Wall Street’s top analysts recommend these buy-rated stocks when the earnings season begins
A selection of items on the menu at Jack in the Box on Campus Drive in Irvine, California.
Glenn Koenig | Los Angeles | Getty Images
The first quarter earnings season is well underway. Several tech heavyweights report on their financial results for the final quarter of last week.
But there is more to come. Many companies are preparing to publish their quarterly results. Ahead of these upcoming earnings releases, Wall Street analysts take stock of the names they cover and highlight games that seem compelling.
The buy-rated stocks listed below have been rated just that by analysts with a proven track record. TipRanks’ analyst forecasting service seeks to identify the top performing Wall Street analysts.
These analysts achieved the highest average return per rating and the highest success rate, taking into account the number of ratings given by each analyst.
Here are the analysts’ best stock picks right now:
Bryan Keane, analyst for Deutsche Bank, remains optimistic about Global Payment’s long-term growth prospects ahead of the Q1 results release on May 4th. Against this background, the five-star analyst repeated his buy recommendation on April 26th. Due to an additional upward trend, he raised the price target to USD 235 (8% upside potential).
It should be noted that due to “Merchant conservatism”, Keane has cut its estimates for the first quarter. The analyst is now calling for sales of $ 1.754 billion and earnings per share of $ 1.76.
Nevertheless, he left his forecasts for the full year 2021 unchanged. For the full year, sales growth is expected to be around 12% at constant exchange rates. An upward trend could potentially be achieved by improving spending and simple compensation over the course of the year.
“We anticipate that GPN will benefit from more than 60% of its business from technical support from the improvement in volume and trends in the integrated and vertical markets business, as well as the continued strength of eComm / Omni-Channel on the ~ 25% accounts for total revenue. GPN should also benefit from new successes and partnerships such as Truist and AWS / toget, as well as strong revenue synergies across all businesses, “explained Keane.
Additionally, in Keane’s opinion, the company’s guidelines do not take into account any benefit from the recent economic stimulus package, “which, along with accelerated buybacks and the potential for acquisitive acquisitions, could drive upward.”
With an excellent success rate of 78% and an average return of 24.8% per rating, Keane ranks 182nd among over 7,000 financial analysts recorded by TipRanks.
Lyft announced on April 26 that it, like colleague Uber, is leaving its Level 5 self-driving car unit in the rearview mirror and selling it to a Toyota subsidiary for $ 550 million.
For BTIG’s Jake Fuller, this deal is a huge benefit for the ride-sharing agency. For this reason, the top analyst maintained a buy rating before posting a profit on May 4th. In addition, he raised the target price, moving the number from $ 70 to $ 80 (26% upside potential).
“The pursuit of self-driving cars has hurt the profitability of ridesharing, and it was unclear whether either Uber or Lyft would be able to absorb the investment it would take to get to the finish line,” commented Fuller.
In terms of the impact of the deal, the sale of Level 5 should save about $ 100 million to OpEx, according to the company. This prompted Fuller to boost its EBITDA estimates for 2021. The analyst now expects Lyft to post EBITDA earnings of $ 7 million in Q3 21, up from previous estimate of $ 23 million.
In addition, Fuller increased its booking estimates from $ 9.6 billion to $ 10.1 billion in 2021 and from $ 14.3 billion to $ 14.9 billion in 2022.
Fuller explained the rise in estimates as follows: “We went into the downturn and expected a much slower recovery than the road. This turned out to be the right demand for 2020, but we now expect rides by early 2017 will be close to 2019 levels again. ” 2022. With revenues recovering faster, Level 5 sales and a reduction in Lyft’s break-even point, we are now well above consensus on EBITDA for 2022 ($ 682 million versus $ 298 million). “
According to TipRanks, Fuller currently has a 68% success rate and an average return of 24.6% per review.
Fast food chain Jack in the Box is up 27% year-to-date, up from 11% for the S&P 500. Despite that outperformance, Oppenheimer’s Brian Bittner argues that “the stock is still undervalued”.
“We believe the ~ 30% discount to peers underestimates JACK’s above average fundamentals, increased profitability, and the discernible path to accelerating unit growth. In our view, this increases the risk / return of the stock at current levels, and so do we increase F22E’s estimates. “Bittner wrote in a note dated April 26th.
In view of this, Bittner kept its buy recommendation. Additionally, the analyst raised the price target from $ 115 to $ 135 and increased the upside to 14%.
Bittner believes Wall Street is overlooking two key factors in JACK. First and foremost, the analyst tells clients that the company’s annual EPS performance has improved from around $ 4.50 prior to the pandemic to around $ 6.50, “with legs for further revisions.” With a view to the earnings release for the second quarter on May 12, Bittner estimates that JACK will achieve an EBITDA of $ 67.6 million.
