Analysts are standing by shares like Alphabet and Fb
Shannon Stapleton | Reuters
Rising oil prices, the prospect of the US Federal Reserve pulling back its monetary austerity policies, and tension among Washington lawmakers are just some of the factors behind the recent volatility in the markets.
Top analysts are sticking to the name amid general macro volatility, according to TipRanks, which tracks best-performing stock picks.
Several recent trends, including higher ad spend on Google, digital disruption in schools that empower Chegg, and home pandemic trends that are boosting sales at Peloton, have helped position some stocks in the good faith of top analysts. Let’s take a look at how they built their bullish hypotheses.
Even companies that seem to be involved in everything have room for further growth. Google mother alphabet (GoogL) it is expected to move in further in the course of the year. Jefferies’ Brent Thill believes that spending weakness will continue to rise in the summer. (See Alphabet Stock Analysis on TipRanks)
Upbeat, Thill said that he “remains a top long capital pick,” rated the stock as a Buy, and announced a price target of $ 3,325 per share.
The five-star analyst said online brand managers may want to “replenish” or spend their entire budget on large advertising campaigns in the fourth quarter if the same high sums of money are no longer allocated in the following fiscal year.
In the meantime, TV advertising budgets have already been cut on other platforms. As a result, YouTube sees significant benefits as advertising spend is redirected to the internet. The online video sharing website is a subsidiary of Google and has been a significant source of income for Alphabet.
Simultaneously with the high demand, the video sharing platform is currently increasing ad prices and has a strong supply of content. Additionally, concerns about Apple’s iOS updates didn’t translate into any impact on Google’s advertising revenue. In fact, Facebook appears to be far more affected than YouTube.
Travel and leisure ad spend aside, the rest of the industry has almost recovered from its midsummer lows. Spending was lower in July and August, in part due to supply constraints on both the physical products sold and the employees who sell them. Thill sees long-term monetization opportunities for YouTube as Alphabet continues to invest in new advertising initiatives like “shoppable ads and actionable CTV ads.”
On TipRanks, Thill ranks 53rd out of more than 7,000 expert analysts. He was successful in his ratings 71% of the time, averaging 26.6% on each rating.
In some cases, the digital changes caused by the Covid-19 pandemic have actually been an acceleration of trends that will last long beyond the pandemic. For example, online training technology has generated a lot of interest and, for the most part, will not change in the near future. Chegg (CHGG) continues to see an increase in the number of subscribers and their retention on the direct-to-student learning platform.
Needham & Co.’s Ryan Macdonald expects the company to grow its user base domestically and internationally even as students return to campus in the fall semester of 2021. He optimistically added that “Despite increased usage and competition, Chegg remains one of the top three most widely used digital learning tools in the US and has taken the top spot internationally.” (See Chegg News sentiment on TipRanks)
Macdonald listed this stock as a Buy, with a price target of $ 120 per share.
He claimed that in the current environment, around 70% of domestic users and 80% overseas will be retained. Students abroad generally use less digital learning tools, but switch from free to paid services more quickly. In addition, fewer accounts are now being shared than during the pandemic, indicating successful authentication initiatives by Chegg.
With “healthy usage dynamics and strong international acceptance,” Macdonald assumes that Chegg goes beyond Wall Street’s consensus estimates.
Ranked # 85 out of 7,000+ financial analysts, Macdonald has a 65% success rate and an average return of 36.8%.
Despite weeks of negative headlines and multiple hearings in front of Congress, Brad Erickson of RBC Capital isn’t too worried about Facebook (FB) and its future. The giant technology and social media company is fundamentally solid in terms of its business performance and is highly sought after by advertisers for its “best accuracy” [of consumers] and return on investment. “
Erickson praised the controversial company, noting that “FB created one of the most valuable advertising franchises in the world” and that it “captured unmatched knowledge of the world’s consumers”.
He repeated a buy of the stock and gave a price target of $ 425.
While optimistic, the analyst admitted that Facebook’s future growth depends on its success in turning into a more well-rounded “super app” for its billions of users. Despite having nearly 3 billion users across its various platforms, FB has the power to shift towards greater vertical integration with consumers.
The five-star analyst was encouraged by the monetization opportunities Facebook took advantage of through its internal initiatives such as shops, messengers and pay platforms. Such vertical integrations will ultimately deliver sustainable substance that will satisfy shareholders. (See Facebook Insider Trading Activity on TipRanks)
While Facebook’s management almost certainly doesn’t appreciate the fact that its reputation is being repeatedly challenged in the news cycle media, the fundamentals of its business don’t seem to be shaken.
Out of more than 7,000 financial analysts, Erickson ranks 171st. His accurate ratings have resulted in a 60% success rate and an average return of 36.3%.
For companies that have benefited greatly from the Covid-19 pandemic trends, the challenge now is to transform their businesses into long-term sustainable companies. This is especially true for Peloton Interactive (PTON), whose revenue has so far increased 120% in 2021. The exercise equipment and services company is now looking to focus on a new strategy, and analysts are taking note.
Scott Devitt of Stifel Nicolaus wrote that PTON has secured a “banner year” in 2021 and is currently in a position to aim for even more subscriber growth and international market penetration. The company is thus expanding its product range.
Devitt listed the stock as a Buy with a price target of $ 120.
The bullish analyst stated that Peloton both lowered the price of its main bike product and extended the timeframe of the payment plan. By offering more affordable equipment, the company hopes to attract more subscribers to its training services. In addition, PTON recently relaunched a treadmill that could allow it to be more widespread in households that are less interested in cycling.
While investor sentiment has eased over the last month, the lower valuation could provide an attractive entry point for investors with long-term prospects. (See Peloton Interactive Blogger Opinions and Sentiment on TipRanks)
Additionally, Peloton is targeting an international audience, which currently accounts for around 11% of its revenue streams. Devitt is encouraged by the room for opportunity beyond the domestic consumer. The company invests in foreign language trainers as well as in localized content.
TipRanks holds Devitt 60th out of over 7,000 other analysts. His reviews were successful 66% of the time, returning him an average of 31.4% per review.
The trade desk
Public Internet advertising spending has bounced back from its pandemic lows, and the companies that provide the data to do it are well positioned to grow. Especially The Trade Desk (TTD) is considered the “winner among the demand-side platforms”. This is partly due to its size, international and national presence, and strong partnerships.
Laura Martin from Needham & Co. reported on the stock and suspected that the advertising giants of Facebook, Amazon and Alphabet will soon give up market shares to the open Internet platforms. She believes The Trade Desk has a significant competitive advantage over the “walled gardens” of the tech world.
Martin rated the stock as a buy and optimistically set a price target of $ 100.
In saying that TTD “maximizes global revenue scalability and margin growth,” the five-star analyst stated that the company’s international market is growing faster than its domestic market, even though only 15% of 1H’s sales come from abroad . These statistics inspire confidence that there is a lot more headroom beyond US customers to ramp up.
In addition, around a third of sales are generated with connected TVs, which are becoming more widespread. (See The Trade Desk Risk Factors on TipRanks)
Martin was encouraged to find that TTD’s most recent upgrade, Solimar, had successfully driven new user acquisition and retention. The promising platform is forecast by TTD to ultimately generate half of all displayed impressions.
The financial data aggregator TipRanks currently puts Martin 221 out of more than 7,000 other analysts. Their impressive ranking is reflected in their 57% success rate and their average return of 23.6% per review.