Top Wall Street analysts see a rise in stocks like AMD and Tesla
Strauss Zelnick, CEO of Take Two Interactive.
Adam Jeffery | CNBC
The third quarter earnings season has been marked by many breathtaking paces – and some notable disappointments. Investors are now faced with a daunting question: Which companies will carry their success in the following quarters?
For example, Tesla has been leading the pack on the green tidal wave of electric vehicles, and has yet to retreat on its ramp-up. Additionally, video games have seen a massive rebound during the pandemic, but can developers like Take-Two Interactive continue to reap revenue? Another example, sport is back, but FuboTV is now betting on sports betting to accelerate its activity. Additionally, the company’s move towards cloud services has created significant demand for infrastructure and cloud services companies like Calix, but will the business remain relevant? Finally, the highly competitive semiconductor developer industry is a tight race, but it looks like Advanced Micro Devices is gearing up for a few well-designed quarters.
Some of Wall Street’s top-performing analysts recently released their bullish assumptions on these five names, according to TipRanks, which tracks top-performing stock pickers. Let’s see what they have to say.
The green tidal wave continues to befall investors, as You’re here (TSLA) once again progressed, this time closing a $ 4.2 billion deal with rental company Hertz (HTZZ) per 100,000 vehicles. The deal will certainly provide Tesla with a steady stream of revenue through the end of 2022, but the deal also marks the shift towards more widespread adoption of electric vehicles in the United States (see Tesla Hedge Fund Trading Activity on TipRanks)
In his report, Daniel Ives of Wedbush Securities explained that Tesla is “leading the charge” in the domestic electric vehicle industry, with several competing companies, such as General Motors and Ford, seeking new electrical innovations.
Ives reiterated his buy rating and his target price of $ 1,100 on the stock.
The five-star analyst noted that while demand had previously reached high levels in China and Europe, Tesla now has a multi-month backlog for its US sales of multiple models. Ives expects supply to increase immediately after the activation of the Austin and Berlin giga-factories, through which the company could produce 2 million vehicles per year.
Additionally, the global chip shortage has kept strain on Tesla’s supply chain, fueling extended wait times for vehicles.
Ives wrote that the Hertz order is the “biggest electric deal ever” and that it “points to where demand is heading in the transformation of electric vehicles that is hitting the automotive industry around the world.”
Out of more than 7,000 analysts on its website, TipRanks placed Ives at No. 20. His strong performance was successful 78% of the time and earned him an average of 37.8% per trade.
The past year and a half has been a good one for video game developers. Supported by government-imposed lockdowns, sales have exploded and valuations have climbed. One of these developers, Take-Two Interactive Software (OF THEM), has gone from its former focus on video game development to investing heavily in sales and marketing. Meanwhile, the company has a strong pipeline underway and has a strong ability to surprise investors.
Andrew Uerkwitz of Jefferies presented his hypothesis on the company, writing that he expected TTWO to release up to nine major non-sports game titles over the next three years, which would be a significant increase from its previous two titles per year. If the company can perform at this level, it would increase growth and fill a void left by GTA VI (Grand Theft Auto 6, the latest edition of a popular video game), which is not expected to release until 2026. (See Take-Two News Sentiment on TipRanks)
Uerkwitz priced the stock to buy and provided a price target of $ 231 per share.
Take-Two, which the analyst says has “the highest quality content among US publishers,” is trading at a “reasonable” valuation. While it’s impossible to accurately project how his new game titles might succeed, Uerkwitz does argue that the sheer number of games released, on their own, will be enough to generate gains in the short to medium term.
Uerkwitz categorically recommends buying the stock, noting that once the pipeline is in a clear perspective, a higher price target should be released.
Financial data aggregator TipRanks ranked Uerkwitz 111th out of more than 7,000 analysts. His pass rate is 65% and his grades have an average return of 27.9% each.
The streaming wars are raging, and FuboTV (FUBO) has made strides in expanding beyond TV entertainment. The live sports and streaming service has largely focused on its content list, but is now awaiting approval to start a sports betting business.
