High Wall Avenue analysts will help shares like DraftKings and Peloton when 2021 kicks off
Pedestrians walk past a T-Mobile store in New York.
Scott Mlyn | CNBC
According to some Wall Street experts, there is still a lot of fuel in the tank even after the stock market closed the year at record highs. Goldman Sachs strategists predict that the S&P 500 will round off at 4,300 in 2021, which would mean an upward movement of 14%. However, this depends on higher corporate profits and persistently low interest rates. Risks to this forecast include Senate outflows in Georgia, a surge in interest rates and inflation, and a less successful than expected vaccine rollout.
Others aren’t quite as optimistic, however, as BofA Securities’ Savita Subramanian puts her 2021 S&P 500 target at 3,800 points, or a 1.2% gain, noting that the index has already built in some of this year’s growth.
“There will be another disruption in the development of the markets and the economy in 2021. We believe the economy is recovering aggressively and corporate earnings are aggressively recovering, but market returns are less robust given the many gains from the next Year have been drawn into this year, “commented Subramanian.
With that in mind, it can be difficult to find compelling games. One strategy, however, is to track the activities of professionals with proven stock selection skills. TipRanks’ analyst forecasting service identifies the best performing analysts on Wall Street. These are the analysts with the highest success rate and average return per rating.
Here are the top performing analysts stock picks:
Home fitness company Peloton just announced that it will acquire fitness equipment and device company Precor for $ 420 million in cash. The contract is expected to be concluded in early 2021. For Justin Post of BofA Securities, the move only confirms his optimistic thesis, with the analyst maintaining a buy rating. Along with the call, he kept the price target at $ 150.
According to Post, the acquisition is expected to add 625,000 square feet of manufacturing capacity in the United States to Peloton, complementing existing capacity in Taiwan. “That capacity is likely to be underutilized today due to the pandemic and is expected to go online for Peloton products during the next vacation,” he commented.
Further elaborating his take on the business, Post stated, “We believe Precor may have been looking for a buyer in 2020 who has put financial pressure on the gym and other customers, which is an opportunity for Peloton. We’re seeing the equipment from Precor as being relatively high quality, and a good opportunity for Peloton to both build manufacturing capacity in the US for Holiday 2021 and help it enter new commercial markets. “
It should be noted that Post does not believe the purchase will be a solution to short-term delivery bottlenecks, but it could help limit future shipping risks.
The final result? PTON improved its position in the market in 2020 and is on track to reach 25 million subscribers according to Post.
TipRanks shows that Post ranks 31st, supported by a success rate of 76% and an average return of 33% per review.
For Raymond James analyst Aaron Kessler, purchase-intent marketing company TechTarget remains a top choice after announcing the acquisition of BrightTALK, a webinar and virtual event marketing platform in the enterprise IT marketplace. In a bullish signal, the five-star analyst raised the price target from USD 48 to USD 68 and repeated a buy rating.
In 2020, BrightTalk is projected to have $ 50 million in revenue, with more than half of that coming from long-term contracts. Additionally, adjusted EBITDA for 2020 is estimated to be over $ 10 million.
“We believe the acquisition will be highly complementary given BrightTALK’s proprietary first-time purchase intent data, the addition of virtual events capabilities to the TTGT platform, cross-sell opportunities and increased long-term subscription income from TTGT,” said Kessler.
Online events are likely to stay here in Kessler’s opinion, and while the company used to have an events segment, it hasn’t launched a virtual event platform. “Adding video / webinar content to TechTarget websites should also help attract more users and better position TTGT’s ~ 140 websites in the future,” said the analyst.
All of this puts TechTarget on the right track to get higher sales / EBITDA in the fourth quarter. Kessler is now asking for $ 43.4 million versus $ 42.6 million. His projections for 2021 were also boosted.
With a success rate of 74% and an average return of 25.7% per rating, Kessler ranks 41st on TipRanks’ list of the top performing analysts.
Online sports betting company DraftKings has been named the top pick for 2021 by Rosenblatt Securities analyst Bernie McTernan. The five-star analyst recently repeated a buy rating and a price target of USD 65.
Amid the ongoing public health crisis, government budgets are deteriorating and, as a result, new states are considering passing laws to allow OSB and iGaming.
“We continue to find DKNG’s equity attractive as a pure game and a top 2 player in the emerging online sports betting (OSB) and iGaming markets. In the short term, we are focusing on entering new states like MI and VA,” said McTernan .
Most important to the company, however, according to McTernan, will be “the outlook for new legislation”.
“As states assess the impact of COVID-19 on their budgets, we continue to believe that this will force states to consider OSB and iGaming legislation. This scenario appears to potentially turn out to be a state deficit in NY US $ 15 billion and proving to be a question mark of whether and how much federal aid the state will get has apparently led opponents of the bill like Governor Cuomo to be of possible support, “McTernan said.
According to TipRanks, McTernan has a 78% success rate and an average return of 36.9% per review.
Brian Peterson, an analyst at Raymond James, just gave RingCentral a thumbs up, and the analyst raised the target price from $ 355 to the street high of $ 450. In addition, he repeated a buy recommendation for the name of the software.
Stocks are up more than 50% since Nov. 2, and Peterson notes that he’s “encouraged to see stocks wipe out the recent tale of competition concerns.” That being said, he believes the road “still does not fully capture the extent of medium and long-term growth opportunities.”
With the RNG base nearing 3 million users, Peterson believes the monetization of 210 million users through preferred migration partners should increase in 2021 and 2022, with pipeline build improving through 2021 as well.
All of this prompted Peterson to comment: “While RingCentral has taken significant steps to expand its product portfolio over the past several years, we believe the reach of these channel partnerships is a more substantial dig than investors will appreciate. We believe that RNG will be re-evaluated to a SaaS rating with Elite Growth over the next few years. “
These efforts include the Glip product offering, which offers messaging, video and telephone (MVP) functions as well as a stand-alone conference and collaboration application.
Although the pandemic caused some churn in the SMB segment, management stated that total subscription income is expected to be relatively constant. “With headwinds expected to ease in 2021, revenue growth is improving. There is also a significant opportunity here to expand the existing MME base, which has only invaded the workforce by 15-20%,” said Peterson.
Peterson is among the top 20 analysts with a success rate of 78% and an average return of 36.6% per rating.
In a recent announcement outlining the company’s top picks for 2021, Oppenheim analyst Timothy Horan tells clients that he is optimistic about T-Mobile’s growth prospects for the coming year. The analyst has upgraded the rating from Hold to Buy. He also set a price target of $ 160.
Horan had previously downgraded the share in August 2019 because “there is a risk of increasing churn due to network and customer migrations”. The analyst is now singing a different tune as the company’s performance has exceeded expectations, with very little response from competitors trying to maximize free cash flow.
In addition, Horan’s original view was that the Sprint merger would be challenging in terms of integration and lead to an increase in churn. However, he notes that the “execution was seamless”. The company has already generated $ 1.2 billion in synergies in 2020. The analyst estimates that this number will double in the next year.
It should be noted that T-Mobile owns 50% of the sub-6 GHz spectrum but controls only 30% of the cellular market. According to Horan, this should be balanced out with the C-band auction, but this “will take several years and this spectrum is inferior to its 2.5 GHz”.
“TMUS is building the only true 5G network on 80 MHz of this spectrum, offering a market advantage of around two years due to a 10x speed improvement. We believe TMUS is trading at an attractive valuation compared to comparable companies,” added Horan added.
Horan ranks 108th in the TipRanks ranking and has a success rate of 72% and an average return of 19.9% per review.