Tag: Markets

Top Wall Street analysts are bullish on these 5 stocks

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Exterior of a redesigned Chipotle restaurant

Source: Chipotle Mexican Grill

With market conditions as uncertain as they are now, it may be prudent to have a long-term approach and turn to the experts for guidance.

Here are five stocks chosen by Wall Street’s top analysts, according to TipRanks, a platform that ranks analysts based on their past performances.

Wynn Resorts

Wynn Resorts (WYNN) reported a higher-than-anticipated adjusted loss per share for the fourth quarter. Nonetheless, investors were pleased with the management’s commentary about better times ahead, backed by continued strength in Las Vegas and the reopening of Macao following China’s stringent Covid lockdowns.

Deutsche Bank analyst Carlo Santarelli thinks that the future margin profile of Wynn Macau is “underappreciated.” Moreover, he expects the company’s financial leverage reduction to be “swift and screen well throughout 2023.”

“Given the resurgence of Macau, the continued strength and near term visibility in Las Vegas, and what we view as stability at Encore Boston Harbor, our estimates for 2023 and 2024 are higher across each of the 3 geographies,” Santarelli said.

Santarelli also noted that the stock’s valuation is reasonable, as the company is still in the early stages of the Macao recovery cycle. Santarelli reiterated a buy rating and raised his price target for Wynn to $128 from $106. (See Wynn Blogger Opinions & Sentiment on TipRanks)

Santarelli’s recommendation is worthy of consideration as he ranks 26th among more than 8,000 analysts tracked by TipRanks. Moreover, 67% of his ratings have been successful, generating a 21.7% average return per rating.

Chipotle Mexican Grill

Burrito chain Chipotle Mexican Grill’s (CMG) lower-than-anticipated fourth-quarter results reflected the impact of inflation on consumer spending. However, the company assured investors that transaction trends turned positive in 2023, setting its comparable sales growth estimate in the high-single-digit range for the first quarter.

Chipotle plans to further expand its footprint, which stood at 3,187 restaurant locations at the end of 2022. It aims to open 255 to 285 new locations in 2023.     

Baird analyst David Tarantino, who ranks 320 out of 8,346 analysts on TipRanks, lowered his 2023 earnings per share estimate following the lackluster fourth-quarter results and a lower-than-projected margin outlook for the first quarter. Nevertheless, Tarantino remains bullish on Chipotle.

“We came away with a view that management is taking the appropriate operational steps to drive structural improvements in traffic as 2023 unfolds, and we expect signs of progress on this front to help resolve the pricing/traffic debate and return the focus toward the significant economic value CMG can create via high-ROIC unit expansion,” Tarantino said

The analyst reiterated a buy rating on Chipotle stock and raised the price target to $1,900 from $1,800. Sixty-six percent of Tarantino’s ratings have generated profits, with each one bringing in a 10.6% average return. (See CMG Insider Trading Activity on TipRanks)

Meta Platforms

Social media behemoth Meta Platforms (META) is next on our list. Meta has rebounded this year after a disastrous run in 2022. Its problems last year were due to a slowdown in online advertising spend and the mounting losses of the company’s Reality Labs division — which includes its metaverse projects.  

Despite weak earnings, the stock spiked in reaction to recent results, as investors cheered Meta’s cost control measures and a $40 billion increase in its share repurchase authorization. Meta already had nearly $11 billion remaining under its existing buyback plan. 

Tigress Financial Partners analyst Ivan Feinseth highlighted that Meta’s “most valuable asset” is its huge and growing user base. Daily Active People or DAP (the number of people using at least one of the company’s core products — Facebook, WhatsApp, Instagram, or Messenger, every day) rose 5% to 2.96 billion in the fourth quarter.

Furthermore, Feinseth projects that Meta’s performance will be fueled by a “new, more cost-efficient data center structure” that is competent in supporting artificial intelligence (AI) and non-AI workloads.

Feinseth increased his price target for Meta to $285 from $260 and reiterated a buy rating as he believes it can outperform rivals due to its massive user base and the ability to generate significantly higher returns for advertisers.

Feinseth currently stands at #126 among over 8,300 analysts on TipRanks. Moreover, 65% of his ratings have been successful, with each generating a 13.5% average return. (See Meta Platforms Hedge Fund Trading Activity on TipRanks)

CyberArk Software

Digital transformation, the accelerated shift to the cloud and geopolitical tensions have triggered an increase in cyber threats, driving demand for cybersecurity companies like CyberArk (CYBR).

CyberArk, a leading cybersecurity company, has successfully transitioned from perpetual licenses to a subscription model — which has led to more reliable and predictable revenues.  

Mizuho analyst Gregg Moskowitz noted the impressive 45% growth in CyberArk’s annual recurring revenue (ARR) as of 2022’s end and ARR growth outlook in the range of 28% to 30% by the end of 2023. The analyst also pointed out that CyberArk ended 2022 with more than 1,300 customers generating over $100,000 in ARR, up 40% compared to the prior year.  

Moskowitz reiterated a buy rating on CyberArk stock and a $175 price target, saying, “We continue to view CYBR as a primary beneficiary of a heightened threat landscape that has amplified the need for privileged access and identity management.” He is also optimistic that CyberArk’s transition to a recurring revenue model will drive better financials.

Moskowitz holds the 236th position among more than 8,000 analysts on TipRanks. His ratings have a 58% success rate, with each delivering an average return of 13.8%. (See CyberArk Stock Chart on TipRanks)

Micron Technology

Semiconductor company Micron (MU) has been under pressure in recent quarters due to lower demand in several end-markets, particularly PCs. In the first quarter of fiscal 2023 (ended Dec. 1), the company’s revenue plunged 47% due to lower shipments and a steep decline in prices.

In response to tough business conditions, Micron has slashed its capital expenditure and has been taking initiatives to reduce costs. In December, the company announced that it would cut its workforce by nearly 10% in 2023 and suspend bonuses for the year. It has also suspended share repurchases for now.

Despite the ongoing challenges, Mizuho analyst Vijay Rakesh upgraded Micron to buy from hold and raised his price target to $72 from $48. Rakesh acknowledged that near-term headwinds remain due to high inventories, lower demand for PCs, handsets, servers and lower memory pricing. Nonetheless, he thinks that we are approaching a “cyclical bottom.”

