Wall Street analysts like stocks like Tesla, The Chef’s Warehouse
Elon Musk, founder of SpaceX and managing director of Tesla Inc., is coming to the Axel Springer award ceremony in Berlin on December 1, 2020.
Johannessen-Koppitz | Bloomberg | Getty Images
The second quarter of 2021 is underway and Wall Street analysts are reviewing the stocks they cover. At the same time, concerns about new variants of COVID-19 continue to paint a picture of uncertainty.
What does this mean for investors looking for new investment opportunities? There are still stocks that can outperform. One way to find these is to follow the recommendations of analysts who have a proven track record of success. The TipRanks Analyst Forecasting Service seeks to identify the best performing analysts on Wall Street or the analysts with the highest success rate and average return per rating. These metrics take into account the number of reviews published by each analyst.
Here are the analysts’ best stock picks right now:
The cooks camp
The Chefs’ Warehouse, a specialty distributor, focuses on independent and chef-inspired restaurants.
Lake Street Capital analyst Ben Klieve initiated coverage of The Chefs’ Warehouse with a buy rating on April 5 in a research report that named the name “great ingredients for a great reopening.” He also set a target price of $ 38 with an upside potential of 21%.
Klieve acknowledges the fact that the company faced “unprecedented headwinds in 2020”. However, he argues that this headwind is easing.
“Given the nationwide restrictions on indoor eating, we believe the company will have made it in as good a position as expected by 2020. We expect a significant sequential improvement over the course of 2021 as governments put restrictions cancel and return to near normal conditions until the end. ” We expect the stock to return to pre-pandemic levels as investors gain a better understanding of the competitive position, economic divide and profitability of bosses, “commented Klieve.
Given that CHEF’s niche is the independent and chef-inspired dining space, Klieve believes the company’s position in the distribution industry is solid and, in the analyst’s view, “has significant demand for a return to the same restaurants for the.” Inside consists “. He added, “Management describes an investment in CHEF as investing in their favorite neighborhood restaurant, which we believe is accurate and we believe will be a major catalyst for 2021.”
Speaking of valuation, Klieve tells investors, “The CHEF value proposition is not based on where the stock can be in days or weeks, but rather where a largely reopened economy can pick up the stock in a year.”
Currently, Klieve is tracking a 62% success rate and an average return of 29.9% per review.
On April 4, electric vehicle maker Tesla released its production and delivery results for the first quarter of 21, with the numbers ahead of roadside estimates. In response to this development, Oppenheim-based analyst Colin Rusch confirmed a buy rating and a price target of USD 1,036 (54% upside potential).
Upon closer inspection of the announcement, shipments came in at 184,800 in the first quarter, beating the consensus estimate of 172,230. Model 3 / Y shipments hit 182,780, beating consensus estimate by over 20,000. Although the deliveries of the model S / X with 2,020 were well below the expectations of the analysts, the company was, according to Rusch, “at an early stage in the introduction of the new version of these vehicles”.
“We believe that shipments to China and to a lesser extent the US have been weighted as there is less friction in the supply chain in China. We believe the mix towards China will benefit GM and help reduce inflationary pressures offsetting input costs. We expect the bears to point to a low level. ” The sale of the S / X model as an indicator of the demand for premium vehicles, but we believe that the transition to the new design will stimulate renewed demand for the vehicles, “explained Rusch.
Given that Tesla was able to achieve this solid performance in the face of delivery bottlenecks and advances in commercializing ADAS functionality at a higher level, Rusch is optimistic about its growth prospects.
“We remain constructive with regard to stocks, which pay attention to the details of the call and the automotive margin in the first quarter of 21 as well as to the ADAS commentary as the main driver of the stock,” said Rusch.
With seventh place on the list of the top performing analysts by TipRanks, Rusch achieved a success rate of 63% and an impressive average return of 69.1% per rating.
Azure Power Global
Azure Power Global is a leading developer of utility-scale solar energy in India. Against this background, RBC Capital analyst Elvira Scotto initiated a report with a buy rating and a price target of USD 42. This number brings the upside potential to 50%.
Scotto notes that she sees AZRE as “a way to fuel the growth of electricity and solar demand in India”. According to the IEA, power generation in India is expected to grow by around 145% by 2040.
