Why high analysts help shares like Salesforce and Zoom
Zoom founder Eric Yuan poses with members of his company in front of the Nasdaq building in New York while the screen shows the logo of the video conferencing software company Zoom after the opening ceremony on April 18, 2019.
I have Betancur | Getty Images
As the year progressed, the stock market continued to break record after record. After a historic month for the S&P 500, the index hit a new high this week due to ongoing optimism about a coronavirus vaccine, marking its 28th record high for the year.
The positive jobless claims for the week ending November 28th were lower than expected and contributed to positive investor sentiment. However, this does not mean that things will run smoothly from here, as the next legislative stimulus package is fraught with considerable uncertainty.
“I think we’re going to have a deal, but the problem is that the market is anticipating it,” commented Bill Baruch, president of Blue Line Futures. “Now I’m optimistic and think the path of least resistance is higher for stocks, but one thing is again: what are the markets expecting?”
At the same time, the coronavirus death toll topped 2,800 for the first time this week, according to a Johns Hopkins University tracker.
How can investors achieve compelling results in the current economic environment? By following the activities of the experts who have done everything right in the past. TipRanks’ analyst forecasting service tracks analyst ratings to find the analysts with the highest success rate and average return per rating. These metrics take into account the number of ratings given by each analyst.
Here are the top five top performing analysts’ top performing stock picks today:
Brian Schwartz, Wall Street’s fourth best analyst Oppenheimer, endorsed Salesforce stock after announcing it would acquire Slack Technologies for an enterprise value of $ 27.7 billion or revenue roughly 20x in 2022. On December 2, the five-star analyst maintained a buy rating and a price target of $ 265, indicating an upside of 18%.
The acquisition met with dismay by the road, but Schwartz argued, “The deal is expensive but supports CRM’s long-term growth.”
The analyst said, “We believe long-term investors need a great TAM, leadership position, and predictability to own the stock. However, a taller company requires meeting and likely exceeding fourth-quarter growth targets. ” Assess the challenges and risks of effectively integrating operations, technology, products, services, and thousands of Slack employees. “
In addition, the software company reported third quarter results that, according to the analyst, “showed good growth and margins, but fell short of investor expectations.” Total revenue of $ 5.419 billion reflected a 20% year-over-year gain and beat consensus estimate, with pro forma EPS also beating the street’s forecast. For the first time in five years, however, the overall settlement missed the consensus estimate.
Schwartz added, “Management’s comment was optimistic but this is being offset by the slowdown in trends across the company and another change in leadership.”
Based on data from TipRanks, Schwartz tracks a 79% success rate and an average return of 32.5% per review.
Before the first analyst day in over three years on December 8th, analyst from BofA Securities, Jason Kupferberg, Fiserv gave his seal of approval. To this end, on December 1, he reaffirmed a buy rating. In another bullish signal, the top analyst raised the price target from USD 120 to USD 136 and put the upside potential at 18%.
Kupferberg assumes that the financial services provider will offer multi-year financial advice for the first time since taking over First Data in July 2019.
“This is a major sentiment (new CEO) event and could be a positive catalyst for the stock as it gives investors better insight into each of the FISV segments and the income statement for the years to come Using the multi-year guide (using 2021 as the base year), we believe the most likely scenario for 6% to 8% internal revenue growth and adjusted EPS growth of at least low to mid-teens (down from 22% in 2021) is the a could be slightly higher depending on how much balance sheet provision is included, “commented the analyst.
In addition, Kupferberg expects FISV to provide a detailed overview of the size and scope of its e-commerce business and its capital allocation strategy.
In light of another positive success, stocks trade at a discount to other deal stocks despite the stock’s recent outperformance, and Kupferberg believes the valuation gap will narrow further “as investors become more confident in the execution of the win new CEO “.
With a success rate of 72% and an average return of 17.9% per rating, Kupferberg is one of the top 100 analysts recorded by TipRanks with the best performance.
Despite another estimate beating the quarter, Zoom’s shares fell 15% after the company reported gains in the third quarter of 2021, amid fears its growth would slow.
Upon closer inspection of the results, revenue of $ 777.2 million was above Street forecast of $ 694 million, while earnings per share of $ 0.99 exceeded the consensus estimate of $ 0.76. On an annualized basis, revenue for the quarter increased 367%, compared to a 355% increase in the previous quarter and a 169% increase in the first quarter.
