Shoppers walking into a Lululemon store
Scott Mlyn | CNBC
How do investors pick stocks poised to outperform in the current environment? Stocks are tumbling in a tech-led selloff after reaching record highs over the last few weeks. However, even after the pullback, the S&P 500 has still surged almost 19% on a one-year basis. So it’s not surprising that analysts are also boosting their price targets to new highs. At the same time, pushing the price target higher- while reiterating a buy rating- indicates a notably bullish sentiment on the stock’s outlook. And when this move comes from a top-performing analyst, it’s worth paying attention.
TipRanks analyst forecasting service attempts to pinpoint Wall Street’s best-performing analysts — so investors can follow analysts that tend to get it right. These are the analysts with the highest success rate and average return measured on a one-year basis — factoring in the number of ratings made by each analyst.
Here are the best-performing analysts’ five favorite stocks right now:
Nvidia now has a new Street-high price target of $650. And the analyst behind this bullish estimate is Bank of America’s Vivek Arya. He took his price target all the way from $600 to $650 following Nvidia’s special GeForce event to launch its 2nd generation RTX GPU.
At the event, Nvidia launched three new products: GeForce RTX 3080, 3070, and 3090 Founders Edition (Titan)- all based on the company’s Ampere architecture.
“We believe Ampere adds the performance boost (4K at 60 frames/second) both for traditional AND ray-traced games even on traditional games that Turing often compromised on, leading some Pascal gamers to forgo the Turing upgrade,” Arya told investors on September 2.
He pointed out that both the $699 RTX 3080 and $499 3070 cards are $100 cheaper than forecast- which Arya believes can drive better sales and prompt upgrades among 75% of the customer base still using Pascal or older-generation technology. At the same time, the premium 3090 card is 25% more expensive than its predecessor, which should boost profit margins.
With a 24% average return per rating, Arya is ranked at #111 out of all the analysts tracked by TipRanks.
On 31 August, top Credit Suisse analyst Matt Miksic significantly boosted his Abbott Labs stock price forecast from $109 to a Street-high $136, arguing that he sees ‘significant further upside’ for the medical device stock.
Prompting the bullish move was the recent US approval of Abbott‘s new BinaxNow coronavirus test- the sixth test launched by the company in the US.
“The demand for the new test was underscored by the U.S. government order for nearly all of ABT’s capacity for BinaxNow, which equates to 150 mil units ($750 mil)” commented Miksic on August 31.
While the magnitude of near-term sales is clear, the analyst notes that investors are still questioning the sustainability of sales and how much share ABT will ultimately capture.
However, he believes that lateral flow tests (like the BinaxNow), which can be performed without instruments or equipment, by a wide range of individuals, will be an important and widely used tool for mitigating the risk of spreading the virus while reopening businesses and schools.
And while antibody tests have seen only limited utility and demand to date, he expects demand for immunity testing to increase as vaccines are approved, distributed and administered. “Our new estimates reflect these projected dynamics over the next 24-36 months” stated Miksic.
DocuSign has just received the thumbs up from top Oppenheimer analyst Koji Ikeda. He reiterated his buy rating on the ‘best-of-breed back-office automation technology provider’ while ramping up his stock price forecast from $200 to a Street-high $300 on September 2.
According to the analyst, a key theme coming out of Oppenheimer’s recent tech-focused conference is that back-office automation technologies that can deliver quick time-to-value, like DocuSign, are attractive in the current macro environment.
What’s more, Ikeda is confident that the company’s Agreement Cloud and the flagship eSignature product will drive durable growth- and that this will ultimately result in DocuSign becoming a much bigger and more profitable business.
As a result, Ikeda is predicting continued 30%-plus revenue growth alongside healthy operating margin improvements and cash flow generation.
“While DOCU shares have rallied ahead of the F2Q print, our longer-term view of DocuSign’s potential to generate total revenue well above current consensus estimates makes us comfortable recommending DOCU shares as a core investment holding” concludes the analyst.
With a stellar 95% success rate, and 46.1% average return per rating, Ikeda is one of the Top 50 best analysts tracked by TipRanks.
Ahead of Peloton’s earnings report on September 10, JP Morgan analyst Doug Anmuth has reiterated his buy rating on the exercise equipment company. He also dramatically increased his stock price forecast from $58 to $105.
“While Peloton shares have materially outperformed year to date … we continue to like shares into earnings and believe there is significant upside potential to consensus estimates both near and long term,” Anmuth explained.
For the fiscal fourth quarter, he is looking for revenue of $593 million, with 1.09 million fitness subscribers and adjusted Ebitda of $90 million. That’s notably higher than Peloton’s own revenue guidance of $500 million to $520 million, and consensus of $574.6 million.
Right now the company’s primary concern is keeping up with orders, says Anmuth, with exercise bike delivery times averaging six to seven weeks in the top 20 markets.
“We note this is despite Peloton doubling its manufacturing pace since March, and management’s prior expectation of more normalized delivery times by July/August,” he wrote, adding that while this is not optimal, “it bodes well for ongoing demand and sustained top-line strength and could also cap marketing spend longer than we previously expected.”
A Top 50 analyst on TipRanks, Anmuth is tracking a 71% success rate and 26.6% average return per rating.
Popular athleisure retailer Lululemon has just received a new Street-high price target from Stifel Niolaus’ Jim Duffy. This five-star analyst reiterated his buy rating while taking his stock price forecast from $365 to $445.
Duffy’s new price target works out at 55x his 2022 EPS estimate, which the analyst thinks is justified by the company’s strong growth outlook.
He told investors that his increasing confidence in the stock is down to better-than-expected retail sales, lower promotional activity and the massive global marketing opportunity.
The analyst also cites LULU’s recent $500 million acquisition of at-home workout firm Mirror, which has developed a mirror that turns into an interactive gym with live and on-demand classes.
“Early evidence suggests the global pandemic will benefit both the addressable market for Lululemon’s core apparel offerings and opportunities in tangible adjacent market such as self-care and Mirror,” Duffy wrote on September 2.
Crucially, LULU’s recent boost is not just a short-term trend, says Duffy, but a preview of a ‘new normal’ of lasting consumer behavioral changes. “Beyond the near term, we see durable consumer behavioral change that expands the wearable occasion and addressable market,” he wrote.