Analysts see a rise in stocks like Netflix and Tesla
Tesla CEO Elon Musk gestures as he visits the construction site of Tesla’s Gigafactory in Gruenheide near Berlin, Germany on August 13, 2021.
Patrick Pleul | Reuters
Although the market has been volatile, analysts are spotting upside opportunities among some companies.
Tipranks is able to silence the market noise by aggregating data to show which financial analysts consistently make the right calls, and delivers that information on an easy-to-digest platform.
From electric vehicles to video streaming, some of the top performing analysts in the US financial markets recently made their assumptions on these five stocks.
Let’s take a look and see what some of the top analysts have to say.
Due to the Covid-19 pandemic, investors had high hopes for video streaming service and content producer Netflix (NFLX), but high growth one quarter can often mean a difficult comparison for the next quarter. As the company has experienced a deceleration in subscriber growth throughout 2021, Stifel Nicolaus’ Scott Devitt believes the worst is behind it. (See Netflix hedge fund activity on TipRanks)
Devitt valued the stock as a buy and raised his price target to $ 650 from $ 580.
The bullish analyst predicts that the number of newly acquired subscribers will increase in the second half of the year. Additionally, he believes Netflix’s international focus will help expand its total addressable market overseas.
The company is expected to spend around $ 17 billion on content for the year and is experiencing high levels of user engagement. In addition, Devitt expects Netflix “to be approaching a period of sustained free cash flow generation, which should allow a long trail of self-funded content creation, reduce the need for external funding, and allow the company to return capital to shareholders “.
Although the stock has been affected by stronger market forces in recent weeks, Devitt does not view the decline in the stock price as a reflection of the company’s core business trends. He sees the slight drop as a haircut, however, and writes that it offers an attractive entry point for long-term investors.
Out of more than 7,000 analysts on TipRanks, Devitt is ranked No. 52. His ratings resulted in a 68% pass rate and returned an average of 32.7%.
The Covid-19 pandemic has sparked many business trends, and with people stranded at home, the DIY boom has taken off. While this has declined slightly, retail companies like AutoZone (AZO) continue to show positive results. The auto parts company recently beat Wall Street consensus earnings per share estimates by more than 20% and is expected to have “more gasoline in the tank” by 2022.
Wells Fargo’s Zachary Fadem valued the stock as a buy and raised his price target to $ 1,825 from $ 1,750.
The five-star analyst brushed aside concerns about the DIY slowdown and highlighted the potential benefits of the business. He wrote that AZO is expected to open around 20 additional mega hubs in fiscal year 2022 and that it is managing its inventory properly. (See AutoZone risk factors on TipRanks)
AutoZone has bet on commercial investments to increase its growth, and the analyst believes that the strong quarterly results reflect the success of these initiatives. In addition, Fadem identified the positive of the recovery of labor measures, which he attributes to the finding of “improved unemployment benefits”.
Bullish on the company, the analyst said the share price remains attractive and shareholders could be rewarded with the company’s future growth, which will also be bolstered by its nascent online retail segment.
On TipRanks, Fadem is ranked # 36 out of over 7,000 expert analysts. Fadem ratings have been successful 77% of the time, and they average returns of 29.9% for each.
For software-as-a-service companies, cloud computing is now the name of the game. Companies that have successfully adapted to this new reality are flourishing and Adobe (ADBE) is not an outlier. Called a “pioneer of digital creation and marketing tools and services” by Brian Schwartz of Oppenheimer & Co., the company has adapted to its current advantageous and profitable position in its market.
Schwartz valued the stock as a buy and raised his price target to $ 680 from $ 600.
The optimistic analyst called Adobe a “verifiable cloud platform success story” and said he was optimistic about its prospects. This positivity came after recent encouraging results from Adobe, which exceeded Wall Street consensus estimates on several key parameters. (See Adobe’s insider trading activity on TipRanks)
While a further rise, supported by high levels of profitability, is expected by Schwartz, he warned short-term investors of a possible healthy pullback. This correction would come after the stock has climbed around 29% year-to-date (at the time of writing). He said “the fundamental outlook for Adobe is positive”.
In terms of its more robust platforms, Digital Experience cloud-based products are accelerating with natural growth, and the acquired business management company Workfront is successfully integrating.
Out of more than 7,000 professional financial analysts on TipRanks, Schwartz ranks third. His grades were successful 81% of the time and collectively they generated an average return of 35.4%.
The electric vehicle (EV) market is still a marginal part of the overall automotive industry, but that is sure to change in the years to come. Calling it a winning ‘front and center’ action game in electric vehicles, Daniel Ives of Wedbush argued that Tesla (TSLA) has yet to reach its major global boom, with much larger production capacity this year. (See blogger Tesla’s sentiment on TipRanks)
Ives reiterated a buy note on the stock and assigned a price target of $ 1,000 per share.
Although the bullish analyst admitted that Chinese regulatory challenges exist and have weighed on stock prices for the past two quarters, he expects them to dissipate by the end of the year. He added that until the Berlin Gigafactory is operational, the fact that Europe is shipping its Tesla vehicles from China is an unsustainable “logistical nightmare”.
This problem, however, will be resolved once Berlin starts producing Tesla vehicles. Additionally, the company’s ability to meet demand will once again be sustained once the other manufacturing facility under construction in Austin, TX comes on stream.
Another difficulty has been the global semiconductor chip shortage, which weighed on the entire auto industry for much of 2021.
As the competition rapidly intensifies, Ives expects Tesla to remain dominant over other EV companies. He predicts that the market for electric vehicles and autonomous vehicles will grow from 3% today to 10% by 2025, with Tesla benefiting far more than other companies from the change.
Ives maintains a # 33 ranking out of over 7,000 total analysts on TipRanks. His grades were successful 75% of the time, and averaged 35.7% on each.
Although mobility in general was hampered during the most severe days of the Covid-19 pandemic, Uber Technologies (UBER) has been successful in leveraging its carpooling drivers as food delivery vehicles and maintaining its relevance. The company has faced several high-profile headwinds over the past two quarters, but JPMorgan’s Doug Anmuth sees them easing, with a hike on the horizon.
Anmuth maintained his buy rating on the stock and declared a price target of $ 72.
The analyst explained that the factors weighing on the share price are dissipating and are expected to disappear by the fourth quarter of this fiscal year. These include regulatory hurdles, a low supply of drivers and concerns about its ability to finally generate a profit.
He allayed concerns by saying that in several countries, travel volumes have exceeded pre-pandemic levels and the supply of drivers has improved. Additionally, Uber’s incentives for new drivers have been reduced, signaling a decrease in the sense of recruiting urgency for the company.
Regarding Uber Eats, Anmuth wrote that the rapidly expanding food delivery platform is experiencing high levels of user retention. In addition, a significant number of users are converted directly from the rideshare app, testifying to a strong platform ecosystem.
Anmuth believes Uber management has declared a cautious direction for the third quarter, so the analyst expects this metric to improve when its next earnings release. (See Uber stock charts on TipRanks)
Aggregated by TipRanks, Anmuth ranks 75th out of over 7,000 other analysts. Its success in correctly rating stocks is 68% and has generated an average return of 25.4%.