Analysts expect buy-rated stocks like Gap and Teladoc to keep riding the coronavirus tailwinds

Published Sat, Jul 18 20207:07 AM EDT

(This story is for CNBC PRO subscribers only.) Wall Street analysts said this week said there's a host of well-positioned stocks for investors to keep riding out the coronavirus pandemic. These companies have attributes that analysts believe will bolster a client's portfolio even in a second wave. CNBC Pro examined this week's Wall Street research to find unique buying opportunities during the coronavirus crisis. They include: Hologic , Fox Factory , Teladoc , Gap , Tractor Supply , and Cogent . Teladoc Shares of the online telemedicine company are up a whopping 160% this year as consumers seek medical care from the comfort of their home in the wake of the pandemic. This week JPMorgan raised its price target on the stock to $240 from $194 ahead of the company's much anticipated earnings results on July 29. The firm said it expects "another strong quarter" nothing the company's history of quarterly estimates and believes "the company could also raise expectations for the legacy TDOC business given potential tailwinds from the ongoing impact of the COVID-19 pandemic," analyst Lisa Gill wrote. "We continue to believe we are at an inflection point, with the pace of virtual care adoption set to accelerate as COVID-19 has driven increased awareness and led to new users who will likely be more willing to utilize telehealth for additional services going forward," she said. Gap The apparel and accessories retailer, which also owns the Old Navy and Athleta brand, was upgraded to outperform from sector perform by investment firm RBC this week. Gap, like many retailers, has struggled under the weight of the coronavirus pandemic, but the firm said it now sees several reasons for investors to be bullish on the stock. For instance, the company announced late last month that it would partner with Kanye West's Yeezy to develop a clothing line for men, women, and children. "With secular tailwinds at Old Navy and Athleta's backs post- COVID, we see potential for value unlock at the Gap brand, aided by multiple catalysts including a fall 2020 analyst day, the 1H21 Yeezy Gap launch, and productivity stabilization and fixed cost reduction efforts on a smaller fleet to come," analyst Kate Fitzsimons said. The firm said it understood that "COVID-19 headwinds and second wave concerns" were likely but that Gap would be a "relative outperformer." Shares finished the week up over 10% Tractor Supply "Winners keep winning," Wells Fargo analyst Zachary Fadem said of the home improvement and garden retailer. Shares of the company are up 26% since the company preannounced earnings back on May 26 and the firm said it's seen "few signs" of a slowdown since. "We believe TSCO has played all the right cards during the pandemic, with a well-timed national ad campaign, expanded Omni rollout (new website, mobile app launch, expanded fulfillment) and double-down on associate investments," Fadem wrote. The company will announce its second-quarter earnings next week. "While expectations are running high we view the Q2 print as an important proof point, and opportunity to frame expectations for a 2H facing heightened investments but also lingering tailwinds as consumers increasingly focus on their homes," he said. Cogent Communications- Credit Suisse, Outperform rating "We believe that CCOI is underappreciated and positioned for a robust year of growth aided by COVID-19 tailwinds for network traffic that we expect to be more directly realized in 2Q20. (1) NetCentric revenues should be a focus area of results as OTT streaming services like Disney+ and Peacock should drive improved revenues for the vertical. CCOI's network traffic increased materially towards the tail end of 1Q20 (led by NetCentric traffic growth) and should improve meaningfully given a full quarter aided by COVID-19 tailwinds." Tractor Supply- Wells Fargo, Overweight rating "Winners keep winning. ... .We believe TSCO has played all the right cards during the pandemic, with a well-timed national ad campaign, expanded Omni rollout (new website, mobile app launch, expanded fulfillment) and double-down on associate investments (wages/benefits, mobile POS, etc.). While expectations are running high, we view the Q2 print as an important proof point, and opportunity to frame expectations for a 2H facing heightened investments, but also lingering tailwinds as consumers increasingly focus on their homes." Fox Factory- Jefferies, Buy rating "FOXF's investments in R & D should bear fruit in an expanding TAM as it develops new usage applications for its core products while also allowing the company to gain share in existing product categories. Rising outdoor recreation participation on the heels of COVID-tailwinds represents an additional positive.Rec/leisure spend benefiting from discretionary wallet re-allocation. Some have speculated that stimulus checks have been behind the surge in outdoor recreation sales. While FOXF sees this as a potential tailwind, the larger benefit, in their view, has been the shift in discretionary wallet share away from vacations/travel." Hologic- Cowen, Outperform rating "We believe the magnitude and duration of COVID-19 revenue tailwinds still support upside from current levels and that the "tail" associated with more Panther placements combined with a rebound in other business areas over the next few years should result in a sustainably higher core revenue growth rate for HOLX. ... .ologic is uniquely positioned in the current pandemic: COVID-19 testing provides downside risk protection and a significant longer-term tailwind." Gap- RBC, Outperform rating "With secular tailwinds at Old Navy and Athleta's backs post- COVID, we see potential for value unlock at the Gap brand, aided by multiple catalysts including a fall 2020 analyst day, the 1H21 Yeezy Gap launch, and productivity stabilization and fixed cost reduction efforts on a smaller fleet to come. ... .While we acknowledge uncertainty across our group with COVID-19 headwinds and second wave concerns in the fall, we see GPS as a relative outperformer given catalysts ahead, which we expect can be a driver of value unlock in the shares off of depressed levels. Teladoc- JPMorgan, Teladoc "We expect another strong quarter, citing a strong history of quarterly beats, and while TDOC is expected to update its FY20 guidance to include InTouch Health, we believe the company could also raise expectations for the legacy TDOC business given potential tailwinds from the ongoing impact of the COVID-19 pandemic. We continue to believe we are at an inflection point, with the pace of virtual care adoption set to accelerate as COVID-19 has driven increased awareness and led to new users who will likely be more willing to utilize telehealth for additional services going forward."

Jason Gorevic, CEO, Teladoc

Scott Mlyn | CNBC

(This story is for CNBC PRO subscribers only.)

Wall Street analysts said this week said there's a host of well-positioned stocks for investors to keep riding out the coronavirus pandemic. These companies have attributes that analysts believe will bolster a client's portfolio even in a second wave.

CNBC Pro examined this week's Wall Street research to find unique buying opportunities during the coronavirus crisis.