Top Wall Street analysts say buy Rivian and Nio
A Citibank sign in front of one of the company’s offices in California.
Justin Sullivan | Getty Images
Investors are simply unable to find a bottom in this bear market and are struggling to maintain their optimism in the face of growing concerns of a possible recession.
However, the key to successfully surviving a bear market is to calmly wait for the market to recover, while taking advantage of current discounts on good stocks.
It makes sense now more than ever to closely follow what top Wall Street analysts are saying about stocks. Here are five stocks picked by some of Wall Street’s top analysts according to TipRanks, which ranks analysts based on their performance.
Electric vehicle (EV) manufacturer Nio (NIO) suffers from the impact of generally weak consumer buying patterns (in response to inflation); and this weakness should remain an overhang at least for the rest of this year.
Additionally, the lockdown in China due to the resurgence of COVID-19 has been a misfortune so far, but with the easing of restrictions, Nio is expected to experience an acceleration in growth. (See Nio Hedge Fund trading activity on TipRanks).
Recently, Mizuho analyst Vijay Rakesh cut his revenue estimates for the June quarter and the full year. Additionally, he also lowered his price target on the stock to $48 from $55, keeping in mind short-term pressures, most of which are beyond Nio’s control.
Nonetheless, strong demand for EVs has kept Rakesh’s long-term outlook on Nio supported. Additionally, Rakesh sees the supply chain disruptions that have persisted since the start of the pandemic, easing in the second half. The second half of the year should also bring more capacity at foundries to help EV and other automakers ramp up production smoothly.
Overall, Rakesh maintains a bullish stance on the company over the medium to long term, with an enhanced Buy rating.
Rakesh ranks 131st in the list of nearly 8,000 analysts tracked and ranked on TipRanks. Additionally, 56% of its stock ratings were successful, returning an average of 19.5% per rating.
Another maker of electric vehicles and car accessories on Vijay Rakesh’s radar is Rivian (SHORE). Granted, the company has been a victim of circumstance, particularly supply chain disruptions and chip shortages, but growth should pick up momentum soon after the clouds clear.
Notably, Rakesh is bullish on the outlook for battery electric vehicles (BEVs) in the second half. “Despite high macro risks, BEV could see steep 2H ramps as China reopens and demand improves, with BEV potentially up >55% 2H (over) 1H,” Rakesh noted, speaking in general from the EV industry. (See Rivian stock chart on TipRanks)
Therefore, despite lowering its production estimate for Rivian for the June quarter, the analyst is optimistic that economies of scale will be realized underpinned by “a clear path to deeper vertical integration yielding more control over vehicle production and delivery.” Rakesh factored short-term headwinds into his price target and cut it from $10 to $70 per share.
“We see RIVN as pure play and a strong frontrunner in the EV market, with a focus on the fastest growing SUV/light truck market and a strong utility vehicle roadmap with Amazon,” Rakesh explained while reiterating a buy note on the stock.
Microchip technology (MCHP) is a leading developer and manufacturer of microcontrollers, memory and analog and interface products for embedded control systems (small, low-power computers designed for specific tasks). Like its peers, the company has also faced the consequences of global supply chain shortages, which lead to increased lead times and manufacturing constraints.
Recently, Stifel Nicolaus analyst Tore Svanberg found various benefits for the company and upgraded Hold to Buy’s MCHP stock. He also raised the price target to $75 from $70. (See Microchip’s insider trading activity on TipRanks)
Svanberg believes Microchip has proven its business to be resilient in previous downturns. Additionally, he also noted that the current valuation of a price-to-earnings ratio of 9.8 times on estimated non-GAAP EPS of CY23, is close to Microchip’s lowest valuation in the past five years. This makes the stock even more attractive right now.
“MCHP has built a highly diverse and successful analog and embedded computing business model, with an incredibly diverse revenue base across multiple metrics,” said Svanberg, who ranks 28th among nearly 8,000 analysts tracked on TipRanks. . Additionally, his stock odds were successful 66% of the time, with an average return of 22.5% per odds.
The banking sector is one of the sectors that will benefit the most from the situation of high interest rates, and Citigroup (VS) is one of the biggest players in this field.
As RBC Capital Market analyst Gerard Cassidy pointed out in a recent research report, Citigroup is asset-sensitive, which means net interest income will steadily increase throughout the period of monetary tightening. “The higher levels of net interest income that are generated by rising interest rates sits directly in ‘bottom line’ and can have a significant impact on EPS, in our view,” he said. declared.
Cassidy was also optimistic about Citigroup’s long-term prospects. More than half of the company’s revenue comes from outside of North America, putting the company in a strong position to take advantage of growth in emerging markets.
It’s important to note that Citigroup and most industry players suffered lower than normal credit losses, which seems like a good thing at first glance, but is not a sustainable trend according to Cassidy. While credit losses are likely to reach normal levels in the second half of 2022, the analyst believes they are “manageable for C but could lead to increased volatility in its share price.” (See Citigroup’s risk factors on TipRanks)
These observations prompted Cassidy to reiterate a buy rating on the C stock reflecting its long-term uptrend. His short-term concerns factored into the price target, which he reduced from $65 to $60.
Gerard Cassidy ranks 30th among nearly 8,000 analysts tracked by TipRanks. Moreover, it has a history of 67% successful reviews and 22.7% feedback on each review.
Public storage (Message of public interest) owns, develops and operates self-storage facilities in the United States. Encouragingly, a large portion of Public Storage’s customer base prefers not to move their stored items, which makes it easier for the company to increase their monthly fees. Additionally, the recent sale of its Business Parks unit to Blackstone, which is expected to close in the third quarter of this year, is expected to net Public Storage $2.7 billion.
Recently, Stifel analyst Stephen Manaker reiterated his positive stance on the storage operating environment, supported by strong and sustained demand.
Manaker also pointed to Public Storage’s strong balance sheet, as its ample cash reserves should allow the company to cover any expenses in 2022. The analyst assumed that $400 million of the net proceeds from the sale of Business Parks would be retained by the company (and the rest will be paid out via cash dividends). That aside, a cash balance of $941 million was already present at the end of the first quarter. Additionally, $500-800 million is also expected to be retained in cash flow this year. This puts PSA in a strong liquidity position. (See public storage dividend date and history on TipRanks)
Now, Manaker recalled that PSA has a $500 million bond maturing this year. Moreover, according to the indications provided by the company, $1 billion is the acquisitions budget for FY22. The above assumptions and calculations made by Manaker deduced that PSA might not even have to raise capital. extra to repay its obligation and complete the acquisitions. This is good news in times of high interest rates.
These sharp rises led the analyst to reiterate a buy rating on the stock. However, rising interest rates led Manaker to lower his price target to $360 from $410, even though he assumes lower interest charges.
Notably, Stephen Manaker ranks 42nd among nearly 8,000 analysts tracked on TipRanks. Interestingly, 75% of his reviews were successful and each of his reviews generated an average return of 19%.