Salesforce signage outside its office building in New York.
Scott Mlyn | CNBC
Retail investors are grappling with the stock market’s volatility as economic data arrives and the Federal Reserve’s interest rate decision looms.
To avoid making knee-jerk decisions based on short-term market activity, investors may want to consider input from Wall Street analysts who have combed through the financial details of a number of companies and have insight into their long-term prospects.
With that in mind, here are three stocks that are preferred by Wall Street’s top pros, according to TipRanks, a platform that ranks analysts based on past performance.
The first pick of the week is cloud-based customer relationship management software provider Salesforce (CRM). The company recently reported above-average earnings and revenue in its fiscal third quarter. Despite macroeconomic headwinds, Salesforce delivered solid profit growth due to its productivity and cost-cutting measures.
Mizuho analyst Gregg Moskowitz highlighted that current remaining performance obligation, a leading indicator of revenue, rose 14% in the fiscal third quarter, well above management’s forecast of about 11% growth. This outperformance was driven by strong early renewal activity and a large deal.
The analyst also pointed to several other positives, including robust operating margin expansion, solid operating cash flow growth, stronger multi-cloud traction, and early success of the company’s artificial intelligence-related offerings.
Moskowitz raised his price target on Salesforce shares from $255 to $280 and reiterated his Buy rating. He said: “CRM remains well positioned to support its large customer base in revenue and process optimization through digital transformation.”
Interestingly, Moskowitz ranks 94th among more than 8,600 analysts tracked by TipRanks. Its ratings were profitable 62% of the time and delivered an average return of 16.3% each time. (See Salesforce technical analysis on TipRanks)
We move to the fintech company Block (square). Last month, the company impressed investors with a strong third-quarter performance, driven by impressive growth in both its Cash App and Square platforms. The company also raised its profit forecast and announced a $1 billion share repurchase plan.
Recently, Deutsche Bank analyst Bryan Keane increased his price target on SQ shares from $75 to $90 and reiterated a Buy rating. He noted that Block stock had started to regain some momentum following the results.
Keane added that the Street’s consensus expectations for operating income and earnings before interest, taxes, depreciation and amortization through 2026 increased due to improving margins, leading to significant free cash flow generation.
For Cash App, the analyst is optimistic that the company can increase its monetization rate above its core estimate of nearly 1.43% by 2024 through growth in e-commerce, further adoption of its existing products and upcoming product launches. For the Square ecosystem, the analyst expects Block to maintain positive returns through the expansion of Square banking and other efforts.
“We remain optimistic about the company’s long-term prospects and see sustained high growth with significant profitability improvements,” Keane said.
Keane is ranked 868th out of more than 8,600 analysts on TipRanks. His reviews were successful 57% of the time, with each review delivering an average return of 6.5%. (See Block Options activity on TipRanks).
Technology giant Microsoft (MSFT) has attracted a lot of attention this year due to its aggressive efforts to capitalize on the growth opportunities in the generative artificial intelligence space.
In a research note to investors, Tigress Financial analyst Ivan Feinseth highlighted that MSFT recently posted its strongest revenue increase in six quarters, thanks to the performance of its cloud computing business, which is benefiting from the momentum of its new AI products. The analyst believes that Microsoft is at the forefront of the AI revolution with the continued integration of AI functionality and ChatGPT into its offerings.
Feinseth expects ongoing cloud migrations, growing enterprise AI projects focused on business optimization and the expansion of Microsoft 365 applications to boost the company’s performance. He also expects the Activision Blizzard acquisition to strengthen the company’s gaming business.
“MSFT’s strong balance sheet and cash flow will continue to fund ongoing growth initiatives and business-expanding strategic acquisitions, and enhance shareholder returns through ongoing dividend increases and share repurchases,” Feinseth said.
Feinseth increased the price target for MSFT shares from $433 to $475 and reiterated the buy recommendation for the stock. He ranks 311th among more than 8,600 analysts tracked by TipRanks. Its ratings were profitable 60% of the time, delivering an average return of 9.8% each. (See Microsoft insider trading activity on TipRanks)
Source : www.cnbc.com