Amazon.com delivery trucks in Richmond, California, U.S., on Tuesday, Oct. 13, 2020.
David Paul Morris | Bloomberg | Getty Images
Given the current financial environment, which strategy can investors use to pinpoint compelling opportunities?
Despite inflation concerns, there are still stocks poised to outperform. One way to find them is by following the recommendations of analysts that get it right time and time again. TipRanks analyst forecasting service attempts to identify the best-performing analysts on Wall Street, or the analysts with the highest success rate and average return per rating. This takes into account the number of ratings published by each analyst.
What’s more, the stocks discussed below haven’t received any hold or sell ratings. Just buys from top analysts. So, these names have a unanimously bullish analyst outlook right now.
Here are the best-performing analysts’ five favorite stocks right now:
Alphatec is a medical technology company that is focused on changing the way spinal surgeries are approached.
Following its 4Q20 earnings release, H.C. Wainwright analyst Sean Lee maintained a Buy rating on the stock. In a further bullish signal, the analyst bumped up the price target from $16 to $19. Notably, Lee boasts a 75% success rate and 69.2% average return per rating.
What’s more, overall, Alphatec has received 6 Buy ratings from top analysts, with a $19.67 average stock price forecast.
In the quarter, the company posted total revenues of $44 million, surpassing the $43.7 million consensus estimate. “We note that the 4Q20 revenues represent a 36% year-over-year increase over 4Q20, which we believe is particularly impressive in light of industry-wide headwinds caused by the ongoing COVID-19 pandemic in the first half of last year,” Lee noted.
Looking ahead, management guided for total revenue of approximately $178 million, but this doesn’t include the possible revenue contribution from its acquisition of EOS Imaging, which is expected to be completed in 2Q21.
Expounding on the potential impact of this deal, Lee stated, “In the longer term, we believe the successful integration of EOS Imaging can result in major synergies for the company and could allow Alphatec to offer novel, highly differentiated products for the spine market. We believe EOS could also become a major growth driver for Alphatec over the next several years and contribute additional revenues of $127 million by 2025.”
On top of this, during the most recent quarter, Alphatec launched the prone transpsoas or PTP patient positioning system for lateral surgery. PTP allows a surgeon to perform the entire procedure without having to flip the patient, potentially resulting in shorter surgeries, more reproducible results, and enabling concomitant posterior procedures to be conducted at the same time.
In Lee’s opinion, this offering “could become one of the company’s most important product series and change the standard-of-care in lateral surgery.” He added, “According to management, since its launch PTP has been well received by initial adopters and the company is strongly promoting the product through clinical collaborators. We believe that PTP could be a major growth driver for the company in 2021.”
Racking up three back-to-back Buy ratings from top analysts over the last few weeks, RBC Capital’s Frank Morgan is among those singing Addus Homecare’s praises. The five-star analyst just reiterated a Buy rating and a price target of $136.
The company recently unveiled its value-based navigation agreement with Presbyterian Health Plan, with the agreement designed to support closer coordination of care for patients as they are discharged from acute care hospitals into their home or into post-acute facilities.
This deal “positions ADUS for a larger role in post-acute coordination with potential for longer-term shared savings, and second with the COVID relief legislation’s better than expected FMAP increase which demonstrates the federal government’s continued support for personal care and related services amid the pandemic’s residual headwinds,” in Morgan’s opinion.
On top of this, the analyst is “encouraged” by recently passed COVID relief legislation as “it provides a 10% boost to the Federal Medical Assistance Percentage meant to bolster personal care services amid the pandemic.”
This increase gives a larger match than Morgan originally expected, with earlier versions of the bill mentioning a 7.35% rise.
“While the FMAP increase demonstrates strong federal support for continued funding of home care services, we note that the ultimate allocation of the funds is a state-by-state decision. Fortunately, management has noted strong commitment among the Medicaid programs it serves to providing continued funding for personal care operators and patients,” Morgan explained.
Scoring the #123 spot on TipRanks’ list, Morgan has achieved a 71% success rate and 22.1% average return per rating.
In a report called “Multiple Catalysts in Place to Support Elevated Growth Rates”, H.C. Wainwright analyst Amit Dayal lays out his bullish case for AMRS. The analyst gave the price target a major boost, with the figure moving from $11 to $35, and reiterated a Buy rating.
Dayal is not alone in his opinion, with the stock getting a nod of approval from three other top analysts in the last two months. Additionally, the average analyst price target comes in at $25.50.
