A Rising Tide Of Analyst Sentiment
A rising tide of analyst sentiment is lifting the broad market. Not all companies are benefiting from the trend, some will not survive the pandemic, but those that are are poised for growth in calendar 20221 and beyond. The stocks we are highlighting today not only have a boost from the pandemic but are supported by secular trends that promise growth for many years to come.
A Flurry Of Activity For Activision Blizzard
Baird just came out and reiterated its strong buy rating on Activision Blizzard (NASDAQ:ATVI) giving matching the Wall Street high price target of $116. That’s more than $20 above the consensus target and implies another 28% of upside for this gaming stock. In Baird’s view, the incremental gains in usage and engagement will be sustained in 2021 benefiting each of the company’s core franchises. Add to this the console upgrade-cycle that begins this month and the outlook for ATVI is more than robust.
Morgan Stanley came out just a day before calling ATVI its top gaming pick for 2021. In their view, the company is on a path to multi-year EPS growth. In a broader view, the analysts at Morgan Stanley see user growth in the gaming industry four years ahead of schedule because of pandemic-driven demand. Morgan Stanley maintained its overweight rating and setting the Wall Street high price target.
Shares of ATVI seem indifferent to the news but there is a caveat. This stock is in a clear uptrend with the recent price action consistent with consolidation and a possible bull-flag. With the MACD strong and convergent with the recent high the odds of the rally continuing are very high. A break to new highs would be a bullish signal and could take this stock up another $15 at least.
Peloton On Verge Of Transformational Growth
Rosenblatt has been bullish on Peloton (NASDAQ:PTON) for some time now and is getting more so by the day. The company just upped its price target on the company, again, to $186 citing the “deep offering” Peloton provides to its clientele and a favorable competitive environment. Peloton’s new value offering is a compelling reason for the price hike. Rosenblatt thinks this new line, along with the recent Precor acquisition, will be transformational in terms of the growth trajectory.
Peloton agreed to purchase fitness equipment Precor in a deal worth an estimated $420 million. The deal is intended to boost Peloton’s market share in the fitness industry and will boost its manufacturing capacity for core products as well. The analysts are generally bullish on the stock but have a consensus target below the current price action. The silver lining is that no less than 6 price target increases have come out since the Precor deal was announced and their consensus is closer to $170 or about 5% upside from current price action.
Chipotle Mexican Grill, Growing With Innovation
Chipotle Mexican Grill (NYSE:CMG) has had a stellar run under the leadership of Brian Niccol and that run is not over. Not only is the company doubling-down on what was already an aggressive eCommerce strategy it continues to innovate with new cuisine. The company has been testing a new cauliflower rice dish and analysts at Cowen see it rolling out nationwide in early 2021.
According to the note from Cowen, Chipotle Mexican Grill saw a sustained 1-2% uptick in test-store comps that is consistent with what have become new menu items in the past. If so, Cowen sees the addition providing another 100 to 200 basis points of growth to an outlook that is already estimated a double-digit CAGR for the next five years.
Shares of Chipotle Mexican Grill recently broke out of a major consolidation pattern to set a new all-time high. This pattern confirms the continuation of trends set in the middle-portion of 2020 and suggests another $800 in upside potential for this stock.
