The fourth quarter of 2024 has begun and year-to-date gains of 18% in the NASDAQ-100 and 20% on the S&P 500 are fairly hard to ignore. Earnings season will be kicking off within two weeks and the US elections are set just 5 weeks away. While September did not live up to its reputation of being the worst month for stocks (historically), October has been a continual source of worry for investors.
There are many issues happening simultaneously. Geopolitical tensions remain high. China is stimulating its economy while the U.S. Federal Reserve is also only at the start of its rate-cutting campaign. Earnings growth is sputtering, and many key stocks are starting to look overbought. So what happens when investors decide to focus on the most optimistic calls to see what the current upside is if everything goes perfect?
Oggonomics searches the daily flow of analyst calls covering the upgrades and downgrades from Wall Street looking for new ideas in Wall Street research reports. These calls can be a reliable source for finding some of those new ideas that might have otherwise been overlooked or missed.
Oggonomics always reminds its readers and investors that no single analyst call should ever be used as a decision to buy or sell a stock. With that in mind, do not forget that these individual analyst calls are currently showing the most optimistic view from all analysts on Wall Street in each of these stocks. And don’t forget the Oggonomics mantra — “Always being bullish is foolish. And always being bearish means you are broke!”
Looking at the most optimistic analyst price target on any given stock can of course skew what is happening right now if the call is stagnant and has not been updated for months. That is why Oggonomics set basically a 30-day window for the most bullish calls to be counted in.
Traders and investors should also keep the calendar in mind as the fourth quarter kicks off. The Almanac Trader blog from Jeff Hirsch warns that October is the worst month in election years. Now keep in mind that some high-profile cuts to earnings expectations are coming into play right as a massive port-worker strike in the Gulf and East Coast is shutting down many imports and exports. And we still have the same worries from Russia/Ukraine and as Israel’s fight against terror organizations in the region is intensifying.
The most aggressive analyst calls for tech blue chips are highlighted in Amazon.com, Apple, IBM, Meta, Netflix and Shopify. Consensus price target data is from FinViz and specifics on “the most bullish” calls come from each firm’s research reports. Again, do not forget that these are the most optimistic calls on each stock. They do not represent the opinions of Oggonomics, and Oggonomics does not have any formal price targets on any of these stocks.
AMAZON.COM
Amazon.com Inc. (NASDAQ: AMZN)
Market Cap: $ $1.9 Trillion
Consensus Upside: 44%
Street-High Upside: 20%
Amazon.com Inc. (NASDAQ: AMZN) is no stranger to having bullish analyst calls, but a consensus price target of $221 (versus $184 current share price) was dwarfed as Truist Securities reiterated its Buy rating and raised its AMZN price target to $265 from an already-bullish $230 on September 30. Amazon is called out as Truist’s favorite mega cap stock gaining share in global e-commerce as it continues to improve its value proposition to both merchants and consumers alike. The call is about three weeks ahead of earnings noting that Amazon’s North America revenue is tracking to consensus estimates.
The end result is that consumers remain resilient and that there is sustained growth in advertising revenue. AWS is seeing faster growth and with higher operating margins. Truist further noted that that these positives are even as it invests heavily in AI, AWS, logistics and Project Kuiper for satellite broadband. Keep in mind that this $265 price target is moved to fiscal 2025 from the $230 target it had for fiscal 2024.
APPLE IPHONE MANIA (SORT OF)
Apple Inc. (NASDAQ: AAPL)
Market Cap: $3.4 Trillion
Consensus Upside: 10%
Street-High Upside: 22%
Morgan Stanley reiterated its Overweight rating and $273 price target on Apple about 3 or 4 weeks before earnings. With a current $224 share price, the consensus analyst price target is $245.70. As of the week of 9/27, Morgan Stanley saw that iPhone 16 lead times were still tracking lower than the past three iPhone cycles. That doesn’t sound too positive, but…
Where leads times are not slower is in the iPhone 16 Pro/Pro Max models. Morgan Stanley sees these higher-end models now extending and stabilizing across all regions that the firm tracks. It was nothing short of an unexpected-positive for Apple’s story that makes the stock worth watching.
