These stocks have 'compelling' stories, Wall Street analysts say - 4 minutes read
The Wendy's Co. logo is seen on a cup displayed for a photograph at a restaurant location in Daly City, California.
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The U.S.-China trade war is not stopping Wall Street analysts from finding great value. As a busy earnings season winds down, analysts are signaling there are plenty of "compelling" ways to bolster your portfolio. Many stocks are familiar names like Wendy's, Ameriprise Financial, Energizer Holdings, Alibaba, MSG Networks, and Take-Two.
CNBC did a deep dive through sell-side stock research to find companies that analysts are singling out in their respective coverage universes.
This week, analysts at PiperJaffray initiated coverage on Wendy's with an outperform rating. "From a stock perspective, we believe WEN shares offer compelling opportunity as the company works to leverage its made-fresh value proposition and continues to grow its asset-light base," analyst Nicole Miller Regan said.
Financial services company Ameriprise Financial was the recipient of an upgrade by analysts at Credit Suisse. We are, "upgrading to outperform on compelling growth," analyst Andrew Kligerman said. "We like that AMP is less sensitive to the balance sheet than life peers," he said.
While Take-Two interactive might have disappointed some analysts by reporting a weaker-than-expected outlook in its recent earnings report, that's not stopping some analysts from staying bullish on the stock.
"Take-Two has consistently delivered upside to guidance and consensus, making its shares attractive over the near term. We are reiterating our OUTPERFORM rating on Take-Two shares as they continue to present a compelling value," Wedbush analyst Michael Pachter said.
Here are stocks analysts say have compelling stories:
PiperJaffray- Wendy's, Outperform rating
"From a stock perspective, we believe WEN shares offer compelling opportunity as the company works to leverage its made-fresh value proposition and continues to grow its asset-light base. The unit-level economics of the concept are healthy. Management has maintained a steady commitment to returning excess cash to shareholders via share repurchase and dividends."
Credit Suisse- Ameriprise, Outperform rating
"Upgrading to Outperform on Compelling Growth. .. .Valuation—Raising rating from Neutral to Outperform and target price from $145 to $202 on a sum of the parts analysis, which is supported by our discounted cash flow model. We like that AMP is less sensitive to the balance sheet than life peers. Risks include Asset Management pressures, LTC exposure, and equity market sensitivity."
Energizer Holdings- Jefferies, Buy rating
"We raise our FY20-21 EBITDA/FCF ests. by ~2.5% after ENR's solid 2Q (in-line org sales, +4.5% EBITDA upside), which was reported on 5/7, and encouraging FY19-20 guidance. ENR is a highly-levered deal stock in a "risk-off" tape; however, battery fundamentals remain strong, mgmt. has been "extremely pleased" w/the integration, and shares offer compelling value at 9.5x EV/EBITDA vs. staples at 14.5x. Edging PT to $60, ENR remains favored value call in HPC/bevs."
Alibaba- SunTrust, Buy rating
"We remain bullish on BABA as mgt once again executed well against a challenging macro economic/political backdrop in F4Q19, beating expectations and gaining share. Secular drivers of growth remain in place with rising consumption in-and-around China of digital and physical goods (esp. in lower tier cities), healthy household finances, and digitization of Retail. Macro uncertainty and the decision to postpone monetization of the recommendation feed have caused mgt to guide cautiously for FY20 in our view, but a very healthy 33%+ Y/Y revenue guide and a compelling valuation keep us positive."
Imperial Capital- MSG Networks, Outperform rating
"We believe F2020 could be incredibly compelling. And so we posit rhetorically, if MSGN can grow advertising in a year when both teams were not particularly competitive, imagine what happens when the Knicks become instantly competitive, which starting on 7/1/19, is a scenario that could play out with the Knicks exercising its option on the two max slots as previously stated in this report. This past season, Knicks ratings were 32% of what they were the last time the Knicks made the playoffs. As such, advertising effects on these networks given a completely different player line-up is universally compelling, and not at all built in to the stock price. In the meantime, because small-cap value is not particularly in vogue right now, the stock is trading at/near a trough multiple, certainly a unique opportunity for investors willing to be patient."
Wedbush- Take-Two Interactive Software, Outperform rating
"Take-Two has consistently delivered upside to guidance and consensus, making its shares attractive over the near term. We are reiterating our OUTPERFORM rating on Take-Two shares as they continue to present a compelling value. .. .We are adjusting our FY:20 estimates to reflect guidance, and are initiating FY:21 estimates. For FY:21, we are modeling a modest Rockstar release that should result in revenues of $3,000 million and EPS of $5.00. We are adjusting our price target to reflect the initiation of FY:21 estimates, and reiterate our OUTPERFORM rating."