Evan Spiegel, CEO and co-founder of Snap Inc.
Adam Galica | CNBC
As the earnings season accelerates, now is the time to reassess your portfolio. However, in such an unpredictable environment, investors need to be especially savvy when making critical investment decisions.
“Markets are now hoping for (and trading for) a smooth election, a great stimulus, an end to the pandemic, and an economy to return to normal in 2019 early next year,” said Brad McMillan, director of investments at Commonwealth Financial Network. This makes the market particularly vulnerable to disappointment. Indeed, the S&P 500 has retreated this week as stimulus hopes diminish and corona fears resurface.
In order to find interesting investment opportunities, it is worth following the latest stock market recommendations from proven analysts. TipRanks’ analyst forecasting service tries to identify the best performing analysts on Wall Street. These are the analysts with the highest pass rate and the highest average return measured on a one-year basis, taking into account the number of ratings assigned by each analyst.
Here are the five favorite stocks of top performing analysts right now:
For Alex Zukin, five-star analyst at RBC Capital, Microsoft remains one of his favorite short-term earnings calls. On October 12, he reiterated his MSFT buy note and lowered his price forecast from $ 230 to $ 250 (upside potential of 13%).
In a report titled “ The King Is Back, ” Zukin says the checks suggest trade trends are normalizing, which, combined with cautious advice, should provide the estimates with benefits.
“Our controls over Microsoft are coming back in force, with comments from partners leading us to believe that the company has probably met or exceeded internal expectations,” commented the analyst. The main drivers of success are still Azure and O365 / Teams – with “ strong, wide-ranging activity ” for Azure.
As a result, Zukin now sees a path for MSFT to deliver another year of 10% + revenue growth. More specifically, it models a potential increase of around 3% of total revenue, which translates into 1Q21 revenue of $ 36.8 billion (+ 11% over one year) against a consensus $ 35.8 billion (+ 8% over one year).
“The multi-year growth engines of O365 and Azure continue to show fundamental strength, and the expansion of margins in the commercial cloud continues with scale and execution,” Zukin summarizes.
With a 78% pass rate and an average return of 33% per rating, he is one of the top 10 analysts tracked by TipRanks.
On October 13, Apple hosted its highly anticipated “Hi, Speed” virtual event. For Needham analyst Laura Martin, the event confirmed her optimistic outlook for the iPhone maker. It reiterated its buy rating on Oct. 14 with a stock price forecast of $ 140 (upside potential of 16%).
Interestingly, AAPL chose to showcase their HomePod Mini before discussing the new iPhone 12s. “Given AAPL’s hyper-produced videos, we believe the order of presentation indicates that AAPL is committed to turning iPhone owners into ‘iOS homes’,” says Martin.
If successful, this new strategy could create value faster than in the past. For example, buying a home product like a HomePod Mini encourages everyone in the family to join iOS, which lowers the cost of acquiring AAPL customers. And most AAPL services now offer discounted rates for family plans, increasing the cost for any family plan member to leave the AAPL ecosystem.
“We believe that AAPL’s pivot towards maximizing home value is supported by the introduction of 4 new [iPhone] models intended to extract the most value per person in the home, based on their age and income level, “the analyst explains. In addition, the low-cost iPhone choices are attracting new consumers to the market. ecosystem of AAPL.
With a Top 100 ranking on TipRanks, Martin is currently tracking an average return of 24.4% per rating.
Matthew McClintock, senior analyst at Raymond James, has just shifted AutoZone from buying to buying hard. And in another bullish signal, it also increased its price prediction from $ 1,500 to $ 1,565 (upside potential of 34%).
According to McClintock, the auto parts giant deserves a higher rating than historical averages. This is due to improved parts availability / e-commerce execution capabilities of AZO which he believes is expected to generate disproportionate market share gains.
“The coming years of EPS expectations are higher than ever, but the stock has flattened since the start of the year and is trading at a discount to history,” the analyst told investors.
Encouragingly, management recently made scarce forward-looking comments for the first time in at least five years, which McClintock cites as positive for both the prior quarter (1Q21) and the following year (FY21). For example, on the last earnings call, CEO Bill Rhodes remarked that “based on our performance after increased unemployment, we believe our sales will remain high for some time.”
Net-net “AZO is a proven, best-in-class, consistent, long-term retail story that investors have little chance of a career to acquire at a discount,” he concluded. analyst on Oct. 13, adding, “AZO is now our top pick.”
Snap releases its third quarter results on October 20 after market close. Ahead of this key date, Stifel Nicolaus analyst John Egbert reiterated his SNAP buy note, while lowering the stock price forecast from $ 27 to $ 32. Shares have surged so far this year, but Egbert’s price target points to further upside potential of 17%.
“We are waiting for SADs [daily active users] in the high end of Snap’s 3Q forecast range, supported by steady gains in North America / Europe and an inflection in the Rest of the World segment, ”the analyst wrote on October 14.
Indeed, Egbert argues that Snap’s revenue growth likely accelerated noticeably from Q2 levels (+ 17% y / y). Positive signals from third-party advertisers and agencies since August suggest that the rate of revenue growth implied by Snap’s 3Q investment plans (+ 20% y / y) may prove to be cautious, as may expectations. consensus (+ 23% y / y).
Looking further ahead, Egbert believes that Snap should be one of the primary beneficiaries of the growing demand for direct response advertisers during the holiday shopping season. And “the company’s audience growth, product innovation, and the long track of growth in above-market advertising are expected to fuel robust levels of growth in FY21 and beyond.”
TipRanks shows the analyst is getting a stellar average return of 23.4% per rating.
HCA Healthcare has just received approval from Frank Morgan of RBC Capital. This five-star analyst has a price target of $ 168 on the health services stock, which equates to a potential upside of 27%.
“We believe HCA stocks should outperform the peer group given its strong position as the largest integrated healthcare delivery system in the country, with unmatched scale and infrastructure,” said the analyst. October 11.
According to Morgan, HCA has learned to manage effectively during a pandemic. Its teams have developed clinical expertise in providing care for patients with coronavirus while serving non-coronavirus patients safely – and the company can scale up / down as needed by the community.
It has now updated its estimates to reflect HCA’s strong pre-released 3Q20 results, with 3Q20E Adjusted EBITDA now expected at $ 2.03 billion (up from $ 1.99 billion previously). These results demonstrate the success of the management recovery strategy, the analyst said, with continued improvement in volume trends, impressive acuity and strong cost management.
Additionally, with its $ 6 billion CARES Act fund prepayment plan, HCA’s capital allocation options are now much more flexible, including potential redemptions.
Morgan is ranked # 221 out of 7,016 analysts followed by TipRanks.