Shantanu Narayen, CEO, Adobe.
Mark Neuling | CNBC
Investors are grappling with uncertainty after a difficult September left the major averages reeling.
However, the current scenario also offers an opportunity to pick stocks that could generate attractive returns despite short-term pressures.
To that end, here are five stocks favored by Wall Street’s top analysts, according to TipRanks, a platform that ranks analysts based on their past performance.
Software giant Adobe (ADBE) recently reported fiscal third-quarter earnings. The company is experiencing strength in subscriptions to its cloud-based software offerings.
Impressed with the quarter’s print, Deutsche Bank analyst Brad Zelnick boosted his price target for ADBE stock to $610 from $550 and reaffirmed a buy rating. The analyst stated that the results confirm his view of Adobe being a leader in the emerging world of generative artificial intelligence. The analyst said that this pricing strategy could drive the adoption of the core Creative Cloud product with the embedded generative AI tools, which is better than selling the new features separately. The analyst said that this pricing strategy could drive the adoption of the core Creative Cloud product with the embedded generative AI tools, which is better than selling the new features separately.
“This strategy should enable creatives to better appreciate the productivity benefits of generative AI more quickly, and make Firefly-powered generative AI offerings a critical part of their workflows, creating competitive differentiation as well as increasing the overall value of Creative Cloud,” said Zelnick.
The analyst also sees additional monetization opportunities through new standalone offerings like GenStudio.
Zelnick is ranked No.50 out of more than 8,500 TipRanks analysts. His predictions have delivered a profit 71% of time. Each one has averaged a 15.5% return. (See Adobe’s Technical Analysis on TipRanks)
Zelnick is also bullish on another cloud software vendor:
Salesforce (CRM). He said the Dreamforce conference highlighted Salesforce’s leadership position in AI CRM, supported by “trust data and interoperability.” (See Salesforce Hedge Fund Trading Activity on TipRanks).The analyst noted that data cloud commentary from partners was optimistic, based on real demand and ongoing implementations.
“With strong pricing power, unparalleled access to enormous trusted data, an eventual rotation back to front office spending, as well as management’s laser-focus on margins and cash flow growth, we believe Salesforce shares are poised to outperform,” said Zelnick.Pinterest
(PINS) held its investor day on Sept.19. The company stated that they expect a revenue growth rate of mid-to-high teens and an EBITDA margin in the low 30 percent range in the next three to 5 years. The analyst stressed that the overall strategy of the company is based on the importance of the shopping experience. More than 50% use Pinterest to shop. Specifically, 96% of searches on Pinterest are unbranded, providing advertisers a huge opportunity to target users, with more than 50% of them using the platform to shop.“Importantly, the Amazon
ads integration seems to be going well, exceeding management’s initial expectations, with Pinterest using its recommendation engine to target Amazon ads at its own users,” added Sebastian.
The analyst reaffirmed a buy rating on PINS stock and a price target of $34, with a valuation that reflects rapid growth rate, an early stage of market share gains, as well as significant cash flow generation over the long term.Sebastian ranks 328th out of more than 8,500 analysts tracked on TipRanks. The average return on his ratings is 11.7%. Also, 54% have been profitable. (See Pinterest Blogger Opinions & Sentiment on TipRanks) Microsoft
MSFT) recently made several announcements spanning its Microsoft 365 Copilot, Bing, Windows and Surface products.Goldman Sachs analyst Kash Rangan thinks that the developments announced by the company reflect solid execution against its Copilot product roadmap and the strength of its OpenAI partnership.“Microsoft’s speed to market, strong presence across the tech stack and well-established footprint within the enterprise give us confidence that Microsoft is well positioned to drive growth on the back of these announcements and be a key leader in the Gen-AI era,” said Rangan.The analyst thinks that the company should be able to capture a solid part of its more-than-$135 billion total addressable market within Microsoft 365, with additional opportunities across its Azure, Windows, Dynamics and Bing/Edge offerings. Rangan reiterated his buy rating for MSFT, with a $400.0 price target. He has been successful 58% of the times, and each of his ratings has delivered an average return rate of 8.5%. (See Microsoft Financial Statements on TipRanks)
We end this week’s list with logistics giant
). The company reported fiscal first quarter earnings that exceeded expectations but revenue declined due to macro-pressures. The bottom line benefited from the company’s cost-reduction initiatives.Evercore analyst Jonathan Chappell, who holds the 156th position out of more than 8,500 analysts on TipRanks, noted the improvement in the company’s full-year earnings guidance range, despite the lower revenue outlook. The earnings outlook was fueled by the cost reductions under FedEx’s DRIVE program that is targeting savings of $1.8 billion in fiscal 2024.Chappell said that FedEx grabbed about 400,000 packages of volume from its closest peer (
UPS), with a lower possibility of these share gains reversing immediately. FedEx also gained almost 5,000 shipments a day as a result of the liquidation (Yellow) of a major competitor. “Chappell kept his buy rating for FDX, and increased his price target from $276 to $291. He said that FDX is still his top pick. His ratings are successful 65% of time. Each rating has an average return on investment of 19.7%. TipRanks shows FedEx insider trading activity.