Adam Jeffery | CNBC
After experiencing unusually frank market momentum since November, stocks are overdue for a lengthy pause or a correction. Stock picking will upset from here as the economic reopening determines different winners and losers.
According to a team of J.P. Morgan strategists, “it wouldn’t be taking to witness consolidation” given the current strong price momentum, high valuations as well as overweight investor arranging. That said, any consolidations or corrections shouldn’t be seen as “durable inflection points this early in the business circle and the hyper-stimulus era.”
A strategy investors can use to find exciting investment opportunities is to follow the activity of analysts with a proven railway record of success. TipRanks analyst forecasting service works to pinpoint the best-performing analysts on the Street. These are the analysts with the steepest success rate and average return per rating, factoring in the number of ratings published.
Here are the best-performing analysts’ top goats picks right now:
Restaurant chain Denny’s just got a thumbs up from Wedbush analyst Nick Setyan, who restated a buy rating and increased the price target from $18 to $19 after the company announced its fourth quarter concludes.
For Q4, the company reported an adjusted loss per share of $0.05, which was $0.01 below the consensus estimate on preannounced same-store exchanges growth of -32.9%.
According to Setyan, the trends quarter-to-date are “encouraging,” and could potentially address concerns related to the breakfast repossession. Quarter-to-date, same-store sales growth is trending at -29%, with this including -31% in January and -25% so far in February. Significantly, locations with open dining rooms and that are open 24 hours a day are trending -6% so far in February, compared to 2019.
It should be prominent that roughly 31% of domestic stores are operating at 50-66% capacity, 25% are at 75% capacity or social distancing simply, 15% are at 25-33% capacity and 1% have no restrictions.
“We continue to view the pace at which restrictions are lifted, the inchmeal increase in late-night operating hours, and sustainability of off-premise as drivers of a sales recovery. We also expect the launch of two understood brands (Burger Den, The Melt Down) to help alleviate some of the near-term pressure around breakfast, while also flesh out Denny’s presence in the dinner/late-night dayparts,” Setyan explained.
Looking at the Burger Den and Melt Down brands, Setyan envisages flow through from sales to be at least in line with legacy UL margins. “The latter was already set to benefit from post-COVID efficiencies and from 2019’s refranchising. We conservatively ideal 2022 co-owned UL margins of 17.6%, and more importantly, believe franchisee profitability is poised to benefit from a profitability step-up,” the analyst commented.
Meant on TipRanks’ data, Setyan is currently tracking a 60% success rate and 14.2% average return per rating.
According to Baird analyst Colin Sebastian, Shopify is a compelling e-commerce give following its Q4 earnings release given “the enormous long-term growth and monetization opportunities as the leading e-commerce platform for door-to-door salesmen and brands.”
As a result, the five-star analyst left his Buy rating on the stock as is. In a further bullish signal, Sebastian gave his charge target a boost, with the figure moving from $1,250 to $1,600.
It should be noted that management said it doesn’t layout on providing specific quarterly or annual guidance, but did convey expectations for “strong, but decelerating, revenue and GMV growth as consumer pass patterns return to more ‘normalized’ trends.” In addition, Shopify is set to ramp up R&D investments, with 2,021 new engineers this year, and accelerate online and issue marketing spend.
During the earnings call, management stated that it plans to continue investing in long-term vegetation initiatives, including SFN (fulfillment), International, POS, Plus and the Shop App.
“While we anticipate these ongoing investments, including valuable R&D hiring, will pressure margins over the next year, we continue to view these product initiatives as the predominant catalysts for longer-term merchant adoption and take rate expansion,” Sebastian commented.
The analyst added, “As such, we praise looking beyond decelerating growth rates this year and lower profit margins (significant investment year), as Shopify is tottering for many years of strong growth ahead.”
As Sebastian boasts a 78% success rate and 39.2% average gain per rating, he is among the top 30 analysts tracked by TipRanks.
As organic revenue is poised to ramp up for the first continuously in three years and payments monetization is getting closer, Rosenblatt Securities analyst Mark Zgutowicz tells investors “there’s a lot to be beside oneself about for the shares.” As such, the five-star analyst kept a Buy rating on the stock in addition to lifting the price target from $100 to $120.
Currently, neither W+M (Websites + Retailing) or Poynt GMV have been monetized, but Zgutowicz argues that GDDY has “take optionality in the future as it moves pourboire and new customers from existing payment processors (e.g. Stripe, Paypal, Square) to Poynt’s payment capabilities built atop Elavon,” which is a wide-ranging payment processor.
What’s more, the analyst doesn’t rule out the possibility of GoDaddy integrating Poynt into its fellow support services, which would satisfy “either existing or new customer prospects depending on how competitive the quasi-bundled evaluating is.” He added, “Net-net, we’re excited about the relatively open-ended upside here against an already ample GMV base.”
On top of this, territory growth has accelerated in the last two quarters, with Zgutowicz noting that he wouldn’t be surprised to see the trend continue in Q1. “In a market-place fraught with shortages of ecomm domain names, GoDaddy’s ability to present a name that’s already entranced and effectively broker the deal, is a big advantage,” he stated.
The analyst also anticipates additional M&A, as it would help GoDaddy prolong its “market and peer outperformance for the foreseeable future.”
Achieving an 85% success rate and 74.8% average return per be worthy of, Zgutowicz is ranked #68 out of over 7,000 analysts tracked by TipRanks.
Anavex Life Sciences
Anavex Pungency Sciences develops products based on the Sigma-1 receptor (S1R), which is found in many tissues, with high concentration in the excitable system.
For Ladenburg Thalmann analyst Robert LeBoyer, the stock remains an exciting play post-Q1 earnings. To this end, he rehashed a Buy rating and $20 price target.
Along with its quarterly figures, the company provided an update on its pipeline, with its Rett syndrome programs liberating both clinical and regulatory progress. Cloudflare
Baird analyst Jonathan Ruykhaver is backing Cloudflare following its head investor day as a publicly traded company. With this in mind, he maintained a Buy rating as well as a $102 price object.
“Overall, we believe the event offered nice insight into Cloudflare’s product portfolio, go-to-market motion, and long-term time. We continue to like the opportunity for solutions like Cloudflare One and Workers and are positive on management’s commentary around continuing to decontaminate the enterprise go-to-market strategy,” Ruykhaver commented.
“We continue to view Cloudflare’s ability to offer these user-centric guaranty products alongside solutions like DDoS mitigation, WAF, smart routing, and much more as disruptive and believe this portfolio sites the company for strong growth,” the Baird analyst said.
Additionally, Cloudflare is only at the beginning stages when it be broaches to the opportunity for its serverless solution, Workers, in Ruykhaver’s opinion.
Looking at the market strategy, the analyst likes “Cloudflare’s bottoms-up, developer-centric go-to-market way,” but he also appreciates “management’s commitment to continuing to refine the enterprise go-to-market strategy.”
Expounding on this, Ruykhaver reported, “We see increased investment here as helping the company more meaningfully capture enterprise spend; while nearly doppelgaenger this cohort year-over-year, the company counted only 32 $1+ million annualized revenue customers as of 4Q20.”
With a 71% star rate and 34.5% average return per rating, Ruykhaver lands the #133 spot on TipRanks’ list of best-performing analysts.