Top Wall Street analysts see solid potential in these five stocks
The Rivian name is shown on one of their new electric SUV vehicles in San Diego, U.S., December 16, 2022.
Mike Blake | Reuters
There is more to investing in the right stocks than just buying them after a hot earnings report.
Investors can become better informed by researching the opinions of Wall Street experts, especially as they dive into the details of companies’ quarterly results.
Here are five stocks chosen by Wall Street’s top analysts, according to TipRanks, a platform that ranks analysts based on their past performance.
First on this week’s list is cloud-based customer relationship management software provider Salesforce (CRM). The company recently announced that it would be raising the prices for some of its cloud products by 9% on average starting in August.
This marked the first price hike for Salesforce in seven years. Also, it comes at a time when cloud players are under pressure, as clients are optimizing their IT spending due to macro challenges. (See Salesforce Blogger Opinions & Sentiment on TipRanks)
BMO Capital analyst Keith Bachman thinks that the company’s new generative artificial intelligence products and price increases across its core cloud products, including Sales, Service and Marketing clouds, as well as Tableau, could drive growth in fiscal year 2025 (calendar year 2024).
The analyst added that generative AI increases the importance of data, thus providing an advantage to companies that can help consolidate, curate and protect data. “In our opinion, Salesforce is well positioned to help companies leverage data, including GenAI,” said Bachman.
Bachman reiterated a buy rating on Salesforce and raised his price target to $255 from $245. He ranks No. 463 out of more than 8,500 analysts tracked on TipRanks. Also, 59% percent of his ratings have been profitable, with an average return of 8.6%.
However, Deutsche Bank analyst Sidney Ho highlighted that recent data points in the PC supply chain indicate that inventory has normalized, raising hopes that PC shipments could be above-seasonal levels in the second half of 2023.
Ho sees an upside to Dell’s Client Solutions Group (CSG) fiscal second-quarter revenue guidance of “roughly flat” on a quarter-over-quarter basis. Further, Gartner data indicates a gradual improvement in business demand trends, which works well for Dell as it has a significantly higher market share of 23% in the commercial PC market compared to a 9% share in the consumer PC market. Still, Ho cautioned about continued risks in the server market.
“Looking beyond the cyclical downturn, we believe a strong capital returns program could be a source of EPS upside for DELL, especially as its leverage ratio approaches its target level,” explained Ho.
Ho raised the price target on DELL to $60 from $48 and reiterated a buy rating. The analyst ranks 65th among more than 8,500 analysts on TipRanks. Ho’s ratings have been profitable 66% of the time, with each one delivering an average return of 23.9%. (See DELL Insider Trading Activity on TipRanks)
Next on our list is U.S. electric vehicle maker Rivian (RIVN), which impressed investors earlier this month with higher-than-expected deliveries for the second quarter. The company also reaffirmed its annual production guidance of 50,000 vehicles for 2023.
Mizuho analyst Vijay Rakesh sees a possibility of Rivian exceeding its 50,000 production guidance. The analyst noted that the company is executing well, with second-quarter production rising 49% quarter-over-quarter to about 14,000 units and handily exceeding his growth estimate of 23%.
“We see the strong 1H23 deliveries positioning RIVN well for future ramps into 2H23E and beyond,” said Rakesh, who ranks 32 among more than 8,500 analysts on TipRanks. (See Rivian Financial Statements on TipRanks)
The analyst increased his 2023 delivery estimate for Rivian’s R1 vehicle lines to about 39,000 units from 37,000, while maintaining the estimate for its EDVs (electric delivery vans) at 11,000. The analyst expects Rivian to deliver over 92,000 and 115,000 vehicles in 2024 and 2025, respectively.
In line with his bullish stance, Rakesh increased his price target for RIVN to $30 from $27 and maintained a buy rating. Rakesh has a success rate of 64% and each of his ratings has returned 23.9%, on average.
Rakesh is also bullish on Mobileye Global (MBLY), an Israel-based provider of autonomous driving technology. The analyst said that recent trends in the electric vehicle and advanced driver-assistance system (ADAS) bode well for Mobileye.
Rakesh noted that Mobileye’s key customer Zeekr, an EV brand owned by Geely Automobile, is ramping its production, with the June quarter units rising 80% sequentially to 27,000. This implies stronger prospects for Mobileye’s SuperVision systems in the June and September quarters.
The analyst now expects SuperVision units to increase 83% to about 163,000 this year, up from his prior outlook of 150,000. He also thinks that problems at Volkswagen’s software unit Cariad could create new opportunities for SuperVision at Porsche and other Volkswagen brands.
Rakesh raised his price target for MBLY to $48 from $43 and reiterated a buy rating on the stock. “We continue to see MBLY positioned well with ~70% market share and a strong AV [autonomous vehicles] roadmap,” he said. (See Mobileye Hedge Fund Trading Activity on TipRanks)
The rapid growth of OpenAI’s ChatGPT has triggered massive interest in generative artificial intelligence. Tech giants, including Google parent Alphabet (GOOGL), have joined the race and are making huge investments to capture opportunities in this space.
Tigress Financial Partners analyst Ivan Feinseth thinks that the growing integration of AI functionality will help Alphabet maintain its dominant position across all key technology trends, including search, mobile, cloud, data center, home automation, autonomous vehicle tech and more.
He also expects the company to benefit from the increased integration of its Android operating system into Internet of Things devices. It will also benefit from Android’s adoption by several leading automotive original equipment manufacturers as the key driver of their infotainment platforms.
Further, GOOGL continues to build and strengthen its product portfolio through strategic acquisitions and collaborations, including those focusing on AI technology. Indeed, the company is a backer of AI startup Anthropic.
“GOOGL’s strong balance sheet and cash flow enable the ongoing funding of key growth initiatives, strategic acquisitions, and the further enhancement of shareholder returns through ongoing share repurchase,” said Feinseth.
Feinseth increased his price target for GOOGL to $172 from $160 and maintained a buy rating on the stock. The analyst holds the 201st position among more than 8,500 analysts on TipRanks. His ratings have been profitable 61% of the time, with each rating delivering an average return of 13.2%. (See Alphabet Stock Chart on TipRanks)