Top Wall Street analysts like stocks like Uber and Shopify
People wear protective masks in front of the Uber Technologies Inc. headquarters in San Francisco, California, on Wednesday, June 9, 2021.
David Paul Morris | Bloomberg | Getty Images
The recent bout of market volatility has been nothing short of stomach churning for short-term investors.
Indeed, a sell-off led by tech stocks and growth has escalated into a malaise that has kept the three major January readings firmly in negative territory.
Analysts perform long-term forecasts of the companies they cover, which allows them to look beyond short-term fluctuations in stocks. In fact, some of Wall Street’s top analysts have pointed out the names they like best for long-term play, according to TipRanks, which tracks the best-performing stock picks.
E-commerce trends have cooled and the stocks of some players in the space have suffered. Shopify (SHOPPING) is not an outlier, and its valuation is down about 50% since its last peak in November. For many analysts, the discounted share price on the dealer point-of-sale platform appears attractive. (See Shopify stock charts on tip ranks)
One of those optimistic voices is Darren Aftahi of Roth Capital Partners, who is forecasting 30% annual growth in Merchandise Value for SHOP’s forthcoming earnings. He called the company a leader in e-commerce, noting the stabilization in consumer spending trends and the strong position Shopify holds in its space.
Aftahi gave the stock a buy rating and a price target of $1,400.
Most importantly, the analyst discussed Shopify’s recent strategic partnership with Chinese e-commerce giant JD.com. The deal will allow SHOP merchants to “sell directly to Chinese customers through the JD Marketplace” and is expected to be open to “a new TAM of over 500 million active customers of JD in China.”
By tightening the merchant barrier to enter the China market from 12 months to 3 to 4 weeks, Aftahi is confident the deal will increase Shopify’s top line for the second half of 2022.
Financial aggregator TipRanks currently ranks Aftahi 222nd out of more than 7,000 analysts in its database. His success rate is 39% and his reviews have returned him an average of 40.7% per.
For metaplatforms (FB) the last few months of 2021 were turbulent: Countless negative headlines and findings by whistleblower Frances Haugen and subsequent testimonies before lawmakers about Meta’s algorithms have unsettled some investors.
Monness’ Brian White is forecasting a no less turbulent year for Meta, which is expected to report quarterly earnings on February 2nd. The tech giant is also said to “continue to capitalize on the digital advertising trend, participate in accelerated digital transformation, and innovate in the Metaverse.” (See Website traffic for meta platforms on tip ranks)
White gave the stock a buy rating and a price target of $460.
Despite these issues, White FB looks at an attractive discounted valuation and remains bullish on its earnings call overall.
White is ranked 141st out of over 7,000 analysts. His stock picks were correct 66% of the time, earning him an average return of 31.1%.
The pandemic has certainly created a rollercoaster of emotions for investors holding stocks About Technologies (OVER), but analysts have returned to their bullish expectations for the stock. Initially, the Omicron variant caused more panic and tightened restrictions on mobility, although it now appears that levels are returning to pre-pandemic levels.
This situation was best illustrated by Stifel’s Scott Devitt, who argued that the global mobility recovery looks healthy and that the company expects to perform at the higher end of its guidance range. Uber is expected to release earnings after market close on Feb. 9 and hold an investor conference the following day. (See Uber hedge fund activity on tip ranks)
Devitt gave the stock a buy rating and a price target of $50.
He went on to say that Uber recently revamped its loyalty program after launching its Uber One membership service. The new iteration of the former Uber Eats Pass will connect users to benefits found across the company’s various businesses, including its delivery, grocery and ride-sharing apps. This move is expected to result in increased engagement within Uber’s loyal base and is viewed by Devitt as “an incrementally positive as it reinforces the value proposition over the previous offering.”
Additionally, Uber has been busy integrating its freight capabilities with newly acquired Transplace, a logistics management software company.
Devitt is ranked 335th by more than 7,000 financial analysts. The analyst’s stock picks were successful 52% of the time, earning him an average return of 23.9%.
Until the last quarter, the Covid-19 pandemic has been good for us HubSpot (HUBS). As soon as news of the omicron variant hit the headlines, the stock began to plummet. Still, analysts appreciate the direction the software company is taking for marketing, sales, and business management. (See HubSpot insider trading activity on tip ranks)
Jefferies’ Samad Samana is one of those in the crowd, claiming that the stock “remains one of our favorite mid-cap names.” He noted that the end of 2021 and the first few weeks of 2022 make promising forecasts for the year.
Samana gave the stock a Buy rating and a price target of $800 per share.
The analyst wrote of a continued and strong growth outlook for HubSpot in 2022, due in part to its “enterprise traction and higher connection rates.” The company has seen more and more larger companies adopt its software and stick with it even after they’ve scaled up themselves. In that sense, it competes with established players like Salesforce.
Samana said that “a number of large customers who previously migrated away from HUBS have expressed interest in returning to HUBS due to significant advancements in the product suite and ability to handle larger, more complex customers.”
TipRanks ranks Samana 386th out of over 7,000 analysts. His stock picks produced a correct return 53% of the time, generating an average return of 29.9%.
The digital transformation caused by the pandemic has caught up with another cloud-based enterprise and workflow solutions company, sending its valuation higher. Like his colleagues Service now (NOW) also fell sharply from early November highs, but was able to post excellent fourth-quarter earnings. According to Oppenheimer & Co.’s Brian Schwartz, the stock has a potential recovery in sight.
The analyst noted robust momentum in ServiceNow’s business, driven by demand for IT services. Regarding this demand, he was encouraged by NOW’s findings, writing that “these findings should allay concerns that enterprise IT demand is somehow collapsing.” (See ServiceNow Earnings Data on tip ranks)
Schwartz gave the stock a buy rating and a target price of $660.
Investors should always be vigilant when companies are setting their guidance above Wall Street consensus estimates. ServiceNow did so despite continued headwinds from the slowing macro environment over the past two months.
Additionally, Schwartz noted his bullish sentiment despite stock price swings, writing that “NOW offers a nice balance of strong top line growth, margin growth and high cash flow margins such that even if valuation multiples continued to decline, Space, its unique financial profile and… Anchoring in enterprise IT stacks enables ServiceNow to outperform its growth competitors.”
He went on to say that ServiceNow “offers investors a unique proposition among large-cap software stocks.”
Schwartz is ranked 14th out of over 7,000 professional analysts in the TipRanks database. He was successful in evaluating stocks 72% of the time, and his selections earned him an average of 51.4%.