Analysts back stocks like Alphabet and Facebook

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Shannon Stapleton | Reuters

Rising oil prices, the prospect of the Federal Reserve returning to its easy money policy and tensions among lawmakers in Washington are just a few of the factors behind the latest bout of volatility on the steps.

Top analysts are sticking to these names amid the overall macroeconomic volatility, according to TipRanks, which tracks top-performing stock pickers.

Several recent trends, including increased ad spend at Google, digital disruption in schools bolstering Chegg, and pandemic home exercise trends that are driving sales at Peloton, have helped position some actions in the good faith of the best. analysts. Let’s take a look at how they constructed their bullish assumptions.

Alphabet

Even businesses that seem to be involved in everything have room to continue to grow. Generating an overwhelming share of its revenue from ad spend, parent company Google Alphabet (GOOGL) should continue to transport it at the end of the year. Jefferies’ Brent Thill expects the fall in summer spending to continue to pick up. (See Alphabetical analysis of actions on TipRanks)

Stating bullish that GOOGL “remains one of the best large-cap picks,” Thill valued the stock as a buy and declared a price target of $ 3,325 per share.

The five-star analyst explained that in the fourth quarter, online brand managers may wish to “empty” or spend all of their budgets on big advertising campaigns, in case the same amounts of money are no longer allocated. the following exercise. .

Meanwhile, on other platforms, TV advertising budgets have already been cut. This makes YouTube see huge benefits as ad spend is diverted to the internet. The online video sharing website is a subsidiary of Google and has been a major source of income for Alphabet.

Along with the strong demand, the video sharing platform is currently raising ad prices and showing strong levels of content supply. Additionally, concerns about Apple’s iOS updates have not materialized into impacts on GOOGL’s advertising revenue. Indeed, it seems that Facebook has been affected much more than YouTube.

Beyond travel and leisure ad spending, the rest of the industry has almost recovered from its midsummer lows. July and August saw lower spending levels, in part due to supply constraints for both the physical products sold and the staff to sell them. Thill anticipates long-term monetization opportunities for YouTube, as Alphabet continues to invest in new advertising initiatives such as “Buyable Ads and Actionable CTV Ads”.

On TipRanks, Thill is ranked 53rd out of more than 7,000 expert analysts. He was successful in his grades 71% of the time and got an average of 26.6% on each grade.

Chegg

In some cases, the digital shifts caused by the Covid-19 pandemic were actually accelerations towards trends that will persist well beyond the pandemic. For example, there has been massive interest in the technology of online education and for the most part that will not change in the near future. Chegg (CHGG) continues to see the expansion of its student subscribers, as well as their retention levels on the direct-to-student learning platform.

Ryan Macdonald of Needham & Co. expects the company to grow its user base nationally and internationally, even as students return to campuses, with the fall 2021 semester underway. He optimistically added that “amid increasing use and competition, Chegg remains one of the three most commonly used digital study tools in the United States and has taken the # 1 spot internationally.” . (See Chegg News Sentiment on TipRanks)

Macdonald valued this stock as a buy and provided a price target of $ 120 per share.

He asserted that in the current environment, around 70% of domestic users are retained, as well as 80% internationally. Students abroad tend to use fewer digital study tools in general, but they switch from free to paid services faster. Additionally, fewer accounts are now being shared than during the pandemic, indicating successful authentication initiatives by Chegg.

With “healthy usage dynamics and strong international adoption,” Macdonald expects Chegg to perform beyond consensus Wall Street estimates.

Ranking 85th out of more than 7,000 financial analysts, Macdonald maintains a success rate of 65% and average returns of 36.8%.

Facebook

Despite weeks of negative headlines and several Congressional hearings, RBC Capital’s Brad Erickson isn’t at all worried about Facebook (FB) and its future. The massive tech and social media company is fundamentally strong when it comes to its business performance, and highly sought after by advertisers because of its “best-in-class targeting.” [of consumers] and return on investment. “

Erickson praised the controversial company highly, noting that “FB has created one of the most valuable advertising franchises in the world” and that it has “gained unparalleled knowledge of the consumers of the world.”

