Top Wall Street analysts say they’ll buy stocks like Denny’s and Cloudflare when the economy opens again
After unusually broad market momentum since November, stocks are overdue for a long break or correction. Stock selection will play a role from here as the economic reopening determines different winners and losers.
According to a team of JP Morgan strategists, given the current strong price momentum, high valuations and overweight investor positioning, “it would not be surprising to see a consolidation”. However, consolidations or corrections should not be viewed as “lasting turning points this early in the business cycle and in the hyper-stimulus era”.
One strategy that investors can use to find exciting investment opportunities is to track the activities of analysts with a proven track record. TipRanks’ analyst forecasting service finds the top performing analysts on the street. These are the analysts with the highest success rate and average return per rating considering the number of published ratings.
Here are analysts’ best stock picks right now:
Denny’s restaurant chain just got a thumbs up from Wedbush analyst Nick Setyan, who reiterated a buy recommendation and raised its target price from $ 18 to $ 19 after the company announced fourth quarter results.
For the fourth quarter, the company reported adjusted loss per share of $ 0.05, which was $ 0.01 below the consensus estimate for announced revenue growth in the same business of -32.9%.
Setyan said trends so far are “encouraging” and could potentially address breakfast recovery concerns. Revenue growth in the same store has been -29% year-to-date, including -31% in January and -25% in February. In particular, locations with open dining rooms that are open around the clock have so far been -6% in February compared to 2019.
It should be noted that roughly 31% of domestic stores are 50-66% busy, 25% are 75% busy, or social distance only, 15% are 25-33% busy, and 1% have no restrictions.
“We continue to see the pace at which restrictions are lifted, the gradual increase in night-time hours and the sustainability of off-premise as a driver of revenue recovery. We also anticipate the launch of two virtual brands (Burger Den, The.) Melt Down ) to ease short-term pressure at breakfast while expanding Denny’s presence in the evening and night sections, “explained Setyan.
With a view to the Burger Den and Melt Down brands, Setyan expects sales through sales to at least match the previous UL margins. “The latter should already benefit from the efficiency after the COVID and the refreshment in 2019. We conservatively model the UL margins of 1722 in co-ownership of 20.6% and above all believe that the profitability of the franchisee will benefit from an increase profitability will benefit. ” commented the analyst.
Based on data from TipRanks, Setyan is currently tracking a 60% success rate and an average return of 14.2% per review.
According to Colin Sebastian, an analyst at Baird, after its fourth quarter release, Shopify is a compelling ecommerce game because “it’s huge long-term growth and monetization opportunities are seen as the premier ecommerce platform for retailers and brands.”
As a result, the five-star analyst left his buy rating for the stock unchanged. In another bullish signal, Sebastian gave his price target a boost, which moved from $ 1,250 to $ 1,600.
It should be noted that management said it did not plan to come up with specific quarterly or annual guidelines, but rather to convey expectations for “strong but slowing sales and GMV growth as consumption habits return to” normalized “trends “. Additionally, Shopify is set to increase R&D investment and accelerate online and product marketing spend with 2,021 new engineers this year.
During the call for results, management announced that it plans to continue investing in long-term growth initiatives, including SFN (Fulfillment), International, POS, Plus and the Shop App.
“While we expect these ongoing investments, including significant R&D recruitment, to put margins under pressure in the next year, we continue to see these product initiatives as the main catalysts for longer term dealer adoption and rate expansion,” commented Sebastian.
The analyst added, “So we recommend going beyond slowing growth rates this year and lowering profit margins (significant investment year) as Shopify is prepared for many years of strong growth.”
Since Sebastian has a success rate of 78% and an average return of 39.2% per rating, he is among the top 30 analysts recorded by TipRanks.
Mark Zgutowicz, an analyst at Rosenblatt Securities, says organic revenues will rise for the first time in three years and monetization of payments is getting closer. “There’s a lot to look forward to for the stocks.” Because of this, the five-star analyst maintained a buy rating for the stock and raised the price target from $ 100 to $ 120.
