As earnings season draws to a finale, investors' eyes are focused on how the second half of 2021 will look.
Be it a contagious new Covid-19 variant causing lockdowns, shifting e-commerce trends changing consumer behavior, or vacation seasonality determining the fate of the travel industry, the factors affecting our financial future are unpredictable. To gain an edge, many investors take into consideration the ratings put forth by the top performing financial analysts. TipRanks makes this possible for the everyday investor by organizing these updated ratings into an easy-to-read format.
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Some of the companies featured in this article fell short of analysts' estimates with poor earnings performances over the second quarter at times due to difficult comparisons against their incredibly strong first-quarter results. Others, however, pulled through and reported uplifting developments. These now remain as, or have been newly assigned, buy ratings. Wall Street's best-performing analysts assigned these ratings due to the companies' potential for long-term upside.
Let's take a look at five stocks that top analysts see as long-term buys.
Positioned particularly well to handle the deceleration in e-commerce trends, Walmart recently reported quality earnings results. After Walmart beat Wall Street consensus estimates and raised its own guidance, Peter Benedict of Robert W. Baird & Co. increased his price target from $160 to $170, and maintained his buy rating on the stock.
The five-star analyst was pleased by Walmart's diversifying revenue streams, notably the acceleration in initiatives like Walmart Connect. He also noted that gains had been made across the grocery and general merchandise sectors.
Walmart beat Wall Street's $1.51 earnings per share estimates, reporting $1.78. Furthermore, the retailer increased its international sales by 13%, and reached an all-time high in Sam's Club memberships.
The back-to-school shopping season brings encouragement to Benedict, who stated that Walmart is "well-positioned regardless of the macro environment," for the second half of the year. Stimulus payments certainly aided Walmart's past earnings, and now the analyst argues that the business is continuing to accelerate forward.
TipRanks' unique data has placed Benedict as #34 out of over 7,000 analysts. He has a success rate of 81%, and an average return of 24.3% per rating.
As vaccination drives picked up steam in the first half of the year, so did the travel industry. Despite the company's particularly precarious position at the start of the pandemic, Airbnb was able to navigate the rough seas and is now sailing smoothly. After another second-quarter earnings beat, Brian Fitzgerald of Wells Fargo has forecasted a strong second half ahead.
Fitzgerald rated the stock a buy and raised his $200 price target per share to $210.
The five-star analyst based his hypothesis on the fact that while long-term nonurban bookings have been the strongest niche for the company, it is now seeing shorter, more urban bookings rise. This comes on the heels of economies opening up throughout the summer, along with the typical vacation season getting underway.
However, he expects the more flexible travel trends to stick around, as consumers retain their increasingly hybrid work schedules. Airbnb has a vast portfolio of domestic and international property options, and as such, Fitzgerald believes the company is in an especially advantageous position to capture this trending market.
Despite Covid-19, things have been going well for the company. Its Nights and Experiences initiative expanded 197% year-over-year, and it saw gross booking value move 320% upward over that same period.
Airbnb has been helping its supply and demand curve by attracting more hosts, after many had opted for renting their properties long-term to locals. It has introduced better optimized onboarding strategies for new hosts, cutting the onboarding time by greater than 50%.
Fitzgerald remains optimistic for the third quarter, arguing that the guidance provided by ABNB is "conservative." However, he does caution that the "spread of Covid variants, local travel restrictions and slowing vaccinations are beginning to adversely impact cancellations."
On TipRanks, Fitzgerald is ranked #36 out of over 7,000 total analysts. He has a success rate of 70%, averaging a return of 32.9% per rating.
The shortage in semiconductors during the first half of 2021 caused several industries to spiral, notably automotive producers and computer manufacturers. Now, with the supply of silicon chips slowly creeping back up to meet the high demand, it is important to find the best firm in which to invest.
Vivek Arya of Bank of America believes one of those to be Advanced Micro Devices. He asserts that even with the recent run-up in price, the stock is still trading at about 25% less than what it's worth.
Calling it a "top catch-up candidate," Arya rated the stock a buy, and declared a price target of $135.
Not only did AMD recently beat earnings per share expectations by more than 20%, but the company is currently trading at a discount, in relation to its industry competitors. Arya said that the company is poised to grow its gross margins by more than almost any other semiconductor producer.
In contrast to Intel, AMD has "limited exposure to more cyclical smartphone, memory, [and] autos/industrial demand." Intel is still dealing with losses from Apple's decision to produce its processors in-house, and its pipeline is possibly a generation behind AMD's roadmap.
On TipRanks, Arya is rated as #71 out of more than 7,000 total analysts. He has a success rate of 69%, while averaging returns of 27.4% per rating.
Even a less-than-stellar second-quarter earnings print can result in a buying opportunity. For example, if a stock falls precipitously, but the investor sees it as an overreaction, a buying opportunity presents itself. This is precisely the thought process of Brad Erickson of RBC Capital Markets, who wrote that the trends that negatively affected Wix.com "appear transitory," and that the company itself is still a leader in web design.
Erickson reiterated his buy rating on the stock, and assigned a revised price target of $270. While this target comes in lower than his previous at $315, it still could represent a sizeable upside for anyone willing to make the trade.
The five-star analyst hypothesizes that Wix's B2B partnerships provide more upside than not, as they have the potential to transform into recurring opportunities for monetization. He interpreted management's comments as meaning that the deals themselves also may "organically evolve as much as 4x the minimum commitments depending on conversion."
While Wix does provide services to individual web developers, its larger, more institutional e-commerce customers provide significantly more revenue to the company.
Finally, Erickson wrote that he sees Wix's "increased pursuit of agency channels and the e-commerce opportunity as additional potential upside given the attractive size and recurring nature of these revenue streams." In other words, as long as e-commerce trends continue to grind upwards, Wix stands to benefit.
On TipRanks, Erickson is rated as #184 out of over 7,000 analysts. He has a success rate of 58%, and averages a return of 38.1% per rating.
If a company is able to weather a storm, it will be in strong standing by the time the skies clear up. Nio has been mitigating impacts from the global semiconductor shortage and is projected to perform even better once the supply constraints loosen. Vijay Rakesh of Mizuho Securities is forecasting that path of development for the Chinese electric vehicle (EV) maker.
After rating the stock a buy, Rakesh asserted his optimism by raising his 12-month price target to $65 to $67.
The EV company posted mixed earnings results, but Rakesh sees a more long-term play at hand. Nio raised its guidance for third-quarter deliveries up to a possible 97% year-over-year, and could increase production by up to 100%.
The five-star analyst wrote that Nio is "well positioned for growth with premium EV leadership, EV penetration accelerating in China, Europe expansion in 2H21, and mass market offerings potentially in 2022-23."
The company expects to see its first Norwegian deliveries in September, signifying its standing as a global presence and increasing its brand awareness. Furthermore, Nio has been heavily investing in an effective infrastructure network, with a strong roadmap ahead of increasing numbers of charging stations.
Nio's healthy balance sheet shows its potential for prosperity once the ongoing chip shortage diminishes, allowing the company to expand with its full strength.
On TipRanks, Rakesh is rated as #97 out of more than 7,000 analysts. His success rate stands at 67%, and averages a return of 24.9% per rating.