Rakesh explained, “We believe memory sets up better for 2H23/2024E with supply/capex cuts, inventory correction behind, and a better pricing environment.”

Rakesh ranks 73 out of more than 8,300 analysts on TipRanks, with a success rate of 61%. Each of his ratings has delivered a 19.7% average return. (See Micron Financial Statements on TipRanks)

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Top Wall Street analysts like these stocks for the long haul

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A Peloton exercise bike is seen after the ringing of the opening bell for the company’s IPO at the Nasdaq Market site in New York City, New York, U.S., September 26, 2019.

Shannon Stapleton | Reuters

Investors are trying to make sense of big corporate earnings, seeking clues about what lies ahead as macro headwinds persist. It’s prudent for investors to choose stocks with an optimistic longer-term view in these uncertain times.

Here are five stocks picked by Wall Street’s top analysts, according to TipRanks, a service that ranks analysts based on their past performance.

Costco

Wholesaler Costco (COST) is known for its resilient business model that has helped it navigate several economic downturns. Moreover, the membership-only warehouse club has a loyal customer base and generally enjoys renewal rates that are at or above 90%.

Costco recently reported better-than-anticipated net sales growth of 6.9% and comparable sales growth of 5.6% for the four weeks ended Jan. 29. The company delivered upbeat numbers despite continued weakness in its e-commerce sales and the shift in the timing of the Chinese New Year to earlier in the year.

Following the sales report, Baird analyst Peter Benedict reaffirmed a buy rating on Costco and a $575 price target. Benedict stated, “With a defensive/staples-heavy sales mix and loyal member base, we believe shares continue to hold fundamental appeal as a rare megacap “growth staple” – particularly in the face of a difficult consumer spending backdrop.”

Benedict’s convictions can be trusted, given his 55th position out of more than 8,300 analysts in the TipRanks database. Apart from that, he has a solid track of 71% profitable ratings, with each rating delivering 16.3% average return. (See Costco Hedge Fund Trading Activity on TipRanks)​

Amazon

2022 was a challenging year for e-commerce giant Amazon (AMZN) as macro pressures hurt its retail business and the cloud computing Amazon Web Services division.

Amazon’s first-quarter sales growth outlook of 4% to 8% reflects further deceleration compared with the 9% growth in the fourth quarter. Amazon is streamlining costs as it faces slowing top-line growth, higher expenses and continued economic turmoil.

Nonetheless, several Amazon bulls, including Mizuho Securities’ Vijay Rakesh, continue to believe in the company’s long-term prospects. Rakesh sees a “modest downside” to Wall Street’s consensus expectation for the 2023 revenue growth for Amazon’s retail business. (See Amazon Website Traffic on TipRanks)

However, he sees more downside risks to the Street’s consensus estimate of a 20% cloud revenue growth in 2023 compared to his revised estimate of 16%. Rakesh noted that Amazon’s cloud business was hit by lower demand from verticals like mortgage, advertising and crypto in the fourth quarter and that revenue growth has slowed down to the mid-teens so far in the first quarter.

Consequently, Rakesh said that AMZN stock could be “volatile near-term given potential downside revision risks.” Nonetheless, he reiterated a buy rating on AMZN with a price target of $135 due to “positive long-term fundamentals.”

Rakesh stands at #84 among more than 8,300 analysts tracked by TipRanks. Moreover, 61% of his ratings have been profitable, with each generating a 19.3% average return.

Peloton 

Fitness equipment maker Peloton (PTON), once a pandemic darling, fell out of favor following the reopening of the economy as people returned to gyms and competition increased. Peloton shares crashed last year due to its deteriorating sales and mounting losses.

Nevertheless, investor sentiment has improved for PTON stock, thanks to the company’s turnaround efforts under CEO Barry McCarthy. Investors cheered the company’s fiscal second-quarter results due to higher subscription revenue even as the overall sales dropped 30% year-over-year. While its loss per share narrowed from the prior-year quarter, it was worse than what Wall Street projected. 

Like investors, JPMorgan analyst Doug Anmuth was also “incrementally positive” on Peloton following the latest results, citing its cost control measures, improving free cash flow loss and better-than-anticipated connected fitness subscriptions. Anmuth highlighted that the company’s restructuring to a more variable cost structure is essentially complete and it seems focused on achieving its goal of breakeven free cash flow by the end of fiscal 2023.

Anmuth reiterated a buy rating and raised the price target to $19 from $13, given the company’s focus on restoring its revenue growth. (See PTON Stock Chart on TipRanks) 

Anmuth ranks 192 out of more than 8,300 analysts on TipRanks, with a success rate of 58%. Each of his ratings has delivered a 15.1% return on average.

Microsoft

Microsoft’s (MSFT) artificial intelligence-driven growth plans have triggered positive sentiment about the tech behemoth recently. The company plans to power its search engine Bing and internet browser Edge with ChatGPT-like technology.

On the downside, the company’s December quarter revenue growth and subdued guidance reflected near-term headwinds, due to continued weakness in the PC market and a slowdown in its Azure cloud business as enterprises are tightening their spending. That said, Azure’s long-term growth potential seems attractive. 

Tigress Financial analyst Ivan Feinseth, who ranks 137 out of 8,328 analysts tracked by TipRanks, opines that while near-term headwinds could slow cloud growth and the “more personal computing” segment, Microsoft’s investments in AI will drive its future.

Feinseth reiterated a buy rating on Microsoft and maintained a price target of $411, saying, “Strength in its Azure Cloud platform combined with increasing AI integration across its product lines continues to drive the global digital transformation and highlights its long-term investment opportunity.”

Remarkably, 64% of Feinseth’s ratings have generated profits, with each rating bringing in a 13.4% average return. (See MSFT Insider Trading Activity on TipRanks)

Mobileye Global 

Ivan Feinseth is also optimistic about Mobileye (MBLY), a rapidly growing provider of technology that powers advanced driver-assistance systems (ADAS) and self-driving systems. Chip giant Intel still owns a majority of Mobileye shares.

Feinseth noted that Mobileye continues to see solid demand for its industry-leading technology. He expects the company to “increasingly benefit” from the growing adoption of ADAS technology by original equipment manufacturers.  