In addition, in order to increase the number of subscriptions, the company has entered into agreements with connected television equipment manufacturers. This had the positive by-product of lowering marketing costs. (See FuboTV website traffic on TipRanks)
Roth Capital Partners’ Darren Aftahi forecasts the stock to rise, pricing it a buy and giving it a price target of $ 45.
Aftahi explained that the earlier Fubo sports betting kicks off, the better, as the fourth quarter typically involves a seasonal increase in holiday ad spend. Hints began to appear regarding the launch, with FUBO announcing partnerships with NASCAR, as well as with teams from the NBA and NFL. A potential segment of sports betting and gaming has not yet made its way into Aftahi’s valuation projections and would only act as a bonus.
Once launched, it will be imperative for Fubo to demonstrate that it can capture audiences in an “extremely competitive online gaming market”. If it can be done, the addition could “act as a catalyst for positive incremental growth” driving subscriber numbers throughout fiscal 2022.
Ahead of the upcoming release of FuboTV’s results, Aftahi noted that average revenue per user could be affected as most of this quarter’s subscribers joined at the end of the period. This is in part due to the schedule for the football season, although he doesn’t expect this to weigh on Fubo’s average ad revenue per user, which is expected to improve quarter over quarter.
On TipRanks, Aftahi is ranked # 78 out of over 7,000 financial analysts in total. His grades were correct 53% of the time, and his stock picks averaged a 49.2% return.
From the start of the Covid-19 pandemic until now, cloud services have moved from being an innovation to being a commodity. Companies like Calix (CALX), which over the past year has seen its valuation nearly double, remain relevant to their telecom customers thanks to the “criticality of broadband services” highlighted, according to George Notter of Jefferies.
Undeterred by Calix’s impressive year-over-year performance, Notter remained bullish on the title and rated it a buy. He also provided a price target of $ 74.
Notter felt that Calix Cloud, which offers a suite of data analysis tools for marketing, customer support, and network operations, still has room to grow. Notter predicts long-term gains and the current level of penetration is just the beginning of this process. (See Calix risk factors on TipRanks)
The company recently reported encouraging third quarter results, although sales were held back by supply side constraints. These challenges also mitigated the benefits of increasing offerings in Calix Cloud. Notter noted, however, that the company is managing its component supply relatively well and is currently weathering the storm.
In his report, Notter wrote that the company’s CFO mentioned that Calix “will start the fourth quarter of 2021 in the strongest financial position in our history with strong bookings, [and] clear focus on customer and product. These comments were accompanied by remarks about the high sales revenues and the expansion of international business.
Notter maintains a No. 469 position out of over 7,000 professional financial analysts. He was successful 67% of the time and returned an average of 17.1% on his stock picks.
As other industries grappled with a global semiconductor shortage, Advanced Micro Devices (AMD) is benefiting from sustained and high demand. The computer processor designer recently reported impressive earnings, beating Wall Street consensus estimates for sales, earnings per share and gross margins. Beyond the third quarter, analysts take note of AMD’s bright future. (See AMD Stock Analysis on TipRanks)
One such analyst, Hans Mosesmann of Rosenblatt Securities, wrote that AMD’s “David vs. Goliath” story is just being taken seriously by investors. He added that the company was disrupting the existing semiconductor industry and its competitors, namely Intel (INTC), are fighting an uphill battle.
Mosesmann consolidated his bullish position on the stock by rating it long and increasing his price target to $ 180 from $ 150.
The analyst explained that AMD experiences high levels of momentum in all of its products. Meanwhile, its business is experiencing “higher than expected demand, market share gains and better than expected execution of supply constraints.” Describing the stock as one of the “top three buying choices,” Mosesmann indicated his long-term confidence in AMD.
In addition, it expects years of growth for AMD’s market share in data centers, communications infrastructure, and industrial and automotive applications.
Of more than 7,000 analysts, Mosesmann ranks 38th according to TipRanks. The site calculated its success rate at 73% and its average return per grade at 31%.