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What Do Analysts Recommend for Icahn Enterprises after Its 2Q16 Results?


Aug. 16 2016, Updated 10:04 a.m. ET

Analyst recommendations

Icahn Enterprises (IEP) is actively covered by only two Wall Street analysts. Of the two analysts surveyed by Bloomberg, one gave the company a “buy” rating while another gave a “hold.” The analysts have given IEP a price target of $56.5, which is 0.9% higher than its closing price of $56.0 on August 5.

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Icahn’s recent ratings

Jefferies gave a “buy” rating to IEP, with a price target of $61 on August 4. The price target implies an 8.9% upside to its close of $56.0 per share on August 4.

UBS (UBS) gave a “neutral” rating on IEP’s stock, with a price target of $52 on May 10. The price target implies 10.7% potential appreciation over its close of $56.0 per share on August 5.

What do these analyst recommendations mean?

There are only two Wall Street analysts covering Icahn Enterprises. None of them have a “sell” rating on IEP.

The company is severely impacted by the oil and gas sector (XOP) and weakness in industrials (XLI). The stock corrected 26.2% between August 5, 2015, and August 5, 2016.

As a diversified holding company engaged in ten primary business segments, IEP is bound to outperform in some segments (FDML, ARL, real estate, gaming, home fashion, and mining) more than others. Thus, the company will always have to face this issue. In 2Q16, overall performance was largely impacted by Icahn’s Investment segment.

Investment pioneering

At the same time, IEP is backed by Mr. Carl Icahn, a pioneer in the investment world. IEP’s stock has given robust returns in the past and has been consistently giving dividends. At the current market price of $56.0, its dividend yield is nearly 10.7%.

Investors with long-term investments in mind could benefit both from IEP’s dividends and stock appreciation. Investors should also note that like Icahn Enterprises, Berkshire Hathaway (BRK-B), Leucadia (LUK), and Loews (L) have wide ranges of holdings.


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