Prime Wall Road analysts again shares like Lyft and Sq. amid vaccine hopes
Air travelers walk toward a Lyft pickup area at Los Angeles International Airport (LAX) on August 20, 2020 in Los Angeles, California.
Mario Tama | Getty Images
The Democrats have gained control of the White House, and Wall Street appears to be on board. Although President-elect Biden will have to grapple with the ongoing coronavirus pandemic and the economic fallout, stocks have rallied in the days following the election.
On the back of fading uncertainty, the S&P 500 notched its best post-election week performance in at least four decades. On top of this, impressive data from a Phase 3 trial evaluating Pfizer’s experimental coronavirus vaccine has boosted the markets.
“The much-awaited results from Pfizer that its COVID-19 vaccine has an efficacy rate greater than 90 percent is a positive event that will allow society to gradually normalize during 2021,” Goldman Sachs analysts wrote in a note to clients.
Still, a vaccine has yet to be approved, and with many questions related to the pandemic continuing to linger, navigating the current economic climate isn’t easy.
Following the latest stock recommendations from analysts with a proven track record of success is one way to find compelling investment opportunities. TipRanks analyst forecasting service tracks analyst ratings to determine the Street’s best-performing analysts, or the analysts with the highest success rate and average return per rating.
Here are the best-performing analysts’ five favorite stocks right now:
Five-star analyst Mayank Tandon, of Needham, lifted his price target for Square on November 6, with the figure increasing from $190 to $230 (25% upside potential), following its strong Q3 earnings release. Along with the price target update, the analyst reiterated a Buy rating.
In the quarter, Square saw net revenue of $3.03 billion, reflecting a 140% year-over-year jump and surpassing the Street’s $2.04 billion call. This result was driven by an influx of low margin bitcoin revenue. Gross profit for the Cash App segment soared 212% year-over-year, and adjusted EPS of $0.34 easily beat the $0.16 consensus estimate. Additionally, GPV increased 12% year-over-year to reach $31.7 billion, coming in $1.7 billion above analysts’ forecast.
Looking ahead, the payments company is still declining to provide guidance due to continued pandemic-related uncertainty. That said, Tandon remains “positive on the shares for aggressive growth investors looking for exposure to the positive trends driving growth in digital payments.” Square did however state that it expects Cash App gross profit growth to moderate but still surpass 160% year-over-year in October, given that the stimulus impact has dissipated.
“We remain positive on SQ given the impressive growth within Cash App and improving trends in the Seller ecosystem. While the NT investments will weigh on profitability, we believe they will help SQ continue to gain share in both the consumer and business payments end-markets, both of which provide a long growth runway for SQ,” Tandon opined.
Based on his 68% success rate and 21.5% average return per rating, Tandon scores the #70 spot on TipRanks’ list of best-performing analysts.
Helca Mining, which is a silver and other precious metals mining company based in Coeur d’Alene, Idaho, has earned a thumbs up from H.C. Wainwright’s Heiko Ihle. The five-star analyst reiterated a Buy rating, with the price target standing at $7, on November 10. This target puts the upside potential at 39%.
Ihle points to the company’s third quarter results as a key component of his bullish thesis. Revenue came in at $199.7 million and net income attributable to shareholders clocked in at $13.5 million, or $0.03 per share, versus revenue of $161.5 million and a net loss attributable to shareholders of $19.7 million, or ($0.04) per share, in the prior-year quarter.
The strong showing came thanks to a 41% year-over-year increase in silver ounces (oz) sold, as well as 39% growth in the average realized silver price, with the figures landing at 3.1Moz and $25.32/oz, respectively.
“The meaningfully better earnings were a result of the higher revenue figure as cost of sales remained mostly flat,” Ihle commented. This performance prompted the company to bump up its consolidated FY20 silver production guidance to 12.8-13.4Moz, compared to the previous guidance of 12.4 – 13.0Moz.
Reflecting another positive, Ihle points out that “liquidity remains strong” even after HL repaid its revolver. In Q1 2020, the company drew down $210 million from its credit facility in response to the coronavirus pandemic. On top of this, it declared a quarterly cash dividend of $0.00875 per common share, an increase of 250% year-over-year.
When it comes to Lucky Friday, its mine located in Idaho, management believes it will reach full capacity in Q4 2020 and expects to see production of over 3Moz of silver for FY21. “We note that Hecla believes Lucky Friday can produce about 5Moz annually in three to five years without significant capital outlays. The company is also analyzing other mining methods to improve safety and increase production from the site,” Ihle said.
The H.C. Wainwright analyst is among the top 150 analysts tracked by TipRanks.