The company is also at an advantage due to the rising demand in the auto industry for sophisticated camera systems and sensors used in ADAS and safe-driving systems. Furthermore, Feinseth sees opportunities for the company in the autonomous mobility as a service, or AMaaS, space.

Feinseth said there is potential for Mobileye’s revenue to grow to over $17 billion by 2030, backed by the company’s “significant R&D investments, first-mover advantage, and industry-leading product portfolio, combined with significant OEM relationships.” He projects a potential total addressable market of nearly $500 billion by the end of the decade.

Given Mobileye’s numerous strengths, Feinseth raised his price target to $52 from $44 and reiterated a buy rating. (See Mobileye Blogger Opinions & Sentiment on TipRanks)

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What investors need to know about ‘staking,’ the passive income opportunity at the center of crypto’s latest regulation scare

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Not six months ago, ether led a recovery in cryptocurrency prices ahead of a big tech upgrade that would make something called “staking” available to crypto investors.

Most people have hardly wrapped their heads around the concept, but now, the price of ether is falling amid mounting fears that the Securities and Exchange Commission could crack down on it.

On Thursday, Kraken, one of the largest crypto exchanges in the world, closed its staking program in a $30 million settlement with the SEC, which said the company failed to register the offer and sale of its crypto staking-as-a-service program.

The night before, Coinbase CEO Brian Armstrong warned his Twitter followers that the securities regulator may want more broadly to end staking for U.S. retail customers.

“This should put everyone on notice in this marketplace,” SEC Chair Gary Gensler told CNBC’s “Squawk Box” Friday morning. “Whether you call it lend, earn, yield, whether you offer an annual percentage yield – that doesn’t matter. If someone is taking [customer] tokens and transferring to their platform, the platform controls it.”

Staking has widely been seen as a catalyst for mainstream adoption of crypto and a big revenue opportunity for exchanges like Coinbase. A clampdown on staking, and staking services, could have damaging consequences not just for those exchanges, but also Ethereum and other proof-of-stake blockchain networks. To understand why, it helps to have a basic understanding of the activity in question.

Here’s what you need to know:

What is staking?

Staking is a way for investors to earn passive yield on their cryptocurrency holdings by locking tokens up on the network for a period of time. For example, if you decide you want to stake your ether holdings, you would do so on the Ethereum network. The bottom line is it allows investors to put their crypto to work if they’re not planning to sell it anytime soon.

How does staking work?

Staking is sometimes referred to as the crypto version of a high-interest savings account, but there’s a major flaw in that comparison: crypto networks are decentralized, and banking institutions are not.

Earning interest through staking is not the same thing as earning interest from a high annual percentage yield offered by a centralized platform like those that ran into trouble last year, like BlockFi and Celsius, or Gemini just last month. Those offerings really were more akin to a savings account: people would deposit their crypto with centralized entities that lent those funds out and promised rewards to the depositors in interest (of up to 20% in some cases). Rewards vary by network but generally, the more you stake, the more you earn.

By contrast, when you stake your crypto, you are contributing to the proof-of-stake system that keeps decentralized networks like Ethereum running and secure; you become a “validator” on the blockchain, meaning you verify and process the transactions as they come through, if chosen by the algorithm. The selection is semi-random – the more crypto you stake, the more likely you’ll be chosen as a validator.

The lock-up of your funds serves as a sort of collateral that can be destroyed if you as a validator act dishonestly or insincerely.

This is true only for proof-of-stake networks like Ethereum, Solana, Polkadot and Cardano. A proof-of-work network like Bitcoin uses a different process to confirm transactions.

Staking as a service

In most cases, investors won’t be staking themselves – the process of validating network transactions is just impractical on both the retail and institutional levels.

That’s where crypto service providers like Coinbase, and formerly Kraken, come in. Investors can give their crypto to the staking service and the service does the staking on the investors’ behalf. When using a staking service, the lock-up period is determined by the networks (like Ethereum or Solana), and not the third party (like Coinbase or Kraken).

It’s also where it gets a little murky with the SEC, which said Thursday that Kraken should have registered the offer and sale of the crypto asset staking-as-a-service program with the securities regulator.

While the SEC hasn’t given formal guidance on what crypto assets it deems securities, it generally sees a red flag if someone makes an investment with a reasonable expectation of profits that would be derived from the work or effort of others.

Coinbase has about 15% of the market share of Ethereum assets, according to Oppenheimer. The industry’s current retail staking participation rate is 13.7% and growing.

Proof-of-stake vs. proof-of-work

Staking works only for proof-of-stake networks like Ethereum, Solana, Polkadot and Cardano. A proof-of-work network, like Bitcoin, uses a different process to confirm transactions.

The two are simply the protocols used to secure cryptocurrency networks.

Proof-of-work requires specialized computing equipment, like high-end graphics cards to validate transactions by solving highly complex math problems. Validators gets rewards for each transaction they confirm. This process requires a ton of energy to complete.

Ethereum’s big migration to proof-of-stake from proof-of-work improved its energy efficiency almost 100%.

Risks involved

The source of return in staking is different from traditional markets. There aren’t humans on the other side promising returns, but rather the protocol itself paying investors to run the computational network.

Despite how far crypto has come, it’s still a young industry filled with technological risks, and potential bugs in the code is a big one. If the system doesn’t work as expected, it’s possible investors could lose some of their staked coins.

Volatility is and has always been a somewhat attractive feature in crypto but it comes with risks, too. One of the biggest risks investors face in staking is simply a drop in the price. Sometimes a big decline can lead smaller projects to hike their rates to make a potential opportunity more attractive.

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Top Wall Street analysts find these stocks compelling

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Jim Umpleby, CEO of Caterpillar Inc.

Adam Jeffery | CNBC

During these challenging times, making informed decisions with a long-term view is vital for investors.

Here are five stocks chosen by Wall Street’s top analysts, according to TipRanks, a platform that ranks analysts based on their track records.

Advanced Micro Devices

Semiconductor company Advanced Micro Devices’ (AMD) fourth-quarter results surpassed Street expectations even as continued weakness in the PC market dragged down the company’s client segment revenue. Nevertheless, higher sales from the data center and embedded divisions helped offset the weakness in the client and gaming segments.

