The macro picture – and longer-term expectations for certain stocks – become clearer as the earnings season progresses.
To that end, some of the top Wall Street analysts have high hopes for Toast, Apple, Five Below, Freshworks and IMAX, according to TipRanks, which tracks the top performing stock picks. In fact, Apple and IMAX are among the companies reporting for the coming week.
Let’s dive deeper into these stocks and see why analysts are fans.
toast
Today almost every aspect of life seems to be moving towards cloud computing solutions, and for good reason. Many companies offer their customers a medium through which comfort and efficiency are increased and companies realize their full potential.
This also applies to gastronomy, as toast (TOAST) has used this relatively untapped market to gain in importance. (See Toast Insider Trading Activity on TipRanks)
Mayank Tandon began coverage of Needham & Co.’s stock, writing that Toast “runs an extensive restaurant.” [point of sale] and management platform that combines advanced payment processing and software solutions to help restaurants grow effectively and manage day-to-day operations. ”
Tandon rated the stock as a buy and had a price target of $ 70.
The five-star analyst claimed the company has the potential to increase its usable available market up to seven times its current size. He assumes that this is the case because the company is not yet positioned internationally and will most likely bring new innovations on the way.
While Toast offers both software and hardware, Tandon believes the former will make up the majority of its revenue generation. After acquiring existing restaurants, TOST will be able to cross-sell its “payroll, online ordering and loyalty program management”. The analyst believes this positioning is very beneficial for the company in terms of increasing and recurring revenue.
After Toast weathered the Covid-19 pandemic by significantly expanding its restaurant pool, Toast is poised for further economic reopening activities to support its “land and expansion” strategy.
Tandon holds the No. 99 position on TipRanks out of 7,000+ financial analysts. So far, his ratings have been successful 67% of the time, averaging 42.8% for each one.
Apple
Apple (AAPL) has always had an avid following, but now it pops up every time the company launches new products, almost every form of news covering it in some way. This type of free advertising dramatically lowers Apple’s ad spend and increases margins. (See Apple News sentiment on TipRanks)
Laura Martin of Needham & Co. mentioned this detail in her most recent report, adding that Apple’s “insane fandom” has reached the point where the company can post hours of infomercials in 30 days and still have so much free coverage receives. This was a phenomenon she claimed was not seen by any other company in terms of brand awareness.
Martin is bullish on the stock and has rated it a buy. The senior analyst chose a price target of $ 170.
In addition, during the keynote presentation, Apple again focused on the advantages of its in-house silicon chips, which have “improved speed, memory, graphics and editing functions, and battery life” in its products. Martin claimed that vertical integration increases trenches around Apple and shields it from competitors who use outsourced chips.
Apple’s penetration is also something that catalyzes confidence in the company, as iOS devices per user have increased from 1.57 in early 2020 to 1.65 now. This “important leading indicator for the upside of AAPL” shows an expected decline in churn rates. Additionally, the company has made it especially difficult for consumers to leave its vast ecosystem due to the stickiness of accessory and add-on hardware and software ecosystems, family plan prices for services, and financing options for iPhones.
Martin was ranked 191 by more than 7,000 analysts. Their stock selections resulted in a 64% success rate and they achieved an average return of 43.4% per selection.
Five down
While shipping restrictions affect businesses around the world, those who have sheltered from these headwinds could emerge on a stronger foundation.
The value retailer Five Below (FIVE) has mitigated the rising freight costs with fixed contracts and new fulfillment centers. In light of mounting macroeconomic challenges, Five Below plans to expand its higher-priced Five Beyond segment to more stores in hopes of maintaining strong inventory levels as an inflation hedge.
Jefferies’ Randal Konik outlined his optimistic views of the company, writing that Five Below “has rapidly scaled and invested in its supply chain.” He believes the company is better protected from rising shipping costs than its peers, and that the realized impact is “likely to be quite small”. (See below five risk factor analysis on Tipranks)
Konik listed the stock as a Buy with a price target of $ 300.
The five-star analyst stated that Five Below recently opened a new fulfillment center in Arizona that went live during the currently unreported quarter. In addition, the company has announced plans for another center in Indiana due to open in mid-2022. This type of vertical integration creates confidence at Konik that the company will achieve an even smoother delivery with shorter lead times.
The implementation of Five Beyond has already found its way into over 270 stores and is expected to increase to around half of Five Below’s stores by the end of 2022. Konik is thrilled that Five Beyond has been established in so many stores before the Christmas season is starting to launch for retail.
The financial aggregator TipRanks ranked Konik 415th out of over 7,000 professional analysts. He was successful on his ratings 63% of the time, averaging 22.1% on each.
Freshworks
When it comes to retention technology, small and medium-sized businesses tend to be at a disadvantage. With the global trend towards digital living, a data-driven consumer relationship management tool is required to gain an edge over the competition. For this service, some companies turn to the SaaS platforms developed by Freshworks (FRSH).
Brian Schwartz of Oppenheimer & Co. begins reporting on the stock. He claimed the company can maintain a steady rate of industry-leading growth as small and medium-sized businesses using legacy technology move to its platforms. (See Freshworks stock analysis on TipRanks)
Schwartz named the stock a Buy and calculated a price target of $ 50.
The analyst said Freshworks is on the verge of reaching hundreds of thousands of customers who are “struggling to modernize and automate their loyalty strategy.” Obviously, the company has a long ramp of potential organic growth.
Led by his strong management team, Schwartz added that Freshworks has had high levels of billing and revenue for years. He was delighted with the company’s strong business performance and the company’s ability to significantly outperform its Desk and Service counterparts. The analyst expects further upside as the company continues to successfully benefit from its innovations and initiatives.
However, Schwartz cautioned that the stiff competition from established CRM players could pose a risk if they exerted energy on small and medium-sized businesses. In addition, after so much dynamism in the past, the company faces difficult comparisons.
TipRanks calculations place Schwartz in second place out of more than 7,000 financial analysts. His stock valuations were successful 88% of the time, earning him an average of 67.4% each.
IMAX
Despite the ongoing Covid-19 problems, a strong movie board from the studios has drawn consumers back to theaters. For the IMAX (IMAX) box office sales have already returned to pre-pandemic levels, and October is well on its way to becoming the best ever. Moviegoers seem to have learned to live with the virus, but some analysts believe IMAX is being overlooked by investors.
B. Riley Securities’ Eric Wold believes that while the company and the larger film industry have come out of the pandemic better than expected, the stock has lagged the market. He points out that stronger partnerships with studios, more theatrical releases and higher screen counts could catalyze IMAX up ahead of the upcoming third quarter earnings report in late October. (See IMAX Winning Results on TipRanks)
Wold listed the stock as a Buy with a price target of $ 30.
The five-star analyst stated that several methods of filming have been tried throughout the pandemic, and it appears that the one that benefits IMAX also appears to be the best for the industry. The simultaneous release of films in theaters and on streaming services, or the “day-and-date” model as Wold put it, has not been as successful as expected.
Instead, Wold wrote: “All major studios have agreed to implement exclusive cinema windows for their film panels.” He was excited by the prospect of calling on IMAX to push large film releases in shorter, more demand-intensive time windows. With IMAX’s larger screen count, the company is well positioned to take advantage of this opportunity.
Wold is rated # 209 by TipRanks by over 7,000 other analysts. It was successful 67% of the time and has an average return of 35.1% per trade.
