Traders are encountering contradictory indications as recent economic figures suggest a potential deceleration while the S&P 500 continues to achieve fresh peaks.
Given this intricate scenario, investors might seek guidance from distinguished Wall Street analysts who specialize in pinpointing stocks with robust financial positions and encouraging growth potentials.
These are three stocks highly recommended by reputable analysts on Wall Street, as per TipRanks, a platform that evaluates analysts based on their past accuracy.
Micron Technology
Leading the pack this week is Micron Technology (MU), a prominent chip manufacturer. The company recently surpassed expectations for both revenue and earnings in the fiscal third quarter, bolstered by rising demand fueled by the AI trend. Management expresses optimism about the future and anticipates achieving record revenue in fiscal 2025, supported by opportunities in artificial intelligence.
Impressed by the results, Goldman Sachs analyst Toshiya Hari reaffirmed a buy rating on MU stock and raised the price target to $158 from $138. Hari perceives the dip in stock price post-earnings as a favorable opportunity for investors to enter the market. He forecasts that the demand linked to AI and controlled supply will result in better-than-anticipated earnings growth in 2025.
Hari identified various factors supporting his positive outlook, such as Micron’s market share gains in high-bandwidth memory and AI computing expansion in data centers and edge computing.
Micron generated $425 million in free cash flow in the third quarter, indicating a rebound from several previous quarters of negative cash flow. The company aims to sustain positive cash flow in the fourth quarter and beyond into 2025, despite projected increases in capital expenditure.
Hari holds the 25th position among over 8,900 analysts tracked by TipRanks, with a track record of profitable ratings 69% of the time and an average return of 29.2%. (See Micron Technical Analysis on TipRanks)
Amazon
Following in line is Amazon (AMZN), a major contender in e-commerce and cloud services. Evercore ISI analyst Mark Mahaney reiterated a buy rating on AMZN stock with a target price of $225 following an extensive survey of 1,100 participants in the 12th Annual U.S. Online Retail survey.
Mahaney underscored Amazon’s dominant standing in the U.S. online retail sector, topping crucial shopping metrics of price, selection, and convenience. Nevertheless, the survey unveiled escalating competition for Amazon from rival Walmart (WMT), chiefly in selection and convenience.
Despite this, Amazon maintains a substantial advantage over rivals across all three pivotal metrics. The company continues to enhance customer satisfaction, which climbed by 2% to 84% year-over-year, marking progress from the low of 65% in 2020. Mahaney attributes this enhancement to Amazon’s focus on speed and selection, particularly through regional initiatives.
The survey also revealed a record high adoption of Amazon Prime at 81%, driven by appealing features such as Prime Video, Free Same Day Delivery, Prime Music, and Grocery services.
All in all, Amazon remains Evercore’s top large-cap long-term investment based on the survey results supporting positive long-term prospects. The findings align with Mahaney’s perceptions on three primary growth catalysts in 2024 – accelerated growth in Amazon Web Services, enhancing operating margins in the North American Retail segment, and robust free cash flow margins.
Mahaney stands at the 20th spot among more than 8,900 analysts tracked by TipRanks, with a success rate of 63% and an average return of 32.2%. (See Amazon Hedge Funds Trading Activity on TipRanks)
Twilio
Lastly, Twilio (TWLO), a cloud communications platform, clinches the third spot this week. The company reported results that exceeded expectations for the first quarter of 2024, with active customer accounts surging to over 313,000 as of March 31, up from 300,000 in the prior year.
Despite the favorable results, stocks dipped due to lower-than-expected guidance for the second quarter, reflecting weak customer spending conditions.
Tigress Financial analyst Ivan Feinseth recently initiated coverage of TWLO stock with a buy rating and a target price of $75. He views the stock decline as a compelling buying opportunity, believing that Twilio is well-poised to benefit from the upsurge of AI-driven digital customer engagement.
Feinseth anticipates that Twilio will leverage the demand for AI-powered automated customer interactions, propelled by sustained investments in research and development and the incorporation of predictive and generative AI technologies into its products.
He also stressed Twilio’s innovative “call center as a service” platform and its premier position in the communications market. Feinseth expects that the company’s cost-saving initiatives and operational efficiency measures will bolster margins and profitability.
Feinseth holds the 195th position among more than 8,900 analysts tracked by TipRanks, with a success rate of 61% and an average return of 13.1%.
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