In response to the earnings release on December 1, RBC Capital analyst Alex Zukin lowered his target price from $ 600 to $ 550 (33% upside potential) but kept a buy rating on the stock.
Zukin notes that the company “sensibly” exceeded expectations and now “understands the underlying retention dynamics better”. While estimating a substantial sequential decline in gross and net bookings, he stated, “We believe the weakness is at least partly due to increased seasonality and a greater mix of SMB bookings, with a greater likelihood of a recovery in the next quarter. In particular we see potential for oversized booking successes in the fourth quarter, supported by a combination of incentive compensation plans (which are semi-annual for corporate representatives) and traditional corporate buy cycles in the fourth quarter. “
When it comes to the long-term opportunity, “Zoom remains in the pole position to enable a distant and hybrid workforce for large corporations for years or even decades,” says Zukin. He added, “In addition, nascent product opportunities related to the monetization of the consumer / gig economies have the potential to offer the company a meaningful new act, although it has not yet been proven.”
Zukin ranks 6th in the TipRanks ranking, supported by its success rate of 78% and the average return of 32.2% per review.
Thermo Fisher Scientific
Thermo Fisher Scientific has just updated its guidance for the fourth quarter of 2020 and the full year. Management now expects organic growth to accelerate further in the fourth quarter to 40% versus 34% in the third quarter, resulting in adjusted earnings per share of $ 19.17 for full 2020 (55% growth versus $ 12.34) in 2019). For Stephen Unger of Needham, this development confirms his optimistic thesis, with the analyst confirming a buy rating and a price target of USD 539 on December 2nd.
Unger had previously forecast organic EPS growth of 29% for the fourth quarter and 2020 for adjusted EPS of $ 18.37 (49% growth). Most notable to the analyst: “TMO attributed the expected upward trend to higher organic growth in both basic business and sales of COVID-19 reactions (worldwide sales of PCR-based tests and other products / services, including COVID-19- Vaccine and Therapy Development). Which is now expected to contribute remarkable sales of ~ $ 2.4 billion (up from ~ $ 2 billion in Q3 2020). “
Additionally, the company highlighted the fact that fourth quarter revenue was generated from vaccine and therapy development, while also seeing “extremely robust” test demand, including meaningful instrument orders.
The base business is also expected to see a mid-single-digit increase over previous expectations of low to mid-single digits, “reflecting the ongoing recovery from the initial pandemic disruption,” Unger said.
It should be noted that TMO stocks have traded in the range of 23-27 times the street’s FTM EPS since the pandemic began, and have recently noted weakness in investor concerns about the impact of vaccines on coronavirus testing. “We believe the demand for COVID-19 testing will remain strong until at least 1H21, regardless of the pace of vaccine distribution in developed countries, and TMO could keep investors happy with COVID-19 testing sales growing year over year in 2H21 very good surprise. ” Unger explained.
Based on his success rate of 76% and an average return of 37.6% per rating, Unger is the number 203 analyst on the TipRanks list.
This week, bargain dealer Five Below reported on its third quarter results and updated trends for the chain, with investors hailing the solid performance.
Earnings per share doubled for the quarter from $ 0.36 compared to $ 0.18 in the year-ago quarter, beating the street’s $ 0.20 call. The company’s total revenue growth was 12.8% versus the consensus estimate of 5.4% and gross margin was 31.7% versus 31.4% for the year-ago quarter.
Although management did not provide guidance for the fourth quarter, it suggested that gross margins normalize to 39-40% in the fourth quarter of the fiscal year (from 42.1% in the fourth quarter of 2019) and SGA margins by about 50 Lower basis points should be higher incentive costs and the assumption of a normalized comparable sales growth area.
Brian Nagel, an analyst at Oppenheimer, commented on the results, saying, “At the start of the coronavirus pandemic, we identified FIVE as well positioned to tackle management headwinds in the short term and ultimately emerged from the crisis that came before you Even better in the changing retail environment … FIVE is one of the few remaining, larger retailers who are still aggressively and successfully opening new stores in new and existing markets. “
This prompted Nagel to repeat a buy recommendation and a price target of USD 140 on December 3rd.
Nagel is the 14th best performing analyst, supported by his 79% success rate and average return of 29% per rating.