Top Wall Street analysts believe these stocks have more headroom
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With fears of inflation mounting, investors are looking for strategies to identify compelling opportunities.
One such strategy is to look for stocks that seem underrated by the street and have plenty of room to run. The following names meet the requirements and are backed by analysts with an impressive track record. TipRanks’ Analyst Forecasting Service seeks to identify the top performing analysts on Wall Street. These are the analysts with the highest success rate and average return per review, taking into account the number of reviews published by each analyst.
Here are the analysts’ best stock picks right now:
When Carvana shares fell in after-hours trading after the gains were released, Wells Fargo analyst Zachary Fadem was surprised to find “we are scratching our heads”. The online used car dealer, which is down 24% in the past three months, saw better-than-expected retail unit growth, beating its GPU estimate by 6%. It also posted a 50% lower EBITDA loss than previously expected.
For this reason, Fadem repeated a buy recommendation. Additionally, it left the target price unchanged at $ 340, suggesting upside potential of 50%.
Fadem commented, “CVNA continues to fire on all cylinders as the average weekly units increased + 1,600 / week (up from + 600-700 in the third / fourth quarter), suggesting that throughput bottlenecks are decreasing, demand continues to rise and underlying business productivity is also being tracked better than expected. “
Looking ahead, the company is on track to accelerate sales and unit growth. In addition, CVNA expects revenue growth to outpace retail unit growth in the second quarter.
What’s behind the recent withdrawal? Fadem points to a rising interest rate environment, the shift in value from growth and a higher valuation.
Even so, the analyst remains optimistic. He said: “However, from our point of view, it would be difficult to find a company this size that is growing in the triple digits. We see an attractive entry point for a long-term leader in a high-growth, attractive category with significant upward revisions on tap.”
Fadem ranks in a top 30 position on TipRanks’ Top Performing Analysts list, boasting a great success rate of 78% and an average return of 31.2% per review.
With former CFO Ray Winborne passing the baton to new CFO Mark McCaffrey, GoDaddy reported a beat-and-raise quarter thanks to strong product execution across domain, retail and web pro initiatives.
Additionally, Deutsche Bank analyst Lloyd Walmsley says the fact that the first quarter 2021 customer cohort was similar in size to the Q2 2020 and Q3 2020 cohorts suggests that most of his key concerns have been addressed. To this end, the analyst repeated a buy rating and a price target of USD 89 (11% upside potential).
“One of our main problems in leaving the fourth quarter 2020 results for the web presence space was whether new subscriber cohorts would shrink. This does not appear to be the case with either subscribers or the dollar size of the cohort. CFO Ray Winborne has announced this meanwhile, given the differences around the world Demand in the US gives it a robust background for starting new businesses, “commented Walmsley.
Additionally, domain sales growth reached 19% year over year, and according to Walmsley, GoDaddy positioned those results as a function of innovation, particularly in the aftermarket space, which is now double-digit business versus its historic single-digit percentage. Digit. “
The analyst added, “We believe there is room for more innovation in the segment as the year progresses as more experimentation is expected here. Therefore, we believe the double-digit full year projections for the segment may prove conservative implies that the fourth quarter of 2021 would be negative, provided that they are able to effectively hold the 2-year stack in the second and third quarters. We believe that sales by market domains as gross sales and therefore as a lower margin and a little less booked in a predictable manner. “
It should also be noted that there is a new $ 770 million buyback authorization, but Walmsley does not believe the recent buyback activity implies a change in GDDY’s flexible capital allocation strategy.
Based on its 66% success rate and an average return of 29.3% per rating, Walmsley ranks 112th among over 7,000 analysts tracked by TipRanks.
Choose Medical Holdings
For RBC Capital analyst Frank Morgan, Select Medical Holdings is an outstanding provider of healthcare facilities and services. With this in mind, the analyst maintained a buy rating and increased the price target from $ 42 to $ 45. This means that the upside potential is 26%.
“SEM’s diversified post-acute platform appears very well positioned to continue to generate solid growth over the next few years,” wrote Morgan.
In particular, the analyst highlights the company’s brick and mortar business as one of its key strengths. In terms of the CIRHs, occupancy, volume and rate growth have all sustained strong, resulting in 19% revenue growth.