Major changes to Amyris’ business fundamentals are behind Dayal’s optimism. These include its “execution against monetizing parts of its ingredients portfolio,” with the size of the monetization now increased to $500 million compared to the $450 million originally expected. Its outlook also supports annual revenue growth expectations of between 30% and 50% over the next few years.
What’s more, debt is set to land below $100 million by the end of 3Q21. This would be down from $297 million at the beginning of 2020. Dayal also highlights the company’s possible shift towards consistent positive adjusted EBITDA generation going forward, supported by mid-60% level gross margins.
“We believe the company’s growth trajectory should remain elevated over the next few years supported by: (1) 18 ingredients currently in development that could position the company to have more than 30 commercialized ingredients by end of 2025; (2) four new brand launches in 2021; (3) focus on leveraging exclusive formulations and ingredients to take share in niche segments (such as acne treatment product); (4) expansion in physical retail square footage for consumer products; and (5) contribution from acquisitions and distribution agreements in international markets including China and Brazil,” Dayal mentioned.
Based on all of the above, the analyst argues that revenues will grow at a nine-year CAGR from 2021 to 2030 of 28.8%, versus the previous 20.4% estimate.
A top 10-rated analyst, Dayal sports an impressive 77% average return per rating.
E-commerce giant Amazon was deemed a “Fresh Pick” by Baird analyst Colin Sebastian. As such, the top analyst reiterated a Buy rating and price target of $4,000. Wall Street wholeheartedly agrees, with 30 other top analysts also rating the stock a Buy.
“With the market current focusing on rotation to value, interest rates, reopenings, and tough e-commerce comps, we believe investors may be missing one of the most compelling subscription/quasi-subscription models within the Internet and Technology sectors,” Sebastian cheered.
Specifically, the analyst argues that one of the key strengths of the subscription service is its “ability to retain customers with compelling services, while simultaneously adding new ones cost effectively.” What’s more, Sebastian sees at least 75% of Amazon’s revenues as recurring revenue streams.
Looking at online stores, Sebastian estimates that Amazon is quickly approaching 200 million paid Prime subscribers, implying there are 400-600 million people shopping with Amazon regularly and driving 80% of the company’s e-commerce volumes, with the consumer ecosystem supported by services.
As for its third-party seller services, they should benefit from higher rates of retention and usage, in Sebastian’s opinion. He also makes the case that AWS revenues are recurring. “Specifically, the company’s market leadership in infrastructure-as-a-service tends to generate significant repeat usage, while the increasing portfolio of software services (e.g., Aurora) adds incremental quasi-subscription revenue streams,” the analyst commented.
Taking all of this into consideration, Sebastian views shares as “significantly undervalued, with a medium-term path to $5,000/share, based on robust fundamental trends in e-commerce, marketplace services, and cloud.”
With a 75% success rate and 34.8% average return per rating, Sebastian is ranked #28 out of over 7,000 analysts tracked by TipRanks.
According to Wedbush analyst Daniel Ives, cloud momentum for Microsoft is “hitting its next gear of growth in Redmond.” To this end, he kept his Buy rating and $300 price target as is.
As far as the rest of Wall Street goes, the sentiment is 100% bullish, with the stock boasting a total of 23 Buy ratings.
Ives estimates that global cloud spending will reach nearly $1 trillion over the next decade, with “next generation platforms/infrastructure facilitating this IT transformation as AWS/MSFT battle for this golden cloud pie.”
Based on recent field checks for the March quarter, Ives argues “the tide is shifting in the cloud arms race as Microsoft coming off its recent 50% Azure growth number is taking market share vs. AWS (28% year-over-year growth this past quarter).” This led Ives to conclude that Azure’s cloud momentum is still in its early stages within its large installed base, with the Office 365 transition for both consumer and enterprise providing “growth tailwinds over the next few years.”
“With this highest IT priority front and center, we believe 85%-90% of these cloud deployments have already been green lighted by CIOs and healthy cloud budgets already in place for 2021, with Redmond firmly positioned to gain more market share vs. AWS in this cloud arms race. That said, this will be a key 12 to 18 months looking ahead as the Street and industry will be laser focused on the success of AWS and its cloud ambitions vs. Microsoft with the tech titan Bezos no longer front and center,” Ives explained.
With this in mind, as the cloud shift is just starting to take shape globally, Ives tells investors “this disproportionally benefits the cloud stalwart out of Redmond, as Nadella & Co. are so well positioned in its core enterprise backyard to further deploy its Azure/Office 365 as the cloud backbone and artery.”
Landing among the top 100 best-performing analysts, Ives has a 69% success rate and 33.3% average return per rating.