Street analysts see long-term potential in stocks like Dell and Nike
Dell CEO Michael Dell speaks in an interview with CNBC on the New York Stock Exchange floor, July 2, 2018
Brendan McDermid | Reuters
The fourth quarter has just started, and Wall Street analysts are selecting companies they believe have long-term potential.
From video game producers to vacation ownership companies, pundits have weighed in on the stocks of those companies, and they are bullish.
TipRanks is a financial data aggregator that uses its dynamic system like a radar, collecting what Wall Street analysts have to say about the current market atmosphere. The state of the capital markets remains a tangled world of information for even sophisticated investors, but using TipRanks unique tools one can get a clearer perspective on what the professionals are saying.
Let’s see what their assumptions are on these five actions.
If viewed correctly, short-term concerns have the potential to turn into long-term gains.
Nike (NKE) recently posted earnings and while it showed increased demand and strong underlying business fundamentals, the company admitted to struggling with lingering supply chain issues. Sam Poser of Williams Trading, however, sees the time to open a bullish position. (See Nike stock charts on TipRanks)
Poser rated the stock as a buy and declared a price target of $ 196.
The five-star analyst claimed that despite supply chain challenges, “the global health of the Nike brand has never been better.” He sees headwinds as a short-lived concern for investors and the company, and expects Nike to outperform its peers in the near and distant future.
In its earnings call, Nike lowered its forecast, but Poser calculates the clothing retailer is on track to meet the 2025 targets.
The Covid-19 pandemic had initially lowered sales of physical stores, but this measure has almost regained the status it occupied before the closures imposed by the government. In North America, store sales increased more than 50% quarter over quarter, indicating “strong demand” for Nike products.
In a group of over 7,000 expert analysts, Poser is ranked by TipRanks as No. 249. Its stock quotes have earned it a 55% pass rate and have given it an average return of 24.8%.
For SaaS companies, big data is the name of the game.
The processing power of billions of data points from millions of vehicles on the road has provided Otonomo Technologies (OTMO) with a promising business model. The data analytics company recently went public, and analysts are now seeing even more benefits and opportunities for monetizing its product offerings. (See the analysis of Otonomo shares on TipRanks)
One of those optimistic analysts is Jack Andrews of Needham & Co., who wrote that Otonomo harnesses “pivot technology” that unlocks revenue for original equipment manufacturers and investments in connected cars. configuration with hardware upside down â, if it manages to exploit its full potential.
Andrews initiated a buy rating on the stock and set a 12-month price target of $ 10 per share.
The senior analyst explained that the company has created a bridge between two promising sectors: automotive data and its analytics. As the prevalence of connected cars increases, so does the number of possible applications for the data they generate. He noted that beyond the big car manufacturers, new revenue opportunities could emerge from insurance companies and concierge platforms integrating OTMO data.
In addition to business stakeholders, Otonomo provides information to city governments on how to design safer and more efficient city plans.
One of the company’s concerns is a potential regulatory shift towards the privacy of information shared by vehicles by consumers, which would disrupt OTO data standards.
Out of more than 7,000 analysts on TipRanks, Andrews ranks # 158. Of his marks, he succeeded 63% of the time and returned an average of 25.3% on each.
Marriott vacations around the world
The Covid-19 pandemic has proven to be a formidable enemy for the travel and leisure industry. After repeated government-mandated shutdowns, the delta variant arrived in late spring and caused more disruption. Marriott Vacations around the world (ACC) survived the storm and remains relevant even in today’s dynamic climate.
David Katz of Jefferies said the company is set for the rise and is one of its top stock picks for the entertainment industry. (See Marriott Vacations insider trading activity on TipRanks)
Katz rated the stock as a buy and gave it a 12-month price target of $ 190.
This bullish target takes into account the headwinds of Covid-19, as well as the ongoing wildfires in the western United States.
As the industry as a whole is poised to experience this high demand, Katz believes that ACC’s ties to Marriott International (MAR) and its notoriety sets it apart from the competition. In addition, this connection gives VAC “access to the largest hotel loyalty program”, providing the company with a massive installed base.
On TipRanks, Katz ranks at # 418 out of over 7,000 financial analysts. According to his grades, he passed 62% of the time and had an average return of 21% per grade.
Dell Technologies (DELL) recently hosted their pivotal investor day and established a clear roadmap for increasing free cash flow, market share and the overall direction of the business for the long term. Share buyback programs, a focus on high-end consumer products, and the potential rise in infrastructure projects, all point the multinational tech company towards eventual higher valuation.
Amit Daryanani of Evercore ISI reported on the conference, optimistically reiterating a buy note and a 12-month price target of $ 114.
Daryanani explained that Dell announced a share buyback program worth $ 5 billion in shares, along with a quarterly dividend. In an effort to increase free cash flow, the tech company will keep its M&A investments at a lower profile. The analyst said sentiment at the conference was above his expectations. (See Dell Technologies risk factors on TipRanks)
Dell’s infrastructure and cloud storage companies could see “substantial opportunities” in the long term, such as in remote access solutions and telecommunications software. The Covid-19 pandemic and working from home have reinforced trends towards PCs and gaming hardware. Dell understands this and intends to focus on higher-end products for everyday consumers.
Ranked # 355 out of over 7,000 analysts on TipRanks, Daryanani maintains a 63% pass rate on his ratings. His stock picks are currently averaging a 16.6% return.
As individuals went through pandemic-induced lockdowns, many people began to play video games to pass the time. The companies that produce these game franchises have taken advantage of the trend, and Activision Blizzard (ATVI) was not an outlier. Now the company has a “wave of content” directed at consumer consoles, and analysts are bullish on the strong pipeline.
Andrew Uerkwitz of Jefferies defined his bullish assumption on the stock, saying Activision has an “underrated portfolio of high quality content in the fastest growing entertainment segment.”
Uerkwitz declared the buy action and assigned a 12-month price target of $ 120 per share.
After running through several possible scenarios regarding release dates and consumer reception for his upcoming titles, the five-star analyst still finds it hard to imagine other downsides, even in bearish cases. Uerkwitz calculated a situation where a particular stock has underperformed and Activision Blizzard has consistently exceeded earnings per share estimates for fiscal 2021. (See Activision Blizzard’s earnings history on TipRanks)
The company maintains solid gross margins, which gives it significant operating leverage. Elaborating on Activision’s options, Uerkwitz added that he has tools for growth, such as share buyback programs and content investments, and can explore inorganic expansion through mergers and acquisitions.
Activision recently reached an agreement with the Equal Employment Opportunities Commission on a case of sexual harassment. In his view, Uerkwitz sees the $ 18 million deal with the US federal agency as a speed bump in an otherwise smooth year. The regulation allays concerns about worse regulatory penalties, although a less-than-stellar work environment can prove to be a downside if talent is to be hunted.
On TipRanks, Uerkwitz maintains a rank of No. 122 out of over 7,000 expert analysts. His pass rate is 62% and per grade he averages a 27.7% return.