He reiterated a buy on the stock and provided a price target of $ 425.

While optimistic, the analyst admitted that Facebook’s future growth depends on its success in transforming into a more complete “super-app” for its billions of users. Although it has nearly 3 billion users on its various platforms, FB has the power to become more vertically integrated with consumers.

The five-star analyst was encouraged by the monetization opportunities Facebook seized through its internal initiatives, such as the Shops, Messenger and Pay platforms. These types of vertical integrations will ultimately provide lasting substance that will satisfy shareholders. (See Facebook Insider Trading Activity on TipRanks)

While Facebook’s management almost certainly does not appreciate having its reputation repeatedly questioned in the news cycle media, the foundations of its business do not appear to have been shaken yet.

Out of more than 7,000 financial analysts, Erickson is ranked 171st. His precise scores resulted in a success rate of 60% and generated an average return of 36.3%.

platoon

For companies that have benefited significantly from the pandemic trends of Covid-19, the challenge now comes to transforming their activities into long-term sustainable businesses. This is particularly acute for Peloton Interactive (PTON), which has seen sales increase 120% so far in 2021. The exercise equipment and services company is now looking to focus on a new strategy, and analysts are taking note.

Scott Devitt of Stifel Nicolaus wrote that PTON achieved a “banner year” in 2021 and is currently in a position to target even more subscriber growth and international market penetration. Thus, the company is expanding its product offering.

Devitt valued the stock as a buy and gave it a price target of $ 120.

The bullish analyst explained that Peloton both reduced the price of its main bike product and extended the timeline for the payment plan. By offering more affordable equipment, the company hopes to gain more subscribers for its exercise services. Additionally, PTON recently relaunched a treadmill, which may allow wider penetration in households less interested in cycling.

As investor sentiment has weakened over the past month or so, the lower valuation could be an attractive entry point for investors with long-term prospects. (See Peloton Interactive Blogger Opinions and feelings on TipRanks)

In addition, Peloton targets international audiences, which currently represent approximately 11% of its revenue streams. Devitt is encouraged by the possibility of having opportunities beyond domestic consumers. The company has invested in exercise instructors who speak foreign languages, as well as localized content.

TipRanks keeps Devitt 60th among more than 7,000 other analysts. His grades were passed 66% of the time and earned him an average of 31.4% per grade.

The commercial counter

Open internet advertising spend has rebounded from the pandemic-induced lows, and companies that facilitate the data needed to do so are well positioned for further growth. More specifically, the Trade Desk (TTD) was considered a “winner among demand side platforms”. This is in part due to its scale, international and national exposure and strong partnerships.

Laura Martin of Needham & Co. reported on the action, speculating that the advertising titans of Facebook, Amazon and Alphabet will soon cede market share to open internet platforms. She believes The Trade Desk has a huge competitive advantage over the “walled gardens” of the tech world.

Martin valued the stock as a buy and bullishly assigned a price target of $ 100.

Stating that TTD “maximizes global revenue scalability and margin growth,” the five-star analyst explained that the company’s international market is growing faster than its domestic market, despite only 15% of 1H revenue coming from abroad. This statistic suggests that there is much more room to expand beyond US customers.

In addition, about a third of its income comes from connected TVs, the prevalence of which is increasing. (See Risk factors of the trading desk on TipRanks)

Martin was encouraged to find that TTD’s most recent upgrade, Solimar, was successful in boosting new user acquisition and retention of existing users. The promising platform is predicted by TTD to eventually generate half of all posted impressions.

Financial data aggregator TipRanks currently quantifies Martin as No. 221 out of more than 7,000 other analysts. Its impressive ranking is reflected in its 57% pass rate and 23.6% average return per grade.


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