High Wall Avenue analysts like these shares are popping out of the earnings season
Johnson & Johnson products on a shelf in a store in New York.
Lucas Jackson | Reuters
It’s been a busy week for Wall Street. Heavyweights like Apple, Microsoft, Facebook, Boeing and Tesla all reported their earnings for the last quarter.
However, some analysts and strategists have been more focused on leadership and the outlook. “As the earnings season begins and gains momentum, a key factor in the fourth quarter earnings season will not only be how expectations were met, missed, or exceeded in the quarter, but also how reporting company management frames the quarters ahead,” as John Stoltzfus from Oppenheimer comments.
With this in mind, one way to find compelling investment opportunities is to track the activities of the professionals who keep getting it right. TipRanks Analyst Forecasting Service seeks to identify the best performing analysts on the road. These are the analysts with the highest success rate and average return per rating.
Here are analysts’ best stock picks right now:
Following the company’s fourth quarter earnings release, Canaccord Genuity analyst Ken Herbert continues to see the Crane Company’s long-term growth story as strong. For this reason, the top analyst repeated a buy rating for the manufacturer of industrial and technical products. In another bullish signal, he raised the target price from USD 82 to USD 86.
During the quarter, the company had revenue of $ 726 million, a core decrease of 21%. Free cash flow was $ 88 million for the last quarter or $ 275 million for the full year, which was $ 30 million more than the latest mid-forecast.
Additionally, Herbert points out that CR “made bullish comments on order trends in Q4 20 and is confident of meeting the original financial guidance for 2021”.
What’s behind the optimistic outlook? The strength in the Payment and Merchandising Tech (PMT) segment had a lot to do with management’s optimistic forecast. This strong development has continued into 2021, and while the company expects some minor disruptions related to COVID-19, market trends indicate that the disruptions are not a long-term threat.
“We are encouraged by the monthly cadence for Q4 20, which creates additional confidence in the outlook for 2021 for the PMT and FH segments. We believe the strong FCF performance will not be fully appreciated by investors, and the strength of the H1 / 21 crane. The currency deal should be a positive catalyst, “commented Herbert.
To that end, Herbert sees CR on track to post earnings per share in 2021 and 2022 of $ 5.05 and $ 5.75, respectively. “The initial EPS forecast of $ 4.90-5.10 is relatively tight, but we believe management has very good visibility and confidence in the ability to meet the forecast, which we believe reflects legitimate conservatism, “he noted.
Herbert reached 84th place in the TipRanks ranking and had a success rate of 73% and an average return of 26.7% per review.
Despite unforeseen taxes and headwinds in foreign exchange, AudioCodes was able to publish an estimate that beats the results for the fourth quarter of 2020. In addition, the communication software provider issued initial guidelines for 2021, which also exceeded estimates.
As a result, Needham’s Richard Valera maintained a buy rating and a target price of $ 43 on the stock.
“The continued strength in Teams / SBC / Contact Center more than offsets the COVID-related weakness of the service provider and results in higher margins. We believe that we are creating the conditions for better growth, as challenged companies have a lower percentage of the Reach speed and / or stabilize. ” explained the analyst.
With “exceptionally strong growth in the fourth quarter”, the SBC business achieved sales of 95 million US dollars in 2020 after around 60 million US dollars in 2019. “The rapid growth of this predominantly software business has led to steady Increase in product GMs resulted, “Valera said.
While the Service Provider segment only accounted for 18% of revenue, a 10% year-over-year decline, this decline is likely to weaken in 2021. IP iPhones are also poised for a recovery in 2021, according to Valera.
In addition, Valera expects MSFT momentum to remain strong through 2021, with growth expected to be similar to 2020.
In summary, the Needham analyst stated, “We believe that an accelerated shift to clouds triggered by COVID-19 and the associated explosive growth of MSFT teams could help accelerate this rate of growth on a sustained basis. Our recent channel reviews suggest is looking to accelerate the momentum for teams voice deliveries and an associated increase in demand for AUDC SBCs, which we believe will position AUDC well for the uptrend in 2020. As shares have been held since the company’s follow-up offer on June 4th Underperformed at $ 35 per share, we see an attractive risk / reward for the shares. “
In 117th place, Valera achieved a success rate of 69% and an average return of 22.2% per review.
Johnson & Johnson
In response to Q4 pressures from Johnson & Johnson, Morgan Stanley analyst David Lewis raised his target price from $ 178 to $ 187. Along with the revision of the price target, the analyst repeated his buy rating for the stock.
