Wall Street’s top analysts are betting on buy-rated stocks like DraftKings and Etsy right nowOctober 11, 2020
Boosted by fresh stimulus hopes, the markets have rallied this week. But the overall picture remains one of volatility and uncertainty. As yet no stimulus deal has actually been agreed, and with so many different factors at play (with the coronavirus vaccines, and upcoming elections) it’s not easy to pinpoint stocks poised to outperform.
One way to find the most compelling investing opportunities is to follow the latest stock recommendations from analysts with a proven track record of success. TipRanks analyst forecasting service attempts to pinpoint Wall Street’s best-performing analysts. These are the analysts with the highest success rate and average return measured on a one-year basis — factoring in the number of ratings made by each analyst.
What’s more all six stocks covered below don’t just have the support of one top analyst. These stocks all score a ‘Strong Buy’ Street consensus on TipRanks, based on all the top analyst ratings published over the last three months.
Here are the best-performing analysts’ six favorite stocks right now:
Five-star Needham analyst Brad Erickson has just initiated coverage of sports betting giant DraftKings. He kicked off his coverage with a buy rating and $70 price target.
“We view DKNG as one of the leading beneficiaries as online sports betting and gambling take off in the U.S. – an opportunity we size between $42 and $58 billion annually longer-term” the analyst stated on September 30.
Looking forward, he expects the regulatory tailwind to persist and believes online providers’ access to data creates a structurally better user experience vs. brick & mortar.
“Thanks to DKNG’s data-centric approach to customer acquisition and its leading brand & marketing approach, we believe the company could regularly exceed top-line forecasts, although near-term, we suspect EBITDA expectations could be too aggressive” he wrote.
And although some bears may call DKNG over-priced, the analyst says that this is not the time to get hung up on valuations. The key is to look at the bigger picture. In this case, Erickson believes the most important points are DKNG’s runway for growth, strong market share in early states and leading platform technology.
With a 25.5% average return per rating, Erickson is ranked at #280 out of all the analysts tracked by TipRanks.
Walmart has just received the thumbs up from best-performing Cowen & Co analyst Oliver Chen. He reiterated his buy rating on the big-box retailer on October 7 with a stock price forecast of $155.
The analyst is excited about the recent “actions taken by management to create a one-stop-shop for health care services.”
In particular, Walmart recently announced that it is launching Walmart Insurance Services, to assist people with enrolling in insurance plans- including Medicare in time for this year’s Annual Enrollment Period (AEP).
According to Walmart, “Helping customers select the right Medicare insurance plan to meet their needs aligns with Walmart’s mission of helping people save money and live better.” It also boasts its ‘Walmart Health’ centers that deliver everything from primary care to dental, optical and hearing services all under one roof.
For Chen, further personalizing the Walmart experience by merging retail with health i.e. for dietary restrictions or diabetes, should pay off with increased brand loyalty and sales.
“We acknowledge scaling Walmart Insurance Services and other various health care initiatives will take time, but once scaled we anticipate management will look to integrate some into its recently launched Walmart+ membership program,” the analyst argues. “We believe these health care services would distinguish Walmart from competitors.”
Online crafts marketplace Etsy scores a unanimously bullish sentiment from top analysts right now. And one best-performing analyst who has just reiterated his Etsy buy rating is Oppenheimer’s Jason Helfstein.
On October 7, he boosted his stock price forecast from $150 to $160. Helfstein cites encouraging third-party traffic data as a sign that management is successfully executing on its strategy of educating buyers to Etsy’s broad product selection and driving better repeat behavior.
“In our view, the sustained level of engagement following Covid-19-induced tailwinds (from mask and home goods) shows a significant inflection in buyers more closely associating Etsy with everyday items” Helfstein told investors.
For instance, SimilarWeb reveals that 3Q global desktop and mobile web traffic accelerated to 62% year-over-year vs. 2Q’s 42% on approximate comps. Additionally, Google Search Trends point to sustained traffic strength gains in key international geographies, says the analyst.
Given his belief of strong correlation between traffic and conversion, Helfstein now forecasts 3Q gross merchandise sales +108% y/y (top-end of guidance) vs. the Street’s +87% y/y (and his previous +93% estimate).
Out of 6,976 tracked analysts, Helfstein is ranked #8 with an impressive 32% average return per rating.
Immunovant is a promising clinical-stage biopharma. It is developing IMVT-1401, a novel anti-FcRn monoclonal antibody, as an injection for the treatment of autoimmune diseases. On October 7, top-rated Stifel Nicolaus analyst Derek Archila initiated coverage on IMVT with a buy rating and $46 price target.
“We continue with our positive view on the anti-FcRn class as a whole and there are many parallels to the anti-TNF class which generates ~$30 billion in annual revenues” noted Archila.
“IMVT has been aggressive in generating proof-of-concept in its first three indications and with the class de-risked and validated through multiple transactions (i.e. Syntimmune, MNTA) – we remain convinced this will be a major class in immunology” he continued.
These three initial indications are: myasthenia gravis (MG), thyroid eye disease (TED), and warm autoimmune hemolytic anemia (WAIHA).
However, Archila believes that the “pipeline in a product” story for IMVT-1401 is just getting started. Given IMVT-1401’s broad potential across similar IgG mediated autoimmune disorders, the company plans to announce three new indications it looks to pursue over the next 12 months, says Archila.
Net-net, the analyst sees positive long-term potential for the shares, with label expansion the key value driver going forward.
Bank of America’s Justin Post has just reiterated his bullish take on exercise equipment maker Peloton, one of the largest global interactive fitness platforms with over 3.1 million members. He has a buy rating on the stock with a stock price forecast of $116.
“We are encouraged with site visits in September and see a robust product pipeline ahead” applauded the analyst. Specifically, September visits to the Peloton site (+197% y/y), accelerated vs August at 129%. And with a correlation between website visits and gross subscriber adds, this suggests September additions remained strong post Peloton’s 9/10 earnings call.
Meanwhile bike delivery delays have continued since March and are now at 4-8 weeks, below the year-to-date peak at 7-11 weeks, but still extended. According to Post, data suggests that order backlog should help support a strong F2Q’21. Plus a new factory coming online in December is set to double capacity and enable the new treadmill production ramp.
“We reaffirm our Buy and include Peloton in our “in-home” stock group that should benefit from a longer-term change in consumer habits” concluded Post on October 5. He is ranked #30 out of 6,976 tracked analysts, with a strong 25% average return per rating.
Cloud stock Twilio has just held its first analyst day in nearly three years. And word on the Street is that the event exceeded expectations. Indeed, Twilio guided investors to a stellar 30%+ revenue growth over the next four years.
“A 4-year, 30%+ growth outlook cements TWLO as a member of our high growth comp group for nearly another half decade minimally” cheered five-star RBC Capital analyst Alex Zukin after the event. On October 2, he reiterated his buy rating while ramping up the price forecast all the way from $320 to $375.
He believes that there are three key underlying trends supporting this robust growth outlook: 1) an expansive market opportunity, 2) an accelerating core messaging business, and 3) a nascent enterprise sales motion.
In short “Twilio is the clear market leader in one of the largest markets in enterprise software yet, yet it trades at a discount to both high and hyper growth peers” sums up Zukin. He estimates Twilio’s current addressable market at $87B- so with estimated $1.6B revenue for 2020, Twilio is still only 2% penetrated today.
Thanks to his strong stock picking skills, the RBC analyst is one of the Top 10 analysts tracked by TipRanks out of over 6,900 analysts.