Although AMD expects its revenue in the first quarter of 2023 to decline by about 10%, CEO Lisa Su remains optimistic about the company’s ability to win market share this year.

Susquehanna analyst Christopher Rolland said the company’s client and gaming results were better than feared. However, he noted that management’s weaker data center outlook for the first half was a “surprise.”

“While sales into North American hyperscalers more than doubled in 2022, management believes cloud is now undergoing a period of digestion in 1H, returning to growth in 2H (we think helped by ramps of Genoa, Bergamo, MI300 and Pensando, all of which are on track),” explained Rolland about the data center segment guidance. (See AMD Blogger Opinions & Sentiment on TipRanks)

Overall, Rolland reiterated a buy rating for AMD with a price target of $88, saying he prefers to look beyond the uncertainty in 2023 “towards a better 2024.” Rolland’s conviction is worth trusting, given that he is ranked at the 13th position among more than 8,300 analysts tracked by TipRanks. Moreover, 72% of his ratings have been profitable, with each generating a 21% average return.

Tesla

Leading electric vehicle maker Tesla’s (TSLA) upbeat fourth-quarter results wiped out investors’ concerns about supply chain disruptions, the distraction related to Elon Musk’s Twitter acquisition, and the recently announced price cuts.

Tesla is focused on reducing costs and enhancing productivity to combat the near-term macroeconomic pressures and rising competition. Taking into account potential supply chain issues and other possible headwinds, the company issued production guidance of 1.8 million EVs in 2023, even though it has the potential to make 2 million units.

Mizuho Securities analyst Vijay Rakesh projects Tesla’s revenue will grow 29% this year and 26% in 2024. The analyst highlighted that his conservative growth estimates reflect “potentially slowing macro demand offset by secular EV transitional trends.”

Rakesh reaffirmed a buy rating and $250 price target, pointing out that Tesla has industry-leading margins and is on the path to deliver more than $10 billion in free cash flow, compared to rivals who are still at negative free cash flow. (See Tesla Hedge Fund Trading Activity on TipRanks)​

Rakesh holds the 113th position among more than 8,000 analysts tracked on TipRanks. Additionally, 60% of his ratings have been successful and have generated a 17.4% average return.

McDonald’s  

After fast-moving EVs, fast-food giant McDonald’s (MCD) is next on our list. McDonald’s topped expectations, as the restaurant chain witnessed better-than-anticipated traffic at its domestic stores in the final quarter of 2022.

McDonalds’ delivered robust comparable sales across the domestic and international markets, thanks to “strategic menu price increases” in the U.S., attractive menu offerings, and marketing campaigns like the Happy Meal offering for adults. (See McDonald’s Dividend Date & History on TipRanks)  

Despite tough macro conditions, McDonald’s intends to expand further to grab additional business. It plans to open about 1,900 restaurants, with over 400 of these locations in the U.S. and the International Operated Markets segments. The remaining restaurants will be opened by developmental licensees and affiliates.  

BTIG analyst Peter Saleh, who reiterated a buy rating and $280 price target, expects McDonald’s to gain from “moderating inflation, carryover pricing, easing lockdowns in China, and foreign exchange finally becoming a modest tailwind.”

Saleh ranks 383 out of more than 8,300 analysts on TipRanks, with a success rate of 65%. Each of his ratings has delivered a 12.3% return on average.

Mondelez International

Mondelez International’s (MDLZ) recent results reflected the advantages of being a manufacturer of resilient product categories like chocolate, cookies and baked snacks. The Oreo-brand owner delivered robust revenue growth, fueled by higher pricing, increased volumes and strategic acquisitions, including Chipita and Clif Bar.

Despite currency headwinds and higher costs, Mondelez is positive about driving “attractive growth” in 2023 and beyond by increasing its exposure to high-growth categories, cost discipline, and continued investments in iconic brands. (See MDLZ Stock Chart on TipRanks) 

J.P.Morgan analyst Kenneth Goldman, who ranks 652 out of over 8,300 analysts tracked by TipRanks, feels that it is “refreshing to see at least one company surprise to the upside” on the volumes front amid growing concerns about this key metric in the staples industry.

Given the likelihood of several food producers reporting weak volumes in the coming days, Goldman said it could “become increasingly important to own stocks of companies with (a) relatively inelastic categories, (b) strong and unique brands with limited private label competition, and (c) a commitment to continually spending behind their brands.”

In line with his bullish stance, Goldman reiterated a buy rating and increased his price target to $74 from $71. It’s worth noting that 61% of his ratings have been successful, generating a 9.3% average return.  

Caterpillar

Construction and mining equipment maker Caterpillar (CAT) ended 2022 with a double-digit increase in revenue in the fourth quarter, driven by steady demand and higher pricing. However, investors seemed concerned about the impact of rising input costs and the strengthening U.S. dollar on the company’s bottom line.

Furthermore, Caterpillar’s warning about weaker China demand in 2023 didn’t go down well with the shareholders. Nonetheless, the company is optimistic about higher overall sales and earnings this year due to healthy demand across its segments.

Jefferies analyst Stephen Volkmann reaffirmed a buy rating following the Q4 print and maintained a price target of $285. Volkmann called the company’s pricing strength as “the standout positive.”

The analyst also noted that the demand for Caterpillar’s products remains strong, as indicated by a $400 million rise in the order backlog in the fourth quarter on a sequential basis. (See Caterpillar’s Insider Trading Activity on TipRanks) 

Volkmann’s recommendations are worth paying attention to, given that he stands at the 51st position out of 8,300 plus analysts tracked by TipRanks. Remarkably, 69% of Volkmann’s ratings have generated profits, with each rating bringing in a 19.9% average return.

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Fed expected to slow rate hiking to a quarter point but will stay unrelenting in inflation battle

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The Federal Reserve is expected to raise interest rates by just a quarter point but also likely signal it will stay vigilant in its fight against inflation even as it reduces the size of the hikes.

The Fed releases its latest rate decision Wednesday at 2 p.m. ET, and Fed Chair Jerome Powell briefs the media at 2:30 p.m. The expected quarter-point hike follows a half percentage point increase in December, and would be the smallest increase in the federal funds target rate range since the first hike of the cycle last March.

