Top Wall Street Analysts Say Buy Costco & Cigna
Friday’s rally gave investors some respite from the latest bout of market turmoil, but more volatility is likely to come.
It doesn’t help that inflation continues to bite, and the Federal Reserve’s decision to raise rates has created additional uncertainty.
Wall Street’s top pros remind investors to look past the turbulence and aim for long-term investing. Analysts are picking their favorite stocks to weather the storm, according to TipRanks, which ranks Wall Street’s top performing professionals.
Here are five stocks analysts are highlighting this week.
Coursera (YARD) offers online courses covering a wide range of disciplines and skill levels, including degree programs. It targets individuals and businesses, including companies looking to upskill their workforce.
Coursera partners with industry experts and universities to provide course content. Customers can purchase individual course certificates or purchase a subscription plan. Coursera revenue grew 36% year-over-year to $120.4 million in Q1 2022, beating the consensus estimate of $116.7 million. (See the sentiment of Coursera bloggers on TipRanks)
Coursera couldn’t avoid the selloff that hit stocks across the board. Still, those who buy the dip can get a lot. Needham’s Ryan MacDonald attended Coursera’s recent annual conference and came away convinced that the stock presents an excellent long-term investment opportunity. In a recent report, the analyst pointed out that the conference discussions provided insight that implies growing opportunities in Coursera’s segments.
MacDonald priced the stock as a buy with a price target of $32.
In the consumer segment, Coursera is expanding professional certificate offerings with a high gross margin. This strategy will support revenue growth and margin expansion, the analyst said. According to MacDonald, in the enterprise segment, Coursera is introducing innovative offerings and free add-ons that should help it win new customers while expanding its wallet share.
Of the roughly 8,000 analysts in the TipRanks database, MacDonald is ranked 545th. Its success rate is 47%, with an average return of 12.5% per note.
ZoomInfo (ZI) sells access to valuable database information that companies rely on for marketing and recruiting talent. Its TalentOS platform, for example, allows companies to recruit more efficiently.
In the first quarter, ZoomInfo beat consensus estimates on its top and bottom results. The company then provided an upbeat outlook for the second quarter and full year. (See ZoomInfo earnings data on TipRanks)
Despite strong quarterly results and upbeat forecasts, ZoomInfo’s stock was caught in a downturn. According to Raymond James analyst Brian Peterson, the sale of ZoomInfo is a blessing in disguise for investors with a long-term view since they can buy the stock for less. In a recent report, the analyst said ZoomInfo has more room to grow profitably, citing the company’s new product introductions, acquisitions and international expansion.
Peterson priced the stock as a buy with a price target of $65.
In a context of strong demand, ZoomInfo is accelerating its international expansion. The company is increasing its workforce in London and recently opened its first physical office in India.
At the same time, ZoomInfo continues its strategic acquisitions. It recently acquired Comparably and Dogpatch Advisors to bolster its recruiting and sales solutions, respectively. As it expands overseas and improves its solutions through acquisitions, ZoomInfo is gaining more business from existing customers. For example, it recently struck a deal with Google-parent Alphabet (GOOGL), the analyst said.
Peterson is ranked 100th out of nearly 8,000 analysts in the TipRanks database. Its stock quotes have been correct 59% of the time, with an average return of 19.2% per quote.
Costco Big Box Retailer (COST) currently operates a network of approximately 830 stores and plans to open stores in 30 additional locations in 2022. The move could boost its sales. (See Costco stock charts on TipRanks).
In its latest quarterly report, Costco released revenue and earnings that beat consensus estimates. However, Costco stock continued to trade below its level at the start of the year. Oppenheimer analyst Rupesh Parikh believes Costco remains a great investment and the stock’s discount is a great opportunity to buy it at a lower price. In a recent report, the analyst highlighted Costco’s strong management team and good track record of shareholder returns.
Parikh priced the stock as a buy with a price target of $645.
In terms of shareholder returns, Costco has a long history of paying dividends. It recently increased the payout to $3.60 per share on an annualized basis. Parikh sees prospects for a special dividend. The analyst also noted Costco’s strong April sales despite the many headwinds retailers at all levels are facing. The analyst also sees Costco as having a strong competitive position, which should allow it to continue to gain market share.
Parikh is ranked #352 out of around 8,000 analysts in the TipRanks database. The analyst was accurate 62% of the time in his stock quotes, with an average return of 10.5% per quote.
Fintech Green Dot (GDOT) offers prepaid debit cards, checking accounts and cash processing services for consumers. It also assists with the payment of salaries and the processing of tax refunds.
The company reported strong first quarter results as both revenue and earnings improved from the same quarter a year earlier and beat consensus estimates. Green Dot then issued an upbeat outlook for the second quarter and the full year. The company also launched a $100 million share buyback program. (See the green dot risk analysis on TipRanks)
However, Green Dot stock remained under pressure amid the market selloff. According to Needham analyst Mayank Tandon, GDOT has bright prospects and the current pullback presents a bargain opportunity.
Tandon rated GDOT as a buy with a price target of $35.
The analyst noted that the pandemic has accelerated the adoption of digital banking and payments, adding that the trend plays into key GDOT focus areas. Tandon also noted that GDOT management continues to invest to drive future long-term growth. The investments, coupled with share buybacks, could drive double-digit earnings per share growth in 2023 and beyond.
Of the roughly 8,000 analysts in the TipRanks database, Tandon is ranked 573rd. Analyst calls were correct 48% of the time, with an average return of 10% per rating.
Cigna Health Insurance Fund (THIS) is resisting the market sell-off. Investors continued to flock to Cigna shares after the company reported strong quarterly results and issued an upbeat full-year outlook. Mizuho Securities analyst Ann Hynes believes this is the right thing to do now.
In a recent report, the analyst notes that Cigna’s outlook remains bright. The company recently launched a provider consultation service that it says is designed to deliver better outcomes for cancer patients. The service is powered by Evernorth Health Services. In a community pilot, Cigna said results showed 40% of patients received up-to-date treatment advice, thanks to the provider consultation service. According to Hynes, Evernorth’s business performed well in the first quarter and remains well positioned for growth in 2023. (See Cigna’s dividend data on TipRanks)
Hynes priced the stock as a buy with a price target of $291.
According to Hynes, Cigna’s Evernorth unit is benefiting from new contracts and strong renewal rates. The analyst further noted that there is an excellent cross-selling opportunity for Cigna between its healthcare segment and the Evernorth unit.
Of the roughly 8,000 analysts in the TipRanks database, Hynes is ranked No. 568. The analyst’s calls were right 57% of the time, with an average return of 8.9% per rating.