After a rough second quarter, Boingo Wireless has managed to drive a turnaround in Q3. Delivering substantial improvements, revenue increased by 0.1% sequentially to $58.8 million, beating Oppenheimer analyst Timothy Horan’s $57.9 million estimate. The five-star analyst cites a 100-basis point improvement in EBITDA margin as the driver of the solid result.
Additionally, cash EBITDA of $10.3 million beat Horan’s $9.1 million forecast on lower SG&A and network operation costs, with CAPEX accounting for 58% of revenue, compared to 50% in the previous quarter. According to the analyst, this result highlights “expectations of strong growth.”
“Revenue bottomed last quarter and EBITDA margins are improving. Multifamily saw an uptick in traffic usage, meaningful Wi-Fi offload, and higher ARPU. Positively, progress has been made for the MTA project and a carrier will go live in 4Q20. Revenues will ramp up into 2022 and could generate $20 million in revenue per year,” Horan noted.
Some investors have expressed concern as lower foot traffic levels related to the pandemic continue to impact Boingo’s Retail/Advertising segment. However, Horan points out that connects improved from 13.8 million to 28.3 million, with DAS nodes in backlog accelerating by 500 and higher CAPX reimbursements “pointing to strong network demand.”
The analyst added, “Although there wasn’t an update on a strategic transaction, we believe a deal will happen. There is much more business visibility with COVID headwinds subsiding, there has been an uptick in transaction activity in the industry on low-cost debt, and WIFI has unique infrastructure assets.”
All of the above led Horan to boost his FY21 revenue and cash EBITDA projections by 420 basis points, with the analyst also anticipating that “DAS revenue growth will improve as Boingo books venues and the MTA projects ramp.”
To this end, Horan, who is #83 on TipRanks’ ranking thanks to his 71% success rate, maintained a Buy rating and $15 price target (17% upside potential) on November 9.
Oppenheimer’s Ittai Kidron is standing squarely with the bulls on New Relic despite the SaaS software company’s mixed fiscal Q2 2021. On November 6, the five-star analyst kept a Buy rating and $75 price target on stock, suggesting 34% upside potential.
During the quarter, ARR was flat on a quarter-over-quarter basis, with fiscal Q3 revenue guidance indicating declines. Dollar-based net expansion declined to its lowest-ever point of 98%, versus 100% quarter-over-quarter and 112% year-over-year. In addition, gross margin and operating margin contracted by 673 basis points and 784 basis points, respectively, quarter over-quarter.
Kidron adds that there is a high execution bar as the product and pricing model is changing and the macro and competitive environment is tough.
Expounding on this, the analyst stated, “The company’s seeing the early negative effects of the transition to its new product/pricing model, which is further complicated by the challenging macro backdrop and tough competition. We expect the environment to remain challenging and caution investors of more mixed results ahead.”
Having said that, Kidron remains optimistic. Conversion to New Relic One is progressing, with the company seeing “initial positive signs validating the potential of the new pricing strategy.” There was also large account growth, as roughly 77% of ARR came from over $100,000 accounts. “We continue to see strategic/business value in New Relic’s product (TDP, FSO, AI) and pricing (per user for Observability/data ingestion for Telemetry) changes, but caution that it will take 3-4 quarters to fully work through customer renewals,” he mentioned.
All in all, Kidron argues “with the stock trading at the low end of its range (~4.5x EV/sales), the risk/reward scenario looks positively aligned.”
With a 73% success rate and a 36.7% average return per rating, Kidron is among TipRanks’ Top 15 best-performing analysts.
RBC Capital analyst Mark Mahaney sees a recovery for Lyft. To this end, he maintained a bullish call on the ride sharing company on November 10, but trimmed the price target from $48 to $46. This new target still leaves room for 26% upside potential.
Unsurprised by the company’s Q3 performance, Mahaney points out that revenue of $500 million was affected by the U.S. mobility restriction. That said, trends picked up modestly during Q3, with Rides down 54% year-over-year in July, 53% in August and 48% in September, with October down 47%. To compare, Rides were down 75% year-over-year in April. Additionally, EBITDA came in at a loss of $240 million, besting the company’s guidance of -$265 million.
The bottom line? Mahaney argues fundamental trends are improving, with Lyft “aggressively managing expenses.” On top of this, Prop 22’s passage has “removed a major expense wildcard,” in the analyst’s opinion, as gig employees will continue to be classified as contractors in California.
“Long term, we continue to appreciate a very large Ridesharing market opportunity that is still early in its S-Curve adoption, and we continue to recognize a lot of material innovation around both the rider and driver experiences. Given a recovery in U.S. mobility, we continue to like LYFT as a pure play on the U.S. ridesharing industry, especially at < 3X EV/Sales," Mahaney wrote.
Thanks to his 68% success rate and 31.9% average return per rating, Mahaney is ranked #45 out of 7,079 analysts tracked by TipRanks.