While the meeting is expected to be relatively uneventful, strategists say it could be a challenge for the Fed chief to temper the reaction in financial markets. The markets have been rising as investors expect the central bank might succeed in a soft landing for the economy while also snuffing out inflation sufficiently to move back to easing policy.

“How is he going to tell people to calm down, chill out and don’t get so excited by us getting close to the end of the interest rate increases?” said Peter Boockvar, chief investment officer at Bleakley Financial Group. “He’s going to do that by still saying the Fed’s going to stay tight for a while. Just because he’s done doesn’t mean it’s a quick bridge to an ease.”

Federal Reserve Board Chairman Jerome Powell holds a news conference following the announcement that the Federal Reserve raised interest rates by half a percentage point, at the Federal Reserve Building in Washington, U.S., December 14, 2022. 

Evelyn Hockstein | Reuters

The Fed’s rate hike Wednesday would be the eighth since last March. It would put the fed funds target rate range at 4.50% to 4.75%. That is just a half percentage point away from the Fed’s estimated end point, or terminal rate range of 5% to 5.25%.

“I think he will push back on financial conditions. I think the markets are expecting that. I think people realize how much credit spreads have moved, how much the equity market has moved, how much tech stocks have moved. This month has been extraordinary,” said Rick Rieder, BlackRock’s chief investment officer for global fixed income.

A rally that could dampen the Fed’s efforts

Easy credit and a stock market that is rising too quickly could defeat the Fed’s efforts to chill the economy and crush inflation.

Stocks rallied Tuesday as the Fed began its two-day meeting, capping January’s gain of nearly 6.2% for the S&P 500. The tech sector was up 9.2% for the month. Rates have fallen since the end of the year, with the benchmark 10-year Treasury yield at roughly 3.5%, after it ended December at about 3.9%.

Rieder expects Powell to deliver his comments with a hawkish tone. “I think if he’s hawkish, I think the markets have built that in. I think if he’s not, the market could make another leg,” he said.

In the futures market, fed funds futures continued to price a terminal rate of less than 5%. The futures also show investors expect the Fed to actually reverse policy and cut rates by at least 25 basis points by the end of 2023. A basis point equals 0.01 of a percentage point.

“I think he’s going to be hawkish relative to market pricing,” said Jim Caron, head of macro strategies for global fixed income at Morgan Stanley Investment Management.

Caron said the Fed’s downsizing of its rate hikes will be seen dovish in itself. Prior to December’s 50 basis point hike, the central bank raised rates by 75 basis points four times in a row.

“He wants to defend the validity of the 5% to 5.25% terminal rate [forecast],” said Caron. “At the same time, he sees record housing prices are coming down. Wage inflation is coming down. The auto sector is not doing great. Retail’s not doing so great. The jobs market is doing OK. Wage inflation is coming down but it’s still above comfort levels.”

Listening carefully to the Fed’s messaging

Caron said Powell also wants to be careful not to sound too hawkish. “It’s very easy for there to be a mistake in the communication from the Fed or there could be a mistake in the way the market initially interprets things as well,” he said. “That tells me there’s going to be a lot of volatility.”

Investors will be attuned to any comments Powell makes about the economy and whether he expects it to dip into recession, as many economists forecast. The central bank has not projected a recession in its forecast, but it expects very sluggish flat growth, and it sees the unemployment rate rising sharply to 4.6% later this year, from its December level of 3.5%.

The Fed is not expected to make any major changes in its policy statement when it announces the rate hike. Its last statement said that “ongoing increases” in the target rate range will be appropriate in order to reach a policy position that can send inflation back to 2%.

The Fed is making headway against inflation. Personal consumption expenditure core inflation rose by 0.3% in December and was at 4.4% on an annual basis from 4.7% in November, the slowest increase since October 2021

Strategists say the Fed needs more data and will likely wait until at least March to signal how long it could continue to raise interest rates. If it stays at the same pace, there could be two more quarter-point hikes.

The Fed will not be releasing any new forecasts or economic projections Wednesday. Its next forecast is the quarterly release of economic projections at the March meeting, and that is one way markets will get more clues on the intended rate path.

“They don’t want financial conditions to ease all that much, and they don’t have a new set of forecasts to give, so I think what that means is you have fewer changes in the statement and that line about ‘ongoing increases’ is going to stay the same,” said Michael Gapen, Bank of America’s chief U.S. economist.

Gapen said it will be difficult for Powell to sound too hawkish. “Actions speak louder than words. If they decelerate [the size of rate hikes] for the second straight meeting in a row, it’s hard to back that up with overtly hawkish language,” he said.

Boockvar said Powell should emphasize how the Fed will keep rates at higher levels, despite the market view that it will soon cut rates. “Powell is more focused on inflation going down and staying down than trying to help the S&P 500,” said Boockvar. “His legacy is not going to be determined by where credit spreads are or where the S&P is going. It’s going to be determined by whether he slayed inflation and it stayed down.”

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Top Wall Street analysts like these stocks for maximum returns

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A logo of Meta Platforms Inc. is seen at its booth, at the Viva Technology conference dedicated to innovation and startups, at Porte de Versailles exhibition center in Paris, France June 17, 2022.

Benoit Tessier | Reuters

As the earnings season rolls on, many companies are hinting at a challenging year ahead.

Meanwhile, it can be intimidating to invest in such a stressful environment. To ease the process, here are five stocks chosen by Wall Street’s top analysts, according to TipRanks, a platform that ranks analysts based on their past performances. 

Alphabet 

After languishing in the stock market last year due to numerous factors affecting the tech sector, Alphabet (GOOGL) will report its seasonally weakest quarter of the year on Thursday. From relatively low digital ad spending and regulatory crackdowns on digital ads to increasing costs and interest rates, Google endured it all. Needless to say, the company expects sequential growth deceleration in the fourth quarter. 

Nonetheless, Monness, Crespi, Hardt, & Co. analyst Brian White expects the results to be in line with his expectations. The analyst anticipates a 10% sequential sales increase, implying a quarter-over-quarter deceleration in growth. This is notably lower growth than what is usually expected of a typical Alphabet fourth-quarter report (17% on average in the past four December quarters).  