Lewis admits that a surge in COVID-19 cases pushed revenue to the lower end of the company’s previously expected -10% to flat range, resulting in $ 6.6 billion in revenue for the MD&D Segment led. That was below the consensus estimate of $ 6.9 billion and reflected a 2% organic decline.
However, the analyst remains very optimistic about the health giant’s long-term prospects.
“We continue to see the bear case for devices has largely been eliminated through vaccines, improved hospital protocols and COVID-19 testing,” commented Lewis.
In 2021, JNJ projects earnings per share between $ 9.40 and $ 9.60, with revenue between $ 90.5 and $ 91.7 billion.
“Today’s guide from J & J gives us the peace of mind that our Large Cap 2021 numbers are risk-adjusted across the full balance sheet for the year as we’re seeing revenue growth of ~ 10% in 2021 over 2019 (or ~ 5% per year, ~ 2 , 5 points below the group’s previous year figure) model -COVID-19 structural CAGR) and ~ flat year-over-year margins (versus ~ 40 basis points average annual expansion within the group and> 200 basis points as shown today in the J&J guide for 2021 is implied) “remarked Lewis.
Based on his 74% success rate and an average return of 18.2% per rating, Lewis ranks 229th among over 7,000 analysts recorded by TipRanks.
In the first quarter of the fiscal year, Apple achieved record sales. As a result, Canaccord Genuity analyst Michael Walkley left his buy recommendation unchanged, with the analyst also increasing the price target from $ 150 to $ 155.
The end result was $ 111.4 billion, beating Walkley’s estimate and the street’s forecast by 7%. EPS also impressed: the $ 1.68 value beat the consensus and analyst call by 16%.
Additionally, iPhone sales were $ 65.6 billion, up 17% year-over-year, although the iPhone 12 rollout was staggered and it was difficult to meet demand for the higher-end ASP Pro products. Macs and iPads also saw double-digit growth over the period.
“We believe Apple is well positioned to benefit from the 5G upgrade cycle and anticipate strong growth trends as 5G smartphones surge and Apple can continue to grow its revenues from installed base and higher margin services. Apple’s ecosystem approach, including an installed one Base that exceeds. ” 1.65 billion devices worldwide and now over 1 billion iPhone users should continue to generate strong service revenue, “said Walkley.
In terms of analyst’s long-term expectations, Walkley anticipates that higher margin service revenue growth will “outperform overall company growth and increase gross margin.”
He added, “With $ 84 billion in net cash, Apple has a strong balance sheet to continue investing and support long-term growth. With the 5G upgrade cycle expected to be beneficial in 2021, other categories of hardware will be beneficial double digits and the mix continues to shift When it comes to high margin services, we believe the stock price is compelling for longer term investors. “
With a success rate of 71% and an average return of 29.2% per rating, Walkley ranks 54th on TipRanks’ list of Top Performing Analysts.
Facebook just got a thumbs up from Oppenheimer analyst Jason Helfstein. In addition to maintaining a buy rating, the five-star analyst gave the price target a boost, with the number moving from $ 345 to $ 350.
In a report titled “Outstanding Q4 Results with Management Bite at AAPL,” Helfstein explains to clients that the company’s advertising business “continues to benefit from the mundane shift to e-commerce / product advertising”.
In the fourth quarter, advertising revenue rose 31% year-over-year, with the social media company aiming for stable to slightly accelerated year-over-year revenue growth in the first half of 2021. Management is wary of Apple’s iOS 14 rollout, however, creating headwinds for ads.
“FB management has specifically stated that changes to iOS 14 will affect the ability of SMBs to run targeted advertising campaigns. The effects will begin late in the first quarter. Given the competitive environment, we believe that the impact on sales will not occur until the fourth quarter 21 become visible “, wrote Helfstein in the Research Note. The analyst also points out that Facebook “is attacking the inherent messaging advantage of AAPL through pre-installed iMessage on devices, arguing that changes to iOS 14 guidelines will hurt SMBs.”
Separately, Facebook approved additional buybacks of $ 25 billion, with the current approval now standing at $ 33.6 billion. There are also plans to expand Whatsapp and Messenger with additional digital storefronts.
All this led Helfstein to the conclusion: “We continue to see the share price with 11x’22E EBITDA as extremely attractive.”
Helfstein’s calls end up among the top 5 analysts recorded by TipRanks and achieve an average return of 45%. It also has a 74% success rate.