IBM, BUT OF COURSE WATSON
International Business Machines Corp. (NYSE: IBM)
Market Cap: $202 Billion
Consensus Upside: -6.5%
Street-High Upside: 14%
International Business Machines Corp. (NYSE: IBM) has been easy to forget about after years of malaise. Suddenly it is a top gainer of blue chips with a gain of 34% YTD. At $219, IBM is now above its consensus analyst price target of $205 — but Goldman Sachs (Buy rating) is now the highest target after raising its prior $220 target from June up to $250 on September 30. Goldman Sachs had also lifted IBM to the prized Conviction Buy List a month ago.
Goldman Sachs had already talked up IBM’s gains in infrastructure software, as well as AI and consulting. Now what is coming to fruition is solidifying and gains in market share as its prior years of investment in AI/Watson are paying off. While many of the great tech growth stocks have sub-1% dividend yields, IBM’s 3% dividend yield would make that 14% implied upside more like 17% on a total return basis.
META, FACEBOOK, ZUCK
Meta Platforms, Inc. (NASDAQ: META)
Market Cap: $1.45 Trillion
Consensus Upside: 2%
Street-High Upside: 35%
Meta Platforms, Inc. (NASDAQ: META), you know the company we all still call Facebook, has just managed to grow and grow as its social media dominance of 3.3 billion active daily users is lending a massive coup for the expansion of AI. While the consensus price target of $587.47 implies only about 2% upside from the current $575 price, Pivotal Research’s Jeffrey Wlodarczak sees much higher times ahead with a new Buy rating and a $780 price target.
Pivotal sees a strong revenue growth story ahead based on increased usage and from new products which have better targeting and come with higher profitability. Meta’s cost efficiencies also boost the earnings story, and a declining loss story at its Reality Labs effort ties in with an attractive valuation on top of strong earnings growth.
STREAMING TO RICHES?
Netflix Inc. (NASDAQ: NFLX)
Market Cap: $304 Billion
Consensus Upside: 1%
Street-High Upside: 28%
Netflix Inc. (NASDAQ: NFLX) is now the undisputed king of streaming media. With about a month until its report and after a 15% run since the early August panic, Netflix stock seems to have stalled around the $700 to $715 range. Its consensus analyst target price of $710.80 is also only about 1% higher than the current $703 price. Analyst Jeffrey Wlodarczak of Pivotal Research reiterated his Buy rating and raised his price target $900 from $800 on August 30. His new target implied just over 30% upside at the time, and it is still currently a forecast of 27% upside if his street-high thesis plays out based on this simple mantra — Netflix has won the global streaming wars after years of playing out.
Rival streaming from the likes of Disney, Amazon, Paramount, and Warner/Discovery have all fallen short of battling for the top streaming destination. Pivotal noted that competition was heating up again when Netflix went after password sharing, and it surprised Wall Street that it further solidified subscriptions rather than seeing waves of cancellations.
SHOPIFY TURNAROUND ONLY TOOK ONE QUARTER?
Shopify Inc. (NYSE: SHOP)
Market Cap: $101 Billion
Consensus Upside: 2%
Street-High Upside: 31%
Shopify Inc. pulled a quite rapid round-trip move from its pre-summer doldrums. Its shares were around $75 when earnings panic hit in May, then suddenly its ship had corrected and poof — an earnings beat and stronger guidance has SHOP stock back up to where it was and a little more. Citigroup reiterated its Buy rating raised its price target up to $103 from an already bullish $90 on September 30. The consensus analyst target price is $80.22.
The Citi report was after recent discussions with management offering more confidence in Shopify’s Payments adoption as well as cross-selling in select Merchant Solutions products. Citi now sees accelerating revenue growth for the rest of 2024 and it expects a profitability inflection in 2025 with upside to Shopify’s consensus forecasts.
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Again, Oggonomics would always remind readers that no single analyst call should ever be used as a decision to Buy, Sell or Hold a stock. That would particularly be the case here as these analyst calls represent the most optimistic views on Wall Street heading into the fourth quarter of 2024.