However, although Google Advertising revenue growth was significantly hurt by the slowdown in digital ad spending, White notes that “Alphabet proved more resilient than Meta and Snap that were   disproportionately impacted by Apple’s privacy initiatives, most notably App Tracking Transparency, along with other factors.” 

The analyst expects year-over-year digital ad spending comps to improve in the second half of the year. Also, White’s estimates suggest that Google Ad revenues should return to growth in the second quarter of 2023. (See Alphabet Blogger Opinions & Sentiment on TipRanks) 

White reiterated a buy rating on the stock with a price target of $135. The analyst holds the 66th position among almost 8,300 analysts followed on TipRanks. His ratings have been profitable 64% of the time, and each rating has generated an 18% average return.

Meta Platforms 

Another technology name in Brian White’s list is Meta Platforms (META), which is scheduled to report its fourth-quarter earnings on Wednesday “after taking a savage beating in 2022,” according to the analyst’s words. 

The headwinds that the company faced last year, including Apple’s privacy initiatives with App Tracking Transparency, the slowdown in advertisement spending, exorbitant investments in the metaverse, and regulatory scrutiny, are not expected to entirely dissipate in 2023. (See Meta Platforms Website Traffic on TipRanks) 

Over the past 52-weeks, Meta shares were cut nearly in half. Gains in early 2023, are helping to trim last year’s losses.

However, a leaner cost structure, thanks to its significantly downsized business and other initiatives, as well as softening challenges, will be a relief this year. Additionally, in the long run, White expects Meta to benefit from the secular digital ad trend and innovations in the metaverse.  

“With sales up 34% per annum over the past five years, EPS turning in a 32% CAGR and generating an   attractive operating margin, we believe Meta Platforms should trade at a premium to the market and tech sector in the long run; however, we expect the current macroeconomic and geopolitical environment will weigh on advertising spending in the coming quarters,” observed White, who reiterated a buy rating on the stock with a price target of $150. 

WNS 

India-based business process management company WNS (WNS) is next on our list. The company’s solid sales pipeline reflects a healthy demand environment that overshadows economic headwinds. This gives Barrington analyst Vincent Colicchio the “confidence in its ability to generate solid revenue and adjusted EPS growth in fiscal 2023 and beyond.” 

The company recently reported its quarterly earnings, where it beat Street estimates, thanks to the strong demand for its services and products. “As of the close of fiscal Q3/23, the company’s sales pipeline was strong and at record levels and sales cycles declined sequentially, reflecting strong demand. Sales cycles have declined in recent quarters as clients accelerated decisions to improve efficiency ahead of a potential recession,” observed Colicchio. (See WNS Stock Chart on TipRanks) 

The analyst was encouraged by the fact that WNS did not realize any meaningful pressures from the economic headwinds that have hung heavily on peers. Challenges like volume pressures, productivity issues, delays and cancelations, etc., did not deter the business from its growth path. 

Colicchio reiterated a buy rating on the stock with a price target of $97 and even raised his fiscal 2023 and fiscal 2024 earnings-per-share forecasts to $3.86 and $4.14 from $3.78 and $4.12, respectively. 

The analyst currently stands at #282 among almost 8,300 analysts tracked by TipRanks. Moreover, 62% of his ratings have been profitable, each generating a 13.1% average return. 

BRC 

BRC (BRCC) is a unique company. The operator of the Black Rifle Coffee Company is founded and led by military veterans. The company was built to serve premium coffee, content and merchandise to active military, veterans and first responders. 

BRC has been on Tigress Financial Partners analyst Ivan Feinseth‘s buy list in recent weeks. The analyst has a $19 price target on the company. (See BRC Insider Trading Activity on TipRanks) 

Feinseth is confident that the company is a solid emerging high-growth lifestyle investment opportunity, serving a loyal and niche customer base and offering meaningful growth opportunities through product innovation and a digitally native omnichannel distribution strategy. 

BRCC recently announced that it will “shift focus from the near-term buildout of restaurants (Outpost) and DTC (Direct-to-consumer) sales to a faster growth and higher return opportunity in the expansion of the sales of its RTD (Ready-to-drink) beverages packaged and premeasured (k-cup) coffee through an increasing FDM (food drug and mass-market) focus,” explained the TipRanks-rated 5-star analyst. 

Feinseth’s convictions can be trusted, given his 185th position among nearly 8,300 analysts in the TipRanks database. This apart, his track of 63% profitable ratings, each rating delivering 12.1% average returns, is also worth considering. 

Starbucks 

The world’s largest specialty coffee chain retailer Starbucks (SBUX) is also one of Ivan Feinseth’s favorite stocks for this year. The company continues to put its numerous growth drivers into action. This includes new product development, a global coffee alliance and ongoing store growth. Starbucks also enjoys strong brand equity and a committed customer base, which will help drive its new reinvention plan for long-term growth, according to the analyst’s observations. 

“SBUX continues to improve operating efficiencies and customer experience by leveraging ongoing   innovation, new technologies, and new store formats,” said Feinseth, reiterating a buy rating on Starbucks with a price target of $136.  

Moreover, the company’s focus on expanding its product portfolio to include new health and wellness beverages, teas, and core food offerings can boost customer traffic during later hours. (See Starbucks’ Dividend Date & History on TipRanks) 

Staying up to date with the changing industry trends, Feinseth noted that Starbucks is investing in new   digital initiatives to improve customer service, supply-chain management, its loyalty program, and mobile ordering and e-commerce capabilities.  

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Top Wall Street analysts pick these stocks to climb 2023’s wall of worry

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The Spotify logo hangs on the facade of the New York Stock Exchange with U.S. and a Swiss flag as the company lists its stock with a direct listing in New York, April 3, 2018.

Lucas Jackson | Reuters

Coming off a week that was packed with corporate earnings and economic updates, it is still difficult to determine whether a recession can be avoided this year.

Investing in such a stressful environment can be tricky. To help with the process, here are five stocks chosen by Wall Street’s top analysts, according to TipRanks, a platform that ranks analysts based on their past performances. 

