Prime Wall Road analysts help these shares because the earnings season begins
Intel logo exhibited during Mobile World Congress on February 28, 2019 in Barcelona, Spain.
Joan Cros | NurPhoto | Getty Images
The earnings season is here and Wall Street analysts are calling for another drop amid the pandemic.
However, some pros are more optimistic about the fourth quarter earnings season. Ignacio Cantos, Investment Director at ATL Capital in Madrid, notes that "the next catalyst will be the upcoming profit season".
With this in mind, Wall Street experts argue that there are exciting pieces to be made. But how are investors supposed to spot the most compelling opportunities? By reaching out to the analysts who are consistently getting it right. The TipRanks Analyst Forecasting Service seeks to identify the top performing analysts on the street or the analysts with the highest success rate and average return per valuation.
Here are the five most popular stocks of analysts right now:
The biotech name BioMarin has just released better-than-expected Phase 3 results for Roctavian (Valrox), the company's gene therapy for the treatment of hemophilia A. In response to this "significant risk reduction event for the asset (and the company)" "JP Morgan analyst Cory Kasimov reiterated a buy rating and a price target of $ 131 on January 10th.
In particular, the candidate met the primary endpoint of a reduction in the mean annualized bleeding rate (ABR) and all secondary endpoints after one year. The mean ABR was reduced by 84% compared to the standard of care.
According to Kasimov, the ABR result isn't that surprising. However, he notes that the FVIII values have been "reviewed" based on the variability between the Phase 1/2 publications and the interim Phase 3 results. "In this regard, Roctavian showed a mean FVIII of 42.9 in the modified ITT population, which we think is clearly better than prevailing assumptions (based on our interviews at least)," noted the analyst.
Kasimov goes on to argue that the result supports "the validity of Roctavian," although he will wait to see whether or not the FDA will ask for the EU-required annual data.
"In both cases, however, we believe that these results significantly reduce the risk of the asset and increase the overall strategic value of the company. We underline BioMarin's attractive valuation (which is slightly above the underlying business) and we expect the pipeline to be a significant one 2021 will contribute to share performance, "said Kasimov.
Currently, the top healthcare analyst has a 57% success rate and an average return of 21.9% per rating.
The media platform Avid Technology just got a thumbs up from Jack Vander Aarde from Maxim Group. The analyst recently confirmed a buy rating for the stock on January 8th. In another bullish signal, the five-star analyst raised the price target from $ 14 to $ 14 23.
Earlier this month, the company announced a new debt refinance consisting of a $ 180 million loan and an unfunded revolving credit facility of $ 70 million due January 5, 2026. Vander Aarde points out that this move will lower AVID's annual interest costs by roughly $ 10 million and add an additional $ 0.20 to non-GAAP EPS in 2021.
In addition, management says 60% of the $ 30 million cost savings initiatives launched in 2020 will continue into 2021 and beyond.
"While we are cautious about one-time product sales in 2021, we continue to expect robust revenue growth in the service segment as early-stage subscription revenues continue to accelerate (up 74% year over year in Q3 20) very confident that management can implement the margin expansion and free cash flow generation despite the short-term revenue pressures from COVID-19 on some of AVID's core industries (live events, music festivals / concerts) that we expect to see by 2H21 gradually recover, "explained Vander Aarde.
Additionally, AVID stock trades at 13.3 times and 10.2 times Vander Aarde's increased non-GAAP EPS estimates for 2021 and 2022, respectively, which is a discount to peers at 20 times and 18x consensus EPS estimates for 2021 and 2022.
"Other reasons for our optimistic view of AVID are ours, which indicate that AVID has a strong competitive position in this secular growth market and remains the de facto standard for video and audio editing in Hollywood. Other factors driving our optimistic view are a highly skilled management team. An increasing mix of high-margin recurring sales (now over 70% of total sales), world-class product portfolio and recent product launches focused on enterprise SaaS subscription offerings, "added Vander Aarde.
With a success rate of 75% and an average return of 79% per rating, Vander Aarde ranks 111th on TipRanks' list of top performing analysts.
As a player in the semiconductor sector, II-VI develops technical materials, optoelectronic components and optical systems.
For BofA Securities analyst Vivek Arya, II-VI is his top SMid cap choice because "its leading position in the optical market is well supported by 5G / Cloud, complemented by a strong silicon carbide (SiC) portfolio That will expand rapidly with the proliferation of electric vehicles and 5G base stations. "To that end, the five-star analyst maintains a buy rating and a target price of $ 100 on the stock.
