Analysts see upside in stocks like Amazon & Salesforce
An Amazon worker delivers packages amid the coronavirus disease (COVID-19) outbreak in Denver, Colorado, April 22, 2020.
Kevin Mohatt | Reuters
Though the markets are off from their highs, analysts believe that several companies still have room to grow.
Innovations in point-of-sale technology, acquisitions of buy now, pay later firms, and trend shifts to cloud-computing have driven some of Wall Street’s top analysts to provide bullish hypotheses on these stocks. TipRanks’ unique data determines which analysts have made the right ratings, and allows everyday investors to see who to follow.
After carefully poring over these companies’ fundamentals and outlooks, some of the best analysts in the business think they have upside.
As e-commerce trends increase, consumers are looking to buy now, pay later firms to help facilitate their purchases. When companies seek mergers and acquisitions, payment processing companies often provide the perfect fit. This is why analysts are upbeat about PayPal Holdings, Inc. (PYPL), which recently announced a takeover of Japanese buy now, pay later platform Paidy.
Jason Kupferberg from Bank of America expressed his bullish opinion on the matter, writing that the deal will expand PayPal’s capabilities in Japan and expose it to a high growth potential BNPL market. Japan stands as the world’s third-largest ecommerce market, with significant room for penetration in a mostly cash society.
Kupferberg reiterated his Buy rating on the stock, and declared a price target of $323.
The five-star analyst noted that the Paidy deal is expected to close in Q4 of this fiscal year. Paidy is experiencing significant success, seeing volumes and revenues grow more than 100% year-over-year. The Japanese firm serves its users by consolidating their payments into a single bill, and provides value to merchants by increasing their numbers of recurring customers and boosting the amount they typically spend. (See PayPal risk factors on TipRanks)
Declaring PayPal’s stock a “top pick in payments,” Kupferberg does not see significant competitive disruption from Amazon’s (AMZN) recently announced partnership with buy now, pay later service Affirm (AFRM).
Kupferberg is rated on TipRanks as #216 out of more than 7,000 total analysts. His rating track record is impressive, with a 69% success rate and an average return of 16.6% on each rating.
During the pandemic, companies that helped facilitate students who were blocked from studying in-class saw upside. In many places across North America, the school year has begun yet again, although this time with students in the classroom. As a K-12 education software firm, PowerSchool Holdings, Inc. (PWSC) has the capacity to capture both types of educational markets.
Brent Thill of Jefferies Group asserted that although the stock has seen considerable gains since its July 28th IPO, the share price remains at an attractive level. He believes that “PWSC’s market leading and deeply integrated suite of K-12 software applications positions it as a true platform.”
Thill assigned a Buy rating on the stock, and raised his price target to $38 from $32.
PowerSchool recently reported earnings generally in-line with Wall Street consensus estimates, but its revenues indicate strong demand across all grades. This demand is expected to continue as schools reopen and students return to physical classrooms. (See PowerSchool stock charts on TipRanks)
The company’s subscription revenue has been ramping up, and existing customers are sticking around and upgrading their purchased packages. Additionally, international markets remain a long-term strategy, with about 1.3 billion potential students to reach.
The five-star analyst was enthused about PowerSchool’s increases in acquired active users throughout the first half of 2021, as this shows the company’s relevance in a quasi-post-pandemic school reality. Furthermore, the software firm recently closed a high-profile deal with Miami-Dade County in Florida, underlining its value to major metropolitan school systems.
On TipRanks, Thill stands as #20 out of over 7,000 experts. From his ratings, he maintains a 78% success rate, and returns an average of 29.2% per rating.
An iconic brand with an incredibly loyal customer base, Harley-Davidson, Inc. (HOG) has seen its status lag over the last few years. The company connected with an older generation of consumers, but now millennials are the ones with the cash to make motorcycle purchases. Recently, however, Harley-Davidson has been making strides to adapt to the new market realities and increase profits. (See Harley Davidson blogger sentiment on TipRanks)
Stating that the company has already “turned a corner,” Ivan Feinseth of Tigress Financial Partners asserted a bullish thesis on the stock. He wrote that “HOG’s strong brand equity, combined with its innovative ability and the ongoing rollout of new products along with international expansion and consistent long-term history of returning cash to shareholders, will drive greater long-term shareholder value creation.”