“In light of this surge, the desire for greater energy independence and cleaner air, India is aiming for 450 GW of non-hydropower capacity by 2030, including 300 GW of solar capacity (implies an increase in solar capacity of ~ 25-30 GW by 2530), what we believe offers AZRE significant growth opportunities, “commented Scotto.
Looking at recent successes, the company generally signs power purchase agreements for a period of around 25 years and offers “highly visible, long-term cash flow generation (currently ~ 2 GW in operation)”. In addition, AZRE was recognized by SECI for 4 GW of solar capacity.
“We anticipate that SECI will sign a power purchase agreement with AZRE in early April 2021 and forecast that these contracts will increase AZRE’s sales by 102% and EBITDA by 109% by 2026. Additional auction profits would have a positive impact on our estimates.” said Scotto.
There’s one more factor that should give AZRE a leg up. “As a first mover, AZRE has grown in scope (provides advantages in the supply chain), expertise and a solid reputation. In addition, AZRE has a vertically integrated business model that enables AZRE to control its projects and also reduce overall costs Challenges in securing land in India, we believe AZRE offers a significant competitive advantage because of its land acquisition experience and skills, “said Scotto.
Based on their success rate of 64% and an average return of 20.3% per review, Scotto ranks 21st in the TipRanks ranking.
Cloud-based software company New Relic has just announced that it has committed to a restructuring plan designed to realign its spending to reflect the move to a consumption-based model.
After this development, the Needham analyst Jack Andrews kept both his buy rating and his price target of 78 USD (23% upside potential) unchanged.
According to Andrews, “a consumer company inherits a different unit economy and requires a different go-to-market approach compared to a traditional SaaS subscription approach, where a large percentage of revenue is from committed contracts and bookings on the balance sheet.” To this end, renewals become a “non-event” and any additional “stream of customer consumption” becomes a series of small renewals.
With this in mind, management hopes to simplify the sales and customer acceptance roles and reduce the workforce both in the US and internationally.
“NEWR has historically overwhelmed its sales and marketing and G&A colleagues and intends to shift some of those dollars to better invest in its product and R&D roadmap. In the past, the monitoring tools are (especially APM) not sufficiently represented in the NEWR accounts and data The switch to a consumption-oriented model aims to reduce friction losses and drive customer expansions in the long term (i.e. customers are no longer uncertain about the total cost of ownership and high marginal costs faced for the next workload), “explained Andrews.
In addition, New Relic announced preliminary results for the fourth quarter of fiscal year 21, with revenue, ARR, non-GAAP EPS, and non-GAAP EBIT higher than the company’s previous projections.
Andrews also argues that based on the “lowered financial bar and attractive valuation,” the current “risk / reward setup is favorable”.
Data from TipRanks shows Andrews has a 61% success rate and an average return of 24.6% per review.
On April 6, Everbridge, the company providing software for critical events management, announced that it was planning to acquire xMatters in a cash-and-stock deal valued at $ 240 million. After the news broke, Northland Capital analyst Michael Latimore reiterated a buy rating and target price of $ 165, suggesting 32% upside potential may be in stock.
Everbridge assumes that “the combination with EVBG’s CEM offering will result in a powerful offering for IT alerting and incident management”. The transaction is expected to close in the second quarter.
In addition, according to the EVBG, the goal is to reduce the time required to restore IT services and fix security breaches, with partial annual sales of USD 9 to 11 million and a minimal EBITDA effect expected.
XMatters is a service reliability platform that enables DevOps and operations teams to deliver products at scale by automating workflows and making sure infrastructure is working. It includes 2.7 million users and customers such as BMC, athenahealth, Box and Vodafone every day.
“Combined with EVBG, the service will proactively identify IT issues, assemble responders, apply corrective code, manage patches and drive continuous improvement. The solution will help companies drive digital transformation while providing IT resiliency solutions,” wrote Latimore in a research report.
Latimore explains the implications of the deal, noting that “EVBG’s IT alerting business has grown above Everbridge’s corporate average and this acquisition further strengthens Everbridge’s position.”
It should be noted that the company recently unveiled Everbridge for Digital and, according to Latimore, has “a unique position in providing physical and digital security.” The analyst also anticipates that EVBG’s size and reach will accelerate xMatters’ growth.
Latimore landed in the top 90 analysts tracked by TipRanks, achieving a success rate of 62% and an average return of 33.2% per rating.