As for the second, Bittner sees an argument in favor of unit growth. According to the analyst’s calculations, the franchisee’s EBITDA per unit increased by over 29% in 2020. “This, along with 18% to 23% lower construction costs and new development capabilities, strengthens management’s confidence that existing stores can add 950 to 1,200 units from its ~ 2,200 base. New areas would represent another upward trend and an attractive setup than Street represent. ” Models only 1% plus unit growth [compound annual growth rate]”Bittner explained.
In relation to the company’s cash position, Bittner expects share buybacks to be valued at $ 285 million through F22E, which would support greater than $ 100 million in cash, and suggests that “the current buyback authorization of $ 200 million – dollars could be easily depleted / replenished “. The analyst added, “Assuming the current EBITDA run rate, net debt is less than four times and [free cash flow] continues to outperform EPS as we believe the FCF / stock could exceed $ 7.50 in the next year (implies a 6.5% return). “
Bittner, a top analyst in the service sector, has achieved an impressive 69% success rate.
Given the positive partner reviews that showed a shift and upward trend within the customer base, RBC Capital analyst Matthew Hedberg expects SailPoint Technologies to match the consensus estimates (revenue of $ 91.2 million and earnings per share of $ 0.00) when it releases its first quarter results on May 10th.
Since SAIL remained one of Hedberg’s “most popular SMID cap ideas”, the top analyst left his buy recommendation and price target of USD 71 unchanged. Based on that goal, stocks could rise 41% over the coming year.
Hedberg admits that the enterprise identity governance solutions provider was in poor mood after the fourth quarter results were released, but notes that the tide may turn.
“2021 is expected to be a year of transition as management realigns business to focus on subscription-based pricing regardless of deployment [software as a service] remains ratable, we should also see more and more limited-term deals, “commented Hedberg.
In 2020, 33% of IdentityIQ new sales were temporary, with the company expecting that to increase to 50% in 2021 and around 100% in 2022. It should be noted that the current pipeline and up-sells will have a “perpetual option” for now, “the analyst said.
“The impact of the transition is a headwind of 12 points on revenue growth in 2021 and 10-11 points in 2022, with growth expected to normalize after three years, with long-term benefits including world-class SaaS gross margins and 25% -plus operating margins. Management also highlighted its AI / ML skills to expand its value proposition relative to competitors, and is investing in the opportunity, including GTM investments, to reap the benefits of security transformations as management sees the Ability to normalize sales growth of 20% to 30% noted with higher internal aspirations, “added Hedberg.
In addition to the quarterly results, investors will be on the lookout for insights from SAIL’s management team about Okta’s advance into the IGA in 2022.
For Hedberg, a 73% success rate and an average return of 30.2% per review result in a # 54 ranking on the TipRanks list.
Monolithic energy systems
Rick Schafer, analyst at Oppenheimer, points out before the publication of the results in the first quarter on May 4th that the scarce supply may affect the upward trend of Monolithic Power Systems in the short term, but that demand “remains largely strong”.
This prompted Schafer to reiterate its Buy recommendation and target price of USD 420. With this goal, the upside potential is 11%.
Based on Schafer’s recent supply chain reviews, there are significant limitations on 8 inch wafers / PM ICs. However, management’s early capacity investments help Monolithic Power better capture demand.
Schafer explained: “MPWR increased capacity by 20% to 25% in 2020 and added a new 12” factory in the fourth quarter. A new 8 “factory is planned for 2021 year with increasing capacity.”
It should be noted that Auto grew 63% year over year in the fourth quarter, with that division potentially pushing MPS higher in 2021.
“IHS Projects 2021 SAAR growth of more than 14%, perhaps optimistic as chip restrictions reduced global auto production by ~ 1.3 million units in the first quarter. Despite restrictions, we see MPWR 2021 auto growth of ADAS is close to 50% and supports ~ 10x content jump to 50 US dollars ADAS, smart lighting, BMS and body control ensure a richer mix and long-term growth of 30-40% “, commented Schäfer.
Schafer sees 5G RAN as “MPWR’s next major growth pillar from 2022, led by QSMod / BMS content gains from less than $ 50 / BTS to $ 100 / BTS”. In addition, the company received a Huawei license in late 2020, which, according to Oppenheimer analyst, may have contributed to revenue growth early in the second quarter.
Among the top 35 analysts, followed by TipRanks, Schafer has a success rate of 81% and an average return of 24.9% per rating.