Merchants are facing conflicting signals as recent economic data implies a potential slowdown while the S&P 500 persists in achieving new highs.
In this complex situation, investors may look to respected analysts on Wall Street who specialize in identifying stocks with strong financial positions and promising growth prospects for guidance.
Below are three stocks highly endorsed by reputable analysts on Wall Street, according to TipRanks, a platform that evaluates analysts based on their historical accuracy.
Micron Technology
Leading the way this week is Micron Technology (MU), a prominent chip maker. The company recently exceeded expectations for both revenue and earnings in the fiscal third quarter, driven by increasing demand propelled by the AI trend. Management is optimistic about the future and anticipates achieving record revenue in fiscal 2025, supported by AI opportunities.
Impressed by the results, Goldman Sachs analyst Toshiya Hari reiterated a buy recommendation on MU stock and raised the price target to $158 from $138. Hari views the post-earnings stock price drop as a favorable entry point for investors and foresees better-than-expected earnings growth in 2025 due to AI demand and controlled supply.
Hari highlighted several factors supporting his favorable view, such as Micron’s market share gains in high-bandwidth memory and AI computing expansion in data centers and edge computing.
In the third quarter, Micron generated $425 million in free cash flow, signaling a recovery from several prior quarters of negative cash flow. The company aims to maintain positive cash flow in the fourth quarter and beyond into 2025, despite projected increases in capital expenditures.
Hari ranks 25th among over 8,900 analysts tracked by TipRanks, boasting a 69% success rate and an average return of 29.2%. (See Micron Technical Analysis on TipRanks)
Amazon
Next in line is Amazon (AMZN), a significant player in e-commerce and cloud services. Evercore ISI analyst Mark Mahaney reiterated a buy rating on AMZN stock with a $225 target price following a detailed survey of 1,100 participants in the 12th Annual U.S. Online Retail survey.
Mahaney emphasized Amazon’s strong position in the U.S. online retail sector, leading in key shopping metrics like price, selection, and convenience. However, the survey revealed increasing competition for Amazon from rival Walmart (WMT), particularly in selection and convenience.
Despite this, Amazon maintains a substantial lead over competitors across all three critical metrics. The company continues to enhance customer satisfaction, which rose by 2% to 84% year-over-year, an improvement from the 2020 low of 65%. Mahaney attributes this improvement to Amazon’s focus on speed and selection, especially through local initiatives.
The survey also showed a record high adoption rate of Amazon Prime at 81%, driven by attractive features such as Prime Video, Free Same Day Delivery, Prime Music, and Grocery services.
In conclusion, Amazon remains Evercore’s top large-cap long-term investment based on survey results supporting positive long-term prospects. The findings align with Mahaney’s views on three primary growth drivers in 2024 – accelerated growth in Amazon Web Services, improved operating margins in the North American Retail segment, and strong free cash flow margins.
Mahaney is ranked 20th among more than 8,900 analysts tracked by TipRanks, with a 63% success rate and an average return of 32.2%. (See Amazon Hedge Funds Trading Activity on TipRanks)
Twilio
Lastly, Twilio (TWLO), a cloud communications platform, secures the third spot this week. The company reported results that surpassed expectations for the first quarter of 2024, with active customer accounts climbing to over 313,000 as of March 31, up from 300,000 in the previous year.
Despite the positive results, stocks dipped due to lower-than-anticipated 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 sees the stock decline as an attractive buying opportunity, believing that Twilio is well-positioned to benefit from the rise of AI-powered digital customer engagement.
Feinseth expects that Twilio will leverage the demand for AI-driven automated customer interactions, driven by continued investments in research and development and the integration of predictive and generative AI technologies into its products.
He also highlighted Twilio’s innovative “call center as a service” platform and its leading position in the communications market. Feinseth anticipates that the company’s cost-saving efforts and operational efficiency measures will strengthen margins and profitability.
Feinseth ranks 195th among more than 8,900 analysts tracked by TipRanks, with a 61% success rate and an average return of 13.1%.
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