Top Wall Street analysts say buy stocks like Tesla and Amazon
VMware at NYSE, December 14, 2021.
Stocks have had a rocky start to 2022, and further turbulence may be ahead for investors.
This is because the current macro environment has been one of the most volatile in recent memory. Inflation fears, labor shortages and the Federal Reserve’s decision to aggressively withdraw its bond purchases are just a few of the worries that are on the minds of investors.
TipRanks, a financial data aggregation website, provides investors with the tools they need to navigate the market. Top Wall Street analysts name their most optimistic ideas despite tough macro trends.
The shift to cloud-based solution platforms has coincided with the broader digital transformation accelerated by the pandemic. Software and information provider Verint Systems (VRNT) should be one of the beneficiaries.
In a recent report, Jefferies’ Samad Samana detailed his direction for the title, noting that “VRNT’s progress in modernizing and improving the technology stack and product portfolio remains underappreciated.” He highlighted the level of flexibility of Verint’s infrastructure, which “can be deployed across multiple cloud providers (AWS, Azure, Google Cloud), as well as private/hybrid data centers.”
Samana priced the stock long and provided a price target of $62.
Additionally, the analyst noted that the company is capable of serving both legacy and cloud-native customers, and that its cloud solutions software is easily adaptable to pre-existing customers. This kind of ingrained relationship should drive high levels of retention and deter churn. (See Verint Systems hedge fund activity)
Additionally, Verint allows its suppliers to aggregate data about their interactions with customers, including with “Agent Assist,” an AI productivity engine. Through investments and mergers and acquisitions, the company has strengthened its omnichannel capabilities, making it much more attractive to potential vendors.
On TipRanks, Samana is ranked #363 out of over 7,000 analysts. His stock picks were successful 57% of the time and returned him an average of 34.8% on each one.
Decelerating consumer spending and tough earnings comparisons hurt Amazon (AMZN) shares. However, now that supply constraints should ease and Amazon’s investments in logistics and fulfillment infrastructure should bear fruit, analysts are back on the train. (See Amazon’s risk factors on TipRanks)
JPMorgan’s Doug Anmuth was one of the latest to issue a bullish report, noting the reacceleration of e-commerce trends and a largely successful holiday shopping season. Additionally, Amazon Web Services (AWS) still rules the cloud computing market.
Anmuth priced the stock long and declared a price target of $4,350.
The analyst cut his estimates for Amazon slightly, but he thinks lower expectations “should help re-risk stocks and AMZN will become a cleaner story to own through 2022.” In particular, he predicts that the company’s e-commerce segment will benefit this year, due to the expansion of transportation and delivery facilities throughout the year.
Amazon has never been closer to so many of its customers.
The company, which is “well-positioned as a market leader in e-commerce and public cloud,” may also increase Prime membership prices and fulfillment fees. In turn, these moves will increase revenue. Amazon’s AWS growth is robust and considered “sustainable” by Anmuth.
Out of more than 7,000 analysts, Anmuth is ranked No. 155. It has rated stocks correctly 62% of the time, and its ratings have average returns of 32.4% on each.
Although Tesla (TSLA) is already considered the leading maker of electric vehicles, the company is now attacking market share from more established original equipment manufacturers. This means that over the next couple of years, it will be important to see where the company stacks up against traditional automakers — and less so against smaller EV companies, according to Jefferies’ Philippe Houchois.
The analyst is more concerned about Tesla’s future ability to succeed in this way. He believes that a ramp-up in production will be a main catalyst for the company. Indeed, with its new gigafactories in Austin and Berlin, the company is expected to add significant supply in February and April, respectively. (See Tesla stock charts on TipRanks)
Houchois rated Tesla as a buy and assigned a bullish price target of $1,400 per share.
The electric vehicle producer has seen its order book soar to considerable levels, leading Houchois to add that “filling this capacity is not a given” at this time. However, the long list of unfulfilled orders gives confidence in TSLA’s long-term demand and revenue.
Additionally, the analyst wrote that Tesla has a “possibly defined business model to generate cash faster than the ability to add products and capabilities.”
Houchois looks at Tesla’s quarterly results on January 26. The company can validate its strong earnings and provide upgrades for Cybertruck or for a more affordable sedan model.
The analyst ranks at No. 244 out of over 7,000 professional analysts. He maintains a 70% success rate and has returned an average of 41.9% on his picks.
Indicators could point to a breakout in shares of cloud computing company VMware (vmw). (See VMware revenue date and reports on TipRanks)
Monness’ Brian White detailed several reasons why the stock might be about to go up. He pointed to the company’s “unique cloud value proposition”, as well as its attractive valuation.
He upgraded the stock to buy from neutral and calculated a price target of $153.
White noted that VMware has “invested in organic innovations, made acquisitions, and entered into cloud partnerships.” He expects these strategic moves to lay the groundwork for his next step up in business performance.
Although the company was unable to capitalize on the digital transformation that has benefited so many other software companies, the analyst believes that VMW’s long-term prospects have been further strengthened by the general trend. . For now, he is confident in his commercial role.
VMware has found a niche where it is compatible with several established cloud players and has a flexible third-party position “presenting itself as the ‘Switzerland of the industry,'” the analyst said.
White currently holds a position of No. 111 out of more than 7,000 financial analysts. His stock picks were successful 74% of the time and earned him an average return of 37.1%.
Walmart (WMT) appears to have expanded its customer base since the start of the Covid-19 pandemic, and it may also have the ability to continue operating despite rising gas prices and inflation. (See Walmart website traffic on TipRanks)
Guggenheim’s Robert Drbul believes this to be true, writing that Walmart is well positioned to continue to benefit despite tough consumer spending environments. He was not worried about inflationary pressures, gasoline prices and other difficulties caused by lingering variants of Covid. However, he pointed to “overlapping stimulus benefits and expiring child tax credits” as possible negative catalysts.
Calling it one of his “best ideas”, Drbul priced the stock as a buy and provided a price target of $185.
He said as gas costs rise for shoppers, they can simply bundle their trips to Walmart stores into larger purchases or shop online. He sees Walmart’s physical footprint and online presence as a “winning combination.” When costs rise, shoppers can look to save even more by buying a wider variety of products from the retailer.
The analyst is confident in Walmart’s “robust business model”, which can “resist any downturns in consumer spending”. He believes in isolating the company from disruptive macroeconomic forces and trends, and he views the stock price as offering a favorable risk-reward balance.
Drbul is ranked by TipRanks 89th out of over 7,000 analysts. His success rate is 70% and his stock picks have earned him an average of 29.8% each.