Frank Calderoni, CEO of Anaplan.
Adam Jeffery | CNBC
In the final leg of 2020, stocks have delivered a record-breaking rally. The Dow Jones Industrial Average recently closed above 30,000 for the first time, with the other major U.S. stock indexes hovering close to record highs.
Encouraging updates on the advancement of a coronavirus vaccine prompted an investor rotation into cyclical stocks, which tend to outperform during periods of economic recovery.
“Although 30,000 isn’t much different than 29,999, there is something special about those big milestone numbers… This is yet another reminder of how far stocks and the economy have come since the depths of March,” chief market strategist for LPL Financial, Ryan Detrick, commented.
However, the near-term is riddled with uncertainty as the distribution of a vaccine presents a significant challenge, one that will require global coordination. At the same time, coronavirus cases are surging in the U.S., with it reporting the highest single-day death toll since early May this week.
Against this backdrop, one way to find compelling plays is to follow the activity of the analysts with proven stock picking abilities. TipRanks analyst forecasting service attempts to pinpoint the best-performing analysts on Wall Street. This is determined by success rate and average return per rating, factoring in the number of ratings made by each analyst.
Here are the best-performing analysts’ five favorite stocks right now:
Payment processing company Repay Holdings has just earned Northland Capital analyst Mike Grondahl’s stamp of approval. Following a call with members of the management team, the five-star analyst reiterated a Buy rating on November 24, with the analyst projecting 16% upside potential, as the price target stands at $28.
Grondahl acknowledges that coronavirus has been a significant headwind for the space as a whole, but he argues “RPAY has found ways to work through it.” This includes expanding its “TAM from its primary core verticals of personal loans and auto loans to B2B, which is now significant, and into mortgage and accounts receivable.”
“We are excited about RPAY’s ability to continue its expansion into new key verticals and drive strong financial results,” the analyst added.
Looking more closely at these verticals, the auto loans business has been able to expand even against the backdrop of the pandemic. According to Grondahl, there are positive macro tailwinds for this segment as people are starting to move out of urban areas and are buying their first or second car. With the decrease in public transportation utilization, there’s strong demand for used car sales.
As for mortgages, RPAY made its foray into the space with its acquisition of Ventanex in February. Thanks to low interest rates and increased refinancing activity, Grondahl sees several positive tailwinds.
Personal loans, however, have been “soft” recently, as the surplus of cash in the system from stimulus checks spurred a reduction in originations during Q2 2020, with this creeping into Q3 2020 repayment volumes. That said, Grondahl points out that the company didn’t lose any customers, and management believes this reflects only a temporary setback.
The #147-ranked analyst’s stellar track record is backed by a 63% success rate and a 21.7% average return per rating.
Shares of software company Autodesk surged almost 5% on November 25 after it posted fiscal Q3 results that landed above the high-end of management’s guidance range, in line with its pre-announcement a few weeks earlier. For five-star analyst Koji Ikeda, of Oppenheimer, this performance reaffirms his bullish thesis. To this end, he reiterated a Buy rating and $300 price target (11% upside potential).
Total revenue for the quarter came in at $952.4 million, which reflected a gain of 13% year-over-year and beat the consensus estimate by $9.8 million. Pro forma EPS surpassed the Street’s call by $0.08.
Going forward, management guided for fiscal Q4 total revenue of $999 million-$1,014 million, with the midpoint surpassing analysts’ $1,003 million forecast.
There were several positive takeaways for Ikeda. These included inking a nine-figure multi-year renewal deal and finalizing eight $500,000-plus non-compliant user deals, generating an operating margin of 30.1%, the highest level since FY2015, and APAC usage was above pre-pandemic levels.
Even though FY2022 revenue and FCF guidance were below consensus, with management trimming the high-end of FY2021 billings and FCF guidance by roughly $40 million each, Ikeda remains optimistic about ADSK’s long-term prospects.
“We believe Autodesk is well-positioned during and post-pandemic to disrupt the future digitization opportunity in the construction and manufacturing industries that should enable the business to achieve its FY2023 financial targets,” the analyst opined.
Based on his impressive 93% success rate and 44.7% average return per rating, Ikeda scores the #48 spot on TipRanks’ ranking.
As for the 22nd best-performing analyst’s top picks, Needham’s Scott Berg is backing Anaplan. In a bullish signal, the top analyst increased the Anaplan price target to $85 from $70 and reiterated a Buy rating on November 25. This new target puts the upside potential at 21%.
In its third quarter, the company reported revenue and non-GAAP operating margin of $114.8 million and -5.3%, respectively, exceeding Berg’s $109.6 million and -13% estimates. Total revenue grew 28.5% year-over-year, and subscription revenue increased 31.4% and represented 91.1% of total revenue.
Additionally, management guided for initial FY22 total revenue of $550 million, easily besting the consensus.
That being said, the cRPO growth rate slowed from 28% to 20% quarter-over-quarter. Based on the “short history of this metric,” Berg believes this decline “may be an indication of slower Q3 sales or simply reflects the timing of several large upcoming renewals.”
“Positively, we believe partner investments by both Anaplan and the partners remain on-track with our pre-COVID expectations, which should lead to sales improvements as the pandemic subsides. Note, Anaplan was historically a fairly heavy in-person sale, thus a return to travel/in-person meetings could significantly benefit the company,” the analyst explained.
According to TipRanks, Berg is currently tracking a 72% success rate and 27.2% average return per rating.
Top healthcare analyst Edward White, of H.C. Wainwright, takes a bullish stance on Karyopharm Therapeutics, which focuses on the development of therapies for patients with cancer and other serious diseases. He reiterated a Buy rating on November 25 as well as a $41 price target, suggesting 178% upside potential.
The call came in response to KPTI’s announcement that the ongoing Phase 3 SIENDO study passed its interim futility analysis, and the Data and Safety Monitoring Board (DSMB) suggested the study should proceed as planned without any modifications.
SIENDO is a Phase 3 study evaluating the efficacy and safety of Xpovio (the company’s oral selective inhibitor designed to bind and inhibit XPO1, a nuclear export protein) as a frontline maintenance therapy in patients with advanced or recurrent endometrial cancer. Top line data from the study will likely be reported in 2H21.
White points out that the FDA has already approved the therapy as a treatment for relapsed or refractory (r/r) multiple myeloma (MM) and r/r diffuse large B-cell lymphoma (DLBCL).
The drug’s potential extends beyond these indications, with the analyst highlighting that last week, “positive Phase 3 SEAL data were presented at the Connective Tissue Oncology Society 2020 Annual Meeting (CTOS 2020). It was previously reported that the SEAL study, evaluating single agent Xpovio in patients with advanced unresectable dedifferentiated liposarcoma, met its primary endpoint of a statistically significant increase in median progression-free survival.”
Bearing this in mind, White estimates Xpovio sales in dedifferentiated liposarcoma could reach $3 million in 2022, increasing to $26 million in 2026. When considering the therapy’s potential in solid tumors other than dedifferentiated liposarcoma, the analyst expects a launch in 2023 with revenues of $39.9 million that year, growing to $199.5 million in 2026.
With the analyst boasting a 34.2% average return per rating, White is ranked #113 on TipRanks’ list of best-performing analysts.