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Apple

Ahead of Apple’s (AAPL) December quarter results, due out on Feb. 2, investors are fairly aware of the challenges that the company faced during the period. From production disruptions in the iPhone manufacturing facility at Zhengzhou in China to higher costs, Apple’s first quarter of fiscal 2023 has endured all. Needless to say, the company expects a quarter-over-quarter growth deceleration.

Nonetheless, Monness Crespi Hardt analyst Brian White expects the results to be in line with, or marginally above, Street expectations. The analyst believes gains in Services, iPad and Wearables, Home & Accessories revenue could be a saving grace.

Looking ahead, White sees pent-up demand for iPhones come into play in the forthcoming quarters, once Apple overcomes the production snags. (See Apple Stock Investors’ sentiments on TipRanks)

The analyst feels that the expensive valuation of approximately 27 times his calendar 2023 earnings estimate for Apple is justified.

“This P/E target is above Apple’s historical average in recent years; however, we believe the successful creation of a strong services business has provided the market with more confidence in the company’s long-term business model,” said White, reiterating a buy rating and $174 price target.

White holds the 67th position among almost 8,300 analysts followed on TipRanks. His ratings have been profitable 63% of the time and each rating has generated a 17.7% average return.

Spotify

 Audio streaming subscription service Spotify (SPOT) is also among the recent favorites of Brian White.

“Spotify is riding a favorable long-term trend, enhancing its platform, tapping into a large digital ad market, and expanding its audio offerings,” said White, reiterating a buy rating and $115 price target.

The analyst does acknowledge some challenges that await Spotify this year but remains optimistic about its margin improvement plans and several favorable industry developments. While it may be tough to attract new premium subscribers, while facing continued pressure from a lower digital ad spending environment, Spotify should benefit from ad-supported monthly active users (MAUs) this year. (See Spotify Stock Chart on TipRanks)

White is particularly upbeat about the waning mobile app store monopolies, after the European Union passed the Digital Markets Act last year. The act will be imposed from May 2023. One of the benefits for Spotify will be the ability to promote its cheaper subscription offers. Now, it can make the offers available outside Apple’s iPhone app. (This had been a challenge, as Apple previously would allow it to only promote its subscriptions through iPhone app.)

CVS Health Corp.

CVS Health (CVS), which operates a large retail pharmacy chain, has been on Tigress Financial Partners analyst Ivan Feinseth‘s list in recent weeks. The analyst reiterated a buy rating and a $130 price target on the stock.

The company’s “consumer-centric integrated model” as well as its increasing focus on primary care should help make health care more affordable and accessible for customers, according to Feinseth. CVS bought primary health-care provider Caravan Health as part of this focus. Moreover, the impending acquisition of Signify Health “adds to its home health services and provider enablement capabilities.”

The analyst also believes that the ongoing expansion of CVS’s new store format, MinuteClinics and HealthHUBs, will increase customer engagement and thus, continue to be a key growth catalyst. (See CVS Health Blogger Opinions & Sentiment on TipRanks)

Feinseth is also confident that CVS’s merger with managed healthcare company Aetna back in 2018 created a health-care mammoth. Now, it is well positioned to capitalize on the changing dynamics of the health-care market, as consumers gain more control over their health-care service expenditures.

Feinseth’s convictions can be trusted, given his 208th position among nearly 8,300 analysts in the TipRanks database. Apart from this, his track record of 62% profitable ratings, with each rating delivering 11.8% average returns, is also worth considering.

Shake Shack

Fast food hamburger chain operator Shake Shack (SHAK) has been doing well both domestically and overseas on the back of its fast-casual business concept. BTIG analyst Peter Saleh has a unique take on the company.

“Shake Shack is the preeminent concept within the better burger category and the rare restaurant chain whose awareness and brand recognition exceed its actual size and sales base,” said Saleh, who reiterated a buy rating on the stock with a $60 price target. (See Shake Shack Hedge Fund Trading Activity on TipRanks)

On the downside, the analyst points out that the expansion of services outside New York has weakened Shake Shack’s margin profile by generating low returns per unit and exposing the company to greater sales volatility. However, margins seem to have bottomed, and the analyst expects profitability to gain momentum over the next 12-18 months. A combination of higher menu prices and deflation of commodity costs are expected to push restaurant margins up to mid-teen levels.

In its preliminary fourth-quarter results, management at Shake Shack mentioned that it plans to tighten its hands with general and administrative expenses this year, considering the macroeconomic uncertainty. This “should prove reassuring for investors given the heightened G&A growth (over 30%) of the past two years.”

Saleh has a success rate of 64% and each of his ratings has returned 11.7% on average. The analyst is also placed 431st among more than 8,000 analysts on TipRanks.

TD Synnex

Despite last year’s challenges, business process service provider TD Synnex (SNX) has benefited from a steady IT spending environment amid the consistently high digital transformation across industries. The company recently posted its fiscal fourth-quarter results last week, where earnings beat consensus estimates and the dividend was hiked.

Following the results, Barrington Research analyst Vincent Colicchio dug into the results and noted that rapid growth in advanced solutions and high-growth technologies were major positives. Even though the analyst reduced his fiscal 2023 earnings forecast due to an expected rise in interest expense, he remained bullish on SNX’s efforts to achieve cost synergies by the end of the current fiscal year. (See TD Synnex Dividend Date & History on TipRanks)

Looking forward, the analyst sees a largely upward trend in growth, albeit a few hiccups. “The key growth driver in the first half of fiscal 2023 should be advanced solutions and high-growth technologies and in the second half should be PCs and peripherals and high-growth technologies. We expect Hyve Solutions revenue growth to slow in fiscal 2023 and slightly rebound in fiscal 2024 versus fiscal 2022 growth,” observed Colicchio, reiterating a buy rating and raising the price target to $130 from $98 for the next 12 months.

Importantly, Colicchio ranks 297th among almost 8,300 analysts on TipRanks, with a success rate of 61%. Each of his ratings has delivered 13% returns on average.

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Morgan Stanley CEO says the bank’s push for more stable revenue streams has worked. It’s a key reason we own the stock

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James Gorman, Chairman & CEO of Morgan Stanley, speaking on Squawk Box at the WEF in Davos, Switzerland on Jan. 19th, 2023.. 

Adam Galica | CNBC

Morgan Stanley‘s (MS) multiyear transformation plan has been a success, CEO James Gorman said with pride Thursday — and, as shareholders, we see no reason to disagree.