“The company continues to benefit from its proven high-precision patient care capabilities, leading to increased business in new and existing referral sources. As higher agency rates continue to put pressure on the SWB line, the segment resulted in solid margin improvement. Line Performance, and SEM didn’t have to set up bed holds, “Morgan told investors.
Additionally, according to management, hourly rates appear to be falling and the IRF segment has performed solidly with revenue growing 14% and margin widening 310 basis points.
While there are some concerns about how the fading of the Covid-19 pandemic will affect this business area, management does not expect any slowdown. Based on Medicare data, there are approximately 325,000 to 350,000 patients who are eligible for the services SEM’s facilities provide. However, there are only 69,000 discharges across the industry each year, which means that the overall addressable market penetration is relatively low at 20%.
“Additionally, SEM has demonstrated its ability to care for some of the most complex patients, so management expects the pungency (and prices) to remain high,” said Morgan.
SEM’s outpatient segment improved significantly in March and April. With “a strong start to the year with continued momentum in CIRHs and IRFs and improving trends in Concentra and Outpatient Rehabilitation,” Morgan believes that SEM’s adjusted EBITDA forecast “may still prove conservative.”
A success rate of 70% and an average return of 23.3% per review result in a 73rd place on the TipRanks list for Morgan.
After a strong first quarter for the online sports betting company, Northland Capital analyst Greg Gibas confirmed a buy rating. Additionally, the five-star analyst left its target price unchanged at $ 70, which means the stock could gain 66% from current levels.
In the first quarter of 2021, DraftKings posted revenue of $ 312.3 million, up 175% year over year and beating the consensus estimate of $ 237 million. In addition, the B2C segment generated revenue of $ 280.8 million, an increase of 217% over the previous year.
According to management, the impressive business-to-consumer result was due to a 114% increase in monthly unique payers (MUPs) to 1,542 due to “strong retention and acquisition of unique payers in DFS, OSB and iGaming” Segments. “
Gibas added, “Average Revenue Per Monthly Unique Payer (ARPMUP) increased from $ 41 a year ago to $ 61. This was driven by increased user engagement in iGaming and mobile sports betting product offerings, as well as successful cross- Selling efforts positively influenced. ”
Given the way DraftKings started the year, management raised its 2021 revenue forecast from $ 900 million – $ 1 billion to $ 1.05 billion – $ 1.15 billion. This would reflect an increase of 63% to 79% from 2020.
It should be noted that DKNG launched mobile sports betting and iGaming in Michigan, as well as mobile sports betting in Virginia, last quarter. Gibas also notes that by 2021, “25 state legislators have introduced laws to legalize mobile sports betting, have introduced five laws to expand the existing framework for sports betting, and have introduced legislation to legalize sports betting in retail”.
“We expect this legislative momentum to continue into the remainder of 2021 and beyond,” Gibas said.
Based on data from TipRanks, Gibas has achieved an average return of 49.4% per rating and a success rate of 59%.
TuSimple, which offers autonomous technologies specially developed for tractor units, just got a thumbs up from Oppenheimer’s Colin Rusch. Less than a month after going public on April 15, the top analyst initiated coverage of the stock with a buy rating and a price target of $ 55 (52% upside potential).
“While TuSimple (TSP) is still a company in the development phase, we see TuSimple (TSP) as the world’s leading provider of autonomous trucks that use integrated hardware, motion planning and control algorithms and infrastructure to address important weaknesses in the transport and logistics sector ( T & L), “said Rusch.
According to Rusch, this vertical integration is “unique and decisive for the success of the platform”. In addition, TuSimple has more than 3.7 million miles of on-road tests and 6,775 customer reservations.
Additionally, the company is working on solving work problems as Rusch points out that the driver shortage is a significant challenge to the industry, and in part has caused driver wage inflation to rise faster than any other dollar per mile.
“We expect TuSimple’s subscription price to be a 10% to 15% discount on traditional freight carriers’ dollar-per-mile price, while removing one of the industry’s major bottlenecks,” the analyst commented.
It should be noted that in the freight industry, “route density is a major driver of value / mile”, according to Rusch.
“Given the integration of terminals and route characterization that support TuSimple’s business, we believe that focusing on high volume corridors is critical to both adoption rates and profit leverage in its multi-faceted business model,” added the analyst added.
Rusch argues that it will also be important to pay attention to developments related to the introduction of its L4 trucks.
As one of the five analysts with the best performance on the road, Rusch has an average return of 60.5% per rating and a success rate of 61%.