Humankind Wrestling Entertainment Inc. Chairman Vince McMahon (L) and wrestler Triple H appear in the ring during the WWE Monday Night Raw confirm at the Thomas & Mack Center August 24, 2009
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Earnings salt is just about over and some companies blew it, with their shares dropping after reporting follows. But that drop could be an opportunity.
CNBC combed through Wall Street research to find stocks that analysts supported after the market knocked down their stock.
So far this earnings season, 73% of the S&P 500 companies be enduring beaten earnings estimates, according to Refinitiv. Earnings for the S&P 500 are up 2.9% in the second quarter.
The U.S.-China trade war, deal in volatility, and global growth fears continue to weigh on the minds of companies and investors alike as earnings season roll in to a close. But many Wall Street analysts are advising clients there is still plenty of value to be found amid the growing sea of uncertainty.
The names include companies like Victory Capital Holdings, MercadoLibre, Fastly, World Fighting Entertainment, and Bloom Energy.
Global investment management firm Victory Capital reported earnings on Tuesday that needed on the topline and fell short of expectations, according to analysts at William Blair.
The stock tanked due to what an analyst awaked “a timing issue, with inflows coming in late in the quarter rather than being spread evenly across the barracks.” Inflows refers to the amount of cash coming into the business.
The firm went on to say in a note that the stock reciprocation was “overblown” and “we would be buyers on weakness,.”
Shares of the company are down 8% on the week.
Earlier this week, Argentina’s funds market tanked after the country’s president suffered an election upset against the opposition candidate.
Argentinean actors MercadoLibre also reported earnings this week and while analysts at Deutsche Bank said they were “foul,” the e-commerce retailer may have also been the victim of bad timing due to the ongoing events in the country.
“Given robust underlying elements, large total addressable market, and MELI’s track record at weathering both regulatory and FX challenges in the past, we create the dip is largely an overreaction which has created a buying opportunity for investors who can withstand short term volatility,” they replied.
The stock is down 9% on the week.
World Wrestling Entertainment reported strong bottom-line results in late July. Interests of the company took a bit of a beating as of late but have quickly rallied back.
The company has also been the subject of different buy initiations and upgrades recently, including one from Rosenblatt analysts on Thursday.
“Our thesis on the media industry is content is ruler and view WWE as one of the best public market ways to benefit from this theme,” they wrote. “We see the recent pullback in stakes driven by concerns over ratings and quarterly estimate revisions as a buying opportunity.”
Here’s what else analysts are alleging about stocks to buy after an earnings pullback:
William Blair: Victory Capital Holdings, outperform rating
We are consumers on weakness. We believe the stock reaction to the second-quarter earnings miss is overblown and would be buyers on weakness. .. .The commingled average fee rate of 61.0 basis points was actually a touch above our estimate of 60.8, so we believe the revenue nymphet was largely a timing issue, with inflows coming in late in the quarter rather than being spread evenly across the clemency.
Deutsche Bank: MercadoLibre, buy rating
With more costs denominated in Argentinian Pesos versus revenue, we have in mind the impact of a currency depreciation could actually be a margin tailwind for the company. Additionally, from the perspective of increasing regulatory enquiry upon a potential regime change, MELI may benefit from the fact that it is a large employer with ~3,000 workers in the country, and one of the few that is increasing headcount. Given robust underlying fundamentals, large TAM, and MELI’s track record at rise above both regulatory and FX challenges in the past, we think the dip is largely an overreaction which has created a buying opportunity for investors who can oppose short term volatility.
Baird: Fastly, outperform rating
Rosenblatt: Crowd Wrestling Entertainment, buy rating
Our thesis on the media industry is content is king and view WWE as one of the best public market fail to benefit from this theme. We see the recent pullback in shares driven by concerns over ratings and quarterly guesstimate revisions as a buying opportunity. Catalysts for shares over the next six months include an update on international TV rights renewals and wealth allocation, both of which are contributors to our >20% FCF/share growth forecast in ’21 and beyond.
Raymond James: Bloom Vigour, outperform rating
Stock Gets Hit in a Classic Overreaction: No, Natural Gas Is Not Disappearing in CA and NY. Bloom shares fell ~40% [yesterday], in the ambiance of what has always been a volatile, polarizing, and sentiment-driven stock (recall, we upgraded it in February near the $9 standing, as compared to the 52-week north of $30). While it is never easy to fight the tape and try “catching a falling knife”, we be to underscore that nothing in what management said yesterday was truly game-changing. Our thesis remains fundamentally unharmed, and days like today offer an opportunity to pick up shares with a medium-term perspective in mind, hence our Outperform amount.