Shannon Stapleton | Reuters
Rising oil prices, the prospect of the Federal Reserve rolling back its easy-money policy and tensions among lawmakers in Washington are some of the factors behind the latest round of volatility in the markets.
According to TipRanks, which tracks the best-performing stock pickers, top analysts are sticking to these names amid overall macro volatility.
Several recent trends, including higher ad spend at Google, digital disruption at schools that fueled Chegg, and the pandemic exercise that boosted sales at Peloton, have helped keep some stocks in the good faith of top analysts. Let’s see how he formulated his bullish hypothesis.
Even companies that seem connected to everything have room to grow. Generating a substantial portion of its revenue from ad spend, Google-parent Alphabet (Google) is expected to continue to carry as the year winds down. Jefferies’ Brent Thiel expects the decline in spending over the summer to continue to trend back upward. (See Alphabet Stock Analysis on TipRank)
Bullishly stating that GOOGL “remains a top large-cap pick,” Thill rated the stock as Buy and declared a price target of $3,325 per share.
The Five-Star Analyst reported that in the fourth quarter, online brand managers may want to “flush” or spend all of their budget on heavy advertising campaigns, if the same amount of cash is not allocated in the next fiscal year. .
Meanwhile, on other platforms, the TV advertising budget has already been slashed. This is benefiting YouTube a lot as advertising spend has been diverted to the Internet. The online video sharing website is a subsidiary of Google, and has been a significant revenue stream for Alphabet.
Along with high demand, the video-sharing platform is currently driving up ad prices and has a strong level of content supply. Additionally, concerns about Apple’s iOS update didn’t seem to impact GOOGL’s advertising revenue. Indeed, it appears that Facebook was influenced far more than YouTube.
Beyond travel and leisure advertising spending, the rest of the industry has almost recovered from its mid-summer lows. July and August saw lower spending levels, partly due to supply constraints on physical products sold and the staff to sell them. Thill expects long-term monetization opportunities for YouTube, as Alphabet continues to invest in new advertising initiatives like “purchasable ads and actionable CTV ads.”
On TipRanks, Thill is ranked 53rd out of more than 7,000 expert analysts. He has been successful in his ratings 71% of the times, and has returned an average of 26.6% on each rating.
In some cases, the digital changes caused by the COVID-19 pandemic were actually accelerating trends that would persist long into the pandemic. For example, online schooling technology saw huge interest, and for the most part, that won’t change in the near future. Chegg (chgg) continues to see the expansion of its student clientele as well as their retention levels on the direct-to-student learning platform.
Ryan McDonald of Needham & Company expects the company to grow its user base domestically and internationally, even as students return to campus, with the fall of the 2021 semester. He swiftly stated that “Amidst increasing use and competition, Chegg is one of the three most used digital study tools in the US and top ranked internationally.” (See Chegg News Sentiment on TipRank)
McDonald’s gave that stock a buy status, and provided a price target of $120 per share.
He stressed that in the current environment, around 70% of domestic users are retained, as well as 80% internationally. Students abroad generally use less digital study tools, but they are moving from free to paid services at a faster rate. In addition, fewer accounts are being shared now than during the pandemic, indicating a successful authentication initiative by Chegg.
With “healthy usage dynamics and strong international adoption,” McDonald projected Chegg’s performance beyond Wall Street consensus estimates.
Ranking 85th out of more than 7,000 financial analysts, McDonald’s maintains a success rate of 65% and an average return of 36.8%.
Despite weeks of negative headlines and multiple congressional hearings, Brad Erickson of RBC Capital isn’t all worried Facebook (American Plan) and its future. The giant technology and social media company is fundamentally strong with respect to its business performance, and is highly sought after by advertisers due to its “best targeting ability”. [of consumers] and return on investment.”
Eriksson wrote highly of the controversial firm, noting that “FB has created one of the most valuable advertising franchises in the world,” and that it “captured the unrivaled knowledge of the world’s consumers.”
He repeated a buy on the stock, and provided a price target of $425.
Although bullish, the analyst acknowledged that Facebook’s future growth is dependent on its success in transforming itself into a well-rounded “super-app” for its billions of users. While it has nearly 3 billion users across its various platforms, FB has the power to shift towards being more vertically integrated with consumers.
The five-star analyst was encouraged by the monetization opportunities Facebook seized through its in-house initiatives, such as the Shops, Messenger and Pay platforms. This type of vertical integration will ultimately provide lasting substance that will satisfy shareholders. (See Facebook Insider Trading Activity on TipRank)
While Facebook’s management almost certainly doesn’t appreciate its reputation being repeatedly questioned in the news cycle media, the core foundations of its business don’t seem to be shaken just yet.
Out of more than 7,000 financial analysts, Ericsson ranks at number 171. Their accurate ratings have resulted in a 60% success rate, and they have earned an average return of 36.3%.
Companies that have benefited greatly from the trend of the COVID-19 pandemic are now finding it difficult to convert their businesses into long-term sustainable enterprises. This is particularly intense for Peloton Interactive (PTON), whose sales have seen a growth of 120% so far in 2021. The exercise equipment and services firm is now looking to focus on a new strategy, and analysts are taking notice.
Scott DeWitt of Stifel Nichols wrote that PTON achieved a “banner year” during 2021, and is currently in a position to target even greater customer growth and international market penetration. Thus, the company is expanding its product offering.
DeWitt gave the stock a buy status and a price target of $120.
The bullish analyst explained that Peloton has reduced the price of its core bike product and extended the deadline for the payment plan. By offering more affordable equipment, the company hopes to gain more traction among customers for its exercise services. Additionally, PTON recently relaunched a treadmill, which could provide wider penetration in homes that are less interested in cycling.
Although investor sentiment has been weak over the past month, the low valuation could provide an attractive entry point for investors with a longer-term outlook. (See Peloton Interactive Blogger Opinion & Emotion on TipRank)
In addition, Peloton is targeting an international audience, which currently comprises about 11% of its revenue streams. DeWitt is encouraged by the room for opportunity beyond home consumers. The company is investing in exercise course instructors who speak foreign languages, as well as in localized content.
TipRank places DeWitt at rank number 60, ahead of more than 7,000 other analysts. Their ratings have been 66% successful, and have returned an average of 31.4% per rating.
Open Internet ad spending has returned from pandemic-induced lows, and companies that facilitate the data it needs are well positioned for more growth. Specifically, The Trade Desk (TTD) has been recognized as the “winner among demand side platforms”. This is due to its scale, international and domestic exposure and strong partnerships.
Needham & Co.’s Laura Martin reports on the stock, predicting that the advertising titans of Facebook, Amazon and Alphabet will soon gain market share on the open Internet platform. He believes the Trade Desk enjoys a considerable competitive advantage over the “walled gardens” of the tech world.
Martin gave the stock a buy status, and rapidly assigned a price target of $100.
Stating that TTD “maximizes global revenue scalability and margin growth,” the Five-Star analyst pointed out that the company’s international market is expanding faster than its domestic, despite only 15% of 1H revenue overseas. originates from. This statistic inspires confidence that there is a lot more room to grow from US customers.
Additionally, about a third of its revenue comes from connected TVs, a growing trend. (See business desk risk factors on TipRank)
Martin was encouraged to find that TTD’s most recent upgrade, Solimar, has seen success driving new user acquisition and existing user retention. The promising platform is estimated by TTD to eventually drive half of all impressions displayed.
Financial data aggregator TipRanks currently rates Martin as No. 221 out of more than 7,000 other analysts. Her impressive ranking is reflected in her 57% success rate and her average return of 23.6% per rating.