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.

Salesforce

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%.

Dell

Personal computer makers, including Dell (DELL), have been facing significant headwinds, as the demand for desktops and laptops plunged following a pandemic-driven rush.

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)

Rivian Automotive

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.

Mobileye Global

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)

Alphabet

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)

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Top Wall Street analysts like these stocks for the long haul

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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