In particular, Arya underscores the fact that thanks to its larger size from the Finisar acquisition, the company was able to improve its product portfolio within its communications business and strengthen its manufacturing base inside and outside of China in order to adequately serve customers worldwide despite the uncertainty involved serve trade tensions and COVID-19. "
In addition, II-VI has scaled the 3D sensor operations to support the entire current market. Arya believes this could help gain even more market share. All of this prompted the analyst to comment: "II-VI remains in position to achieve double-digit sales / EPS-CAGR (up to CY22)."
Speaking to the SiC Opportunity, Arya admits that this business is still in its infancy, but argues that ongoing 5G rollouts could bring the company's TAM to $ 30 billion in about 10 years.
"While the market has historically been supplied with SiC-based substrates, recent acquisitions (Ascatron, INNOViON) and partnerships (GE) II-VI allow us to build a vertically integrated portfolio that can manufacture SiC modules and devices SiC makes a modest mid-range technology today offers single-digit percentage of sales and can enable long-term outperformance between sales and margin, "stated Arya.
Based on its success rate of 69% and an average return of 26.7% per rating, Arya is among the top 125 analysts tracked by TipRanks.
Ultra Clean Holdings
Quinn Bolton, Wall Street's top analyst, sees Ultra Clean Holdings as a compelling game. The analyst maintains a buy rating and a price target of $ 43 on Jan. 13.
The company just announced that NG's fourth quarter 2020 revenue and earnings per share are expected to be above the midpoint of the original guidance range. Additionally, UCTT found that Q1 2021 revenue is expected to be between $ 370 million and $ 400 million. This is 3-11% above the midpoint of the fourth quarter 2020 revenue forecast and is "strong sequential growth" in Bolton's view.
Additionally, management anticipates that the WFE (Wafer Fab Equipment) mix will shift from NAND to DRAM and Foundry / Logic, with some moderation of NAND possibly later in 2021.
"UCTT is currently seeing strong demand through the year and is seeing no H / H changes at this point thanks to good visibility. The company sees that NAND investment continues to focus on node conversions and believes that NAND – Actors are cautious about when to invest in volume, which could keep the industry in a healthy position, "said Bolton.
In addition, Bolton is optimistic about the $ 348 million acquisition of Ham-Let, arguing that it will "help UCTT diversify some revenue into non-half markets but also within half markets."
In summary, Bolton said, "With the growing global WFE and the consolidation of the semiconductor manufacturing sector, there is an urgent need for Original Equipment Manufacturers (OEMs) to consolidate the supply chain of fragmented subsystems to better meet the cyclical growth demand of WFE. Ultra Clean provides turnkey OEMs Solutions and operational excellence and should see an increasing proportion of content in WFE as the WFE increases. "
The number 1 analyst more than deserves its ranking due to its 80% success rate and average 45.6% return per rating.
Intel has just announced a management reorganization in which former Intel CTO and VMware CEO Pat Gelsinger will succeed Bob Swan as CEO effective February 15th. In response to this development, the J.P. Morgan, Harlan Sur, a buy rating on Jan. 13 and a price target of $ 70.
"We see the change in management in light of Mr. Gelsinger's track record at VMware, EMC and also given his significant role as Intel's first CTO and head of Intel's desktop and server CPU business (primarily responsible for the flagship Core and Xeon platforms We believe he is highly valued by the investment community and has the right background to lead the company through what is arguably one of the most challenging times in the company's existence, "said Sur.
In addition, INTC announced that fourth quarter 2020 revenue and earnings per share will exceed previous projections due to earlier "strong advances" in 7nm process technology. Sur expects the company to employ a hybrid strategy for manufacturing outsourcing / outsourcing.
Sur said the company is likely to have seen an upward trend in the client compute segment, with the data center business also potentially posting a profit.
Going forward, we expect better than seasonal demand for PCs and cloud data center investments, which will have a positive impact in 1H21. This is a good sign for Intel. We also note that Intel announced during CES that Ice Lake (10nm) is in production. We believe Intel has a strong roadmap for future products. Assuming they can execute on their roadmap without further delay, we believe the company will contain its share loss " commented Sur.
Proof of its impressive stock-picking skills, Sur has a 69% success rate and an average return of 21.7% per rating.