When looking at the current market conditions and the impact of macro challenges on companies, it becomes evident that the long-term prospects of a company matter more than the short-term stock movements triggered by quarterly results. According to TipRanks, a platform ranking analysts based on their past performance, Netflix (NFLX) is a stock favored by the top analysts this week. Although the streaming giant reported better-than-expected results for the first quarter of 2024, investors were disappointed with its decision to stop reporting quarterly subscriber numbers. Despite this setback, BMO Capital analyst Brian Pitz reaffirmed a buy rating on NFLX stock with a price target of $713. Pitz highlighted the company’s addition of 9.3 million subscribers, exceeding BMO’s estimate of 6.2 million and the Street’s expectation of 4.8 million. He also emphasized Netflix’s ability to grow in the U.S. with 2.5 million net additions reported in the first quarter in the U.S. and Canada. Pitz believes that Netflix’s $17 billion content investments for 2024 position the company well for ongoing wallet share gains as linear TV viewership declines. Despite growth investments, the analyst expects an improvement in operating margin this year and beyond. He foresees benefits from the focus on advertising, as $20 billion of linear TV ad dollars are expected to shift to connected TV (CTV)/online globally over the next three years. Pitz currently ranks No. 155 among more than 8,700 analysts tracked by TipRanks, with profitable ratings 75% of the time, delivering an average return of 18.4%.
General Motors (GM)
Another stock favored by the Street’s top pros is automaker General Motors (GM). After announcing impressive first-quarter results and raising its full-year guidance, backed by strong performance in North America, Goldman Sachs analyst Mark Delaney reaffirmed a buy rating on the stock and increased the price target to $52 from $50. Delaney raised his EPS estimates for 2024, 2025, and 2026 to reflect improved margin expectations. He believes that margins can remain resilient, driven by cost/efficiencies and relatively firm pricing. Delaney considers General Motors’ progress on electric vehicle profitability favorable, with expectations for positive variable profit in the second half of this year and a mid-single-digit earnings before interest and taxes margin in 2025. The analyst is optimistic about GM’s capital allocation, expecting higher levels of capital return to shareholders beyond 2024. Delaney holds the 256th position among more than 8,700 analysts tracked by TipRanks, with successful ratings 61% of the time and an average return of 17.5%.
Wingstop (WING)
Finally, the last stock on the list favored by the top analysts is the restaurant chain Wingstop (WING), which operates and franchises in over 2,200 locations worldwide. Baird analyst David Tarantino believes that there is potential to scale the company’s presence to over 7,000 global locations, including at least 5,000 U.S. restaurants. BMO’s analysis indicates an upside to the company’s domestic target, with potential for the estimated total addressable market (TAM) to increase over time. Tarantino reiterated a buy rating on WING stock with a price target of $390. He estimates that Wingstop’s unit-level cash-on-cash returns are already about 70% for U.S. franchised locations and are likely to increase further this year. The analyst believes that WING deserves a significant valuation premium due to its solid near-term operating momentum and attractive long-term growth profile. He is positive about the company’s ability to maintain annual revenue growth in the mid-teens with a very capital-efficient growth model. Tarantino currently ranks No. 264 among more than 8,700 analysts tracked by TipRanks, with successful ratings 65% of the time and an average return of 11.5%.
When considering stock picks favored by the top analysts, it is essential to look beyond short-term stock movements and focus on a company’s long-term prospects. Stocks like Netflix (NFLX), General Motors (GM), and Wingstop (WING) have garnered attention from the Street’s top pros due to their positive outlooks and growth opportunities. Analysts like Brian Pitz, Mark Delaney, and David Tarantino provide valuable insights into these companies, highlighting key factors influencing their investment decisions. Investors can use this information to make informed choices regarding their investment portfolios and align their strategies with the long-term growth potential of these companies.
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