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Top Wall Street analysts like these stocks amid easing inflation

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The logo of Alphabet Inc’s Google outside the company’s office in Beijing, China, August 8, 2018.

Thomas Peter | Reuters

Last week, December’s consumer price index reading showed that prices are cooling.

The index dropped 0.1% on a monthly basis, but the metric gained 6.5% from the prior year. Investors seemed to appreciate the news, as the three major indexes closed higher on Friday.

Nevertheless, investing in this uncertain environment can be tricky.

To help the process, here are five stocks chosen by Wall Street’s top pros, according to TipRanks, a platform that ranks analysts based on their track records. 

Alphabet

Google-parent Alphabet (GOOGL) is a frontrunner in every major trend in technology, including the growth of mobile engagement, online activities, digital advertising and cloud computing. Additionally, its focus on artificial intelligence is driving the development of better and more functional products.

Tigress Financial Partners analyst Ivan Feinseth recently reiterated a buy rating on the stock. His bullishness is attributed to robust trends in cloud and search, which “continues to highlight the resiliency of its core business lines.” (See Alphabet Blogger Opinions & Sentiment on TipRanks)

AI-focused investments and efforts to achieve cost and operating efficiencies should continue to drive Alphabet’s growth. Feinseth said that any weakness in the near term is a great buying opportunity.

The analyst is also upbeat about Alphabet’s financial health. “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 repurchases,” said Feinseth, who is ranked No. 229 among more than 8,000 analysts on TipRanks.

The analyst’s ratings have been profitable 60% of the time and each rating has generated average returns of 11.1%.

Hims & Hers

Another stock that Feinseth has recently reiterated as a buy is the multi-specialty telehealth company, Hims & Hers (HIMS). The analyst also raised his 12-month price target on the stock from $11 to $12.

Feinseth is confident in HIMS’s strong brand equity and customer loyalty, which he expects will continue to drive business performance. Moreover, new product innovations are supporting the company’s highly scalable business model, and they are expected to boost this year’s profits. (See Hims & Hers Health Hedge Fund Trading Activity on TipRanks)

The massive health-care market is always evolving and requires strong players with flexible business models to serve the growing demand. The analyst thinks that HIMS is well positioned in this area to be one of the top beneficiaries.

“HIMS’s scalable business model, expanding services, and rapidly growing customer base will drive significant revenue growth. Its asset-light business model of connecting patients to service providers and providing access to high-quality branded healthcare products will eventually drive a significant Return on Capital (ROC), grow Economic Profit, and increase shareholder value creation,” said Feinseth.

OrthoPediatrics Corp.

As the name suggests, OrthoPediatrics (KIDS) deals in the design, manufacture, and commercialization of products that are used in the treatment of orthopedic conditions in children. The company operates in more than 35 countries worldwide.

The pediatric orthopedic market is a niche market that is relatively underserved, which has worked to the company’s advantage. OrthoPediatrics has dominance in this market, giving it a competitive edge in the medical equipment industry. BTIG analyst Ryan Zimmerman notes that the company stands to benefit from this space as larger players have mostly overlooked the opportunity. (See OrthoPediatrics Financial Statements on TipRanks)

Last week, Zimmerman reiterated his buy rating and $62 price target on KIDS stock. In addition to the market opportunity, the analyst said that “with a leading brand among pediatric orthopedic surgeons and a concentrated customer base that performs the majority of cases at a limited number of hospitals, the model is scalable and defendable.”

Zimmerman has the 660th ranking among more than 8,000 analysts tracked on TipRanks. Moreover, 47% of his ratings have been successful, generating 9% average returns per rating.

Intuitive Surgical

Medical technology company Intuitive Surgical (ISRG) is a pioneer in robotic-assisted, minimally invasive surgery. The company is also one of Zimmerman’s favorite stocks for the year.

Recently, Intuitive Surgical announced preliminary 4Q22 results and growth guidance for procedures in FY23, which were as Zimmerman expected. Following the results, the analyst reiterated his bullish stance on the company with a buy rating and $316 price target. (See Intuitive Surgical Stock Investors on TipRanks)

“There continue to be headwinds entering FY23, but we think ISRG is poised to continue to see improving market dynamics coupled with the potential for the launch of a next-generation system. We would be buyers on today’s weakness,” said Zimmerman, justifying his bullishness.

The analyst is bullish on the company’s long-term growth potential in the area of robotic surgery, and sees ISRG as a “clear leader in the space.” Zimmerman said that the pandemic has increased the importance of computer-aided surgery, thanks to accurate clinical outcomes. This is expected to drive the adoption of Intuitive Surgical’s products over time.

The Chefs’ Warehouse

Another BTIG analyst, Peter Saleh, who has the 491st ranking in the TipRanks database, has recently reiterated his bullish stance on food distributor Chef’s Warehouse (CHEF). The company is a premier distributor of food to high-end restaurants and other expensive establishments. 

Saleh sees several upsides to share growth thanks to its “compelling business model as a niche foodservice distributor, more upscale and differentiated customer base, and unfolding sales recovery in key markets.” (See The Chefs’ Warehouse Stock Chart on TipRanks)

The analyst is upbeat about the reopening of markets in key regions and gradual recovery in serviceable areas like hospitality. These upsides are expected to drive sales this year. Saleh said that these upsides, combined with CHEF’s long-term opportunity to enhance market share, underpin his bullish stance on the company.

The analyst gave a “Top Pick” designation to CHEF stock, with a buy rating and $48 price target. “While the capital structure has changed and the technical overhang from the recent convertible issuance seems to remain, we view shares as simply too cheap given fundamentals,” said Saleh.

The analyst has delivered profitable ratings 61% of the time, and each of his ratings has generated returns of 10.9% on average.

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Why we still like Coterra Energy despite the recent fall in natural gas prices

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Pipes at the landfall facilities of the ‘Nord Stream 1’ gas pipeline are pictured in Lubmin, Germany, March 8, 2022.

Hannibal Hanschke | Reuters

Natural gas prices jumped Thursday following a multiweek swoon, providing a lift to shares of Club holding Coterra Energy (CTRA), which lately has relied on the commodity for more than half its operating revenues.

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