.com — Here is your Pro Recap of the biggest analyst picks you may have missed today: a Buy assumption at Merch, and upgrades at Morgan Stanley , Cognizant Technology Solutions, and Union Pacific.

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Morgan Stanley upgraded to Peerperform, 'risk/reward appears much more balance'

Wolfe Research upgraded Morgan Stanley (NYSE:MS) to Peerperform from Underperform.

The analysts previously had concerns about the stock's valuation, risks to net interest income estimates, Basel 3 Endgame impacts, and market/beta sensitivity. However, recent underperformance following Q3 earnings on Wednesday has led to a more balanced risk-reward profile, prompting the upgrade. The analysts now consider Morgan Stanley's shares to be fairly valued, with earnings risks better reflected in consensus estimates.

Merck assumed at Buy

UBS assumed coverage on Merck (NYSE:MRK) with a Buy rating and a $122.00 price target, as reported in real-time on InvestingPro.

The bank anticipates consensus upgrades for Keytruda and Gardasil in 2024.

“We believe consensus continues to underestimate Keytruda revenues as it moves higher up the treatment algorithm, and Gardasil's growth in China,” commented the analysts.

The firm also highlighted underappreciated pipeline opportunities like PRA023 in UC and gefapixant in chronic cough. Additionally, they believe a potential readout in CADENCE in PH caused by heart failure is overlooked. Other catalysts include novel IO, other Keytruda subq/combos, and ADC data, contributing to a forecasted pipeline of $15.5 billion in 2030, compared to the consensus estimate of $12.7B.

The company is set to report its Q3/23 earnings on Oct 26.

Cognizant Technology Solutions earns an upgrade at Citi

Citi upgraded Cognizant Technology Solutions (NASDAQ:CTSH) to Buy from Neutral and raised its price target to $80.00 from $72.00.

The analysts highlighted Cognizant's significant progress on various fronts, improved reputation with clients and employees since the CEO and board-level changes in early 2023, and its attractive valuation compared to peers despite a year-to-date outperformance.

“We consider year-to-date bookings strength and improved client and employee retention as early evidence that Cognizant can keep pace with its main comps into a recovery, and this should help CTSH stock deliver an attractive return,” commented the analysts.

Union Pacific upgraded following Q3 earnings

Deutsche Bank upgraded Union Pacific (NYSE:UNP) to Buy from Hold with a price target of $235.00 (from $223.00) following the company’s reported Q3 earnings yesterday.

Union Pacific reported an EPS of $2.51, better than the consensus estimate of $2.46. However, revenue of $5.9 billion slightly missed the consensus of $5.99B.

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