Feinseth reiterated a Buy rating on the stock and provided a price target of $56.
The analyst opined that Harley-Davidson’s current valuation is attractive for entry, and its strong quarterly revenue reports show that there remains significant possible upside. The company has been improving its balance sheet and free cash flow, which are anticipated to aid in securing strategic investments, dividend raises, and share buybacks.
In regard to recent initiatives, a new standalone brand of electric motorcycles has been introduced in the form of the updated LiveWire One. This electric motorcycle represents the company’s attempt to capture shifting consumer trends. Additionally, a certified pre-owned program has been providing direct exposure to the used motorcycle market for Harley-Davidson.
Feinseth sees opportunities for monetization in purchases of custom branded accessories by existing Harley owners, as well as in the company’s push to expand its international customer reach.
According to TipRanks’ unique calculative capabilities, Feinseth has been placed as #75, out of more than 7,000 professional financial analysts. He has succeeded 72% of the time on his stock ratings, and has returned an average of 20.3% on each one.
If there was one glaring trend that emerged from the Covid-19 pandemic, it was the accelerated digital transformation. Work-from-home mandates pushed all sizes of enterprises and businesses to move their operations online and to seek out cloud-based solutions. Even with employees moving back to their offices, this larger shift toward digitization is here to stay, and Salesforce, Inc. (CRM) is there to capitalize on the shift.
Brian White of Monness bullishly hypothesizes that Salesforce’s unique platform is “more relevant than ever,” and is poised to capture much of the digital transformation trend.
White reiterated a Buy rating on CRM and declared a price target of $300.
Last July, the software firm finalized its high-profile acquisition of business coordination company Slack. Salesforce will soon hold its annual conference, Dreamforce, and White expects the new addition to take up the majority of the investors’ attention.
In addition to the whole suite of Slack-related integrations announced last month, the five-star analyst expects even more innovations to be unveiled at Dreamforce. He is particularly confident on the development, writing that “not only do we believe Slack offers the potential to significantly enhance the value of the Salesforce platform, the deal also provides the company with incremental financial flexibility over the next 12-18 months.”
Looking beyond Slack and its potential, other acquisitions by Salesforce, notably MuleSoft and Tableau, have already turned out successfully.
Financial data aggregator TipRanks currently ranks White as #38 from more than 7,000 certified financial analysts. The site also calculates his success rate to be 79%, and he returns an average of 29.2% from each rating.
While e-commerce trends took off throughout the pandemic, Amazon (AMZN) has now been investing in brick-and-mortar retail spaces, and is now developing a new way to pay for products. According to Justin Post from Bank of America, the multinational conglomerate is in the works to launch new point-of-sale technology in its supermarkets and bookstores. Going a step further, this hardware and software would be integrated into third-party businesses as well. (See Amazon hedge fund trading activity on TipRanks)
Post reiterated his Buy rating on the stock and added a 12-month price target of $4,250.
The five-star analyst noted this new innovation would be implemented in congruence with the company’s delivery channels and its new palm-scanning payment system, Amazon One. Once incorporated by small- and medium-sized businesses, the tech could compete with other point-of-sale firms like Square (SQ) and PayPal (PYPL).
Post explained that the Covid-19 pandemic ramped up the necessity for small and medium-sized merchants to better connect with consumers. It is also beneficial for local businesses to provide multiple ways for generating sales, and Amazon’s technology can offer insightful business analytics for the sellers themselves.
Amazon will not only be selling the point-of-sale tech to third-party retailers, but consumers will likely be able to pay at retail locations through their Amazon accounts. Post notes that the product will offer “deep integration with Amazon’s marketplace, fulfillment, checkout, and payments processing capabilities,” in order to allow Amazon to continue competing with marketplaces like Shopify (SHOP) and Google (GOOGL).
On TipRanks, Post maintains a rating of #43 out of over 7,000 expert analysts. He performs at a 74% success rate on his ratings, and has returned an average of 29% from each one.