Currently neither W + M (Websites + Marketing) nor Poynt GMV have been monetized, but Zgutowicz argues that GDDY “will be optional in the future as it will allow current and new customers from existing payment processors (e.g. Stripe, Paypal, Square) to die Poynt’s payment capabilities are based on Elavon, a global payment processor.
In addition, the analyst does not rule out GoDaddy integrating Poynt into its customer care services, which “will satisfy either existing or new customer prospects, depending on how competitive the quasi-bundled prices are”. He added: “Net-net, we are pleased with the relatively open upward trend here against an already ample GMV base.”
Additionally, domain growth has accelerated over the past two quarters, with Zgutowicz noting that he wouldn’t be surprised if the trend continued into the first quarter. “In a market full of ecomm domain name bottlenecks, GoDaddy’s ability to showcase a name that has already been taken and effectively broker the deal is a huge asset,” he said.
The analyst also anticipates additional mergers and acquisitions as this would help GoDaddy build its “market and peer outperformance for the foreseeable future”.
With a success rate of 85% and an average return of 74.8% per rating, Zgutowicz ranks 68th among over 7,000 analysts recorded by TipRanks.
Anavex Life Sciences
Anavex Life Sciences develops products based on the sigma-1 receptor (S1R), which is found in many tissues and has a high concentration in the nervous system.
For the Ladenburg Thalmann analyst Robert LeBoyer, the share remains an exciting result after the first quarter. To this end, he repeated a buy recommendation and a price target of USD 20.
Along with the quarterly results, the company released an update to its pipeline, with Rett Syndrome programs making both clinical and regulatory progress. Anavex received FDA approval to extend patient treatment for an additional 24 weeks after completing the 12-week conductance assessment AVAVEX 2-73 (phase 2 US study) for a total of 36 weeks. According to LeBoyer, the additional treatment should provide long-term data on safety and effectiveness.
“AVAVEX 2-73 has shown 3 years of stability for the active ingredient and in oral solution for administration,” explained LeBoyer.
It should be noted that the company plans to submit an accelerated approval and orphan drug designation application for the Rett Syndrome indication.
In addition, the Phase 2b / 3 trial evaluating the Alzheimer’s candidate is expected to meet the schedule for registration for 1H2021. The company has also received a grant of nearly $ 1 million from the Michael J. Fox Foundation for Parkinson’s Research for “PET imaging studies of the ANAVEX 2-73 interaction with and activated by the Sigma1 receptor Disease Pathways “is used.
As evidence of its impressive track record, LeBoyer has an average return of 80.6% per review and a success rate of 61%.
Baird analyst Jonathan Ruykhaver supports Cloudflare as a listed company after its first investor day. With that in mind, he kept a buy rating and a price target of $ 102.
“Overall, we believe the event will provide a good glimpse into Cloudflare’s portfolio of products, the go-to-market movement and long-term opportunities. We continue to like the opportunity for solutions like Cloudflare One and Workers and are positive about management’s comment on refining the go-to-market strategy of the Corporate, “commented Ruykhaver.
According to Ruykhaver, Cloudflare One could potentially shake up traditional network architectures. In addition, the company has improved its gateway solution.
“We continue to see Cloudflare’s ability to offer these user-centric security products alongside solutions such as DDoS mitigation, WAF, intelligent routing, and more as disruptive and believe that this portfolio positions the company for strong growth,” said the Baird- Analyst.
Additionally, Ruykhaver believes that Cloudflare is just beginning when it comes to the possibility of its Workers serverless solution.
In terms of market strategy, the analyst likes “Cloudflare’s bottom-up approach to getting developers to market” but also appreciates “management’s commitment to further refining the company’s go-to-market strategy.”
Ruykhaver explained: “We see increased investment here as a way for the company to capture corporate spending more sensibly. While this cohort nearly doubled year-on-year, the company had just 32 customers with annual sales above 1 as of Q420 Million dollars. “
With a success rate of 71% and an average return of 34.5% per rating, Ruykhaver ranks 133rd on TipRanks’ list of top performing analysts.