Earnings season is in full swing, and analysts are closely observing the impact of macro challenges on companies. While short-term stock movements may capture the attention of Wall Street, the focus for top analysts remains on the long-term prospects of companies. According to TipRanks, a platform that ranks analysts based on their past performance, there are three stocks favored by the Street’s top professionals. One of these stocks is Netflix, which reported better-than-expected results for the first quarter of 2024. Despite the disappointment from investors regarding the company’s decision to halt quarterly subscriber number reporting, BMO Capital analyst Brian Pitz reaffirmed a buy rating on NFLX stock with a price target of $713.
Pitz highlighted Netflix’s addition of 9.3 million subscribers during the first quarter, surpassing BMO’s estimate of 6.2 million and the Street’s expectation of 4.8 million. He also noted the company’s growth in the U.S., with 2.5 million net additions reported in the first quarter in the U.S. and Canada. Pitz remains optimistic about Netflix’s future, citing its content investments of $17 billion for 2024, positioning the company well for ongoing wallet share gains as linear TV viewership declines.
Despite its growth investments, Pitz anticipates an improvement in operating margin for Netflix this year and beyond. He also expects the company to benefit from its focus on advertising, especially as $20 billion of linear TV ad dollars are projected to shift to connected TV (CTV)/online globally in the next three years. Pitz currently ranks 155th among over 8,700 analysts tracked by TipRanks, with a profitable rating history of 75% and an average return of 18.4%.
Another stock favored by top analysts is automaker General Motors, which recently announced impressive first-quarter results and raised its full-year guidance. Goldman Sachs analyst Mark Delaney reaffirmed a buy rating on the stock and increased the price target to $52, up from $50. Delaney raised his EPS estimates for 2024, 2025, and 2026 to reflect improved margin expectations for General Motors.
The resilience in margins, according to Delaney, will be supported by cost efficiencies and relatively firm pricing. He also commended GM’s progress in profitability within its electric vehicle (EV) business, with expectations of a positive variable profit in the second half of this year and a mid-single-digit earnings before interest and taxes margin in 2025. Delaney believes that GM’s capital allocation strategy will continue to benefit shareholders, particularly with an aggressive buyback plan aimed at reducing outstanding share count to below 1 billion.
Delaney holds the 256th position among TipRanks’ tracked analysts, with a success rate of 61% and an average return of 17.5%.
Lastly, the restaurant chain Wingstop, with over 2,200 locations worldwide, is another stock attracting attention from analysts. Baird analyst David Tarantino recently expressed optimism about the company’s long-term prospects, citing potential scalability in the domestic market. While Wingstop aims for more than 7,000 global locations in the long term, Baird’s analysis suggests room for at least 5,000 U.S. locations, indicating an upside to the company’s domestic target.
Tarantino believes that Wingstop’s unit-level cash-on-cash returns are already strong and poised for further growth this year. With a positive outlook on the company’s revenue and growth potential, Tarantino reiterated a buy rating on WING stock with a price target of $390. He forecasts ongoing revenue growth in the mid-teens for Wingstop, supported by a very capital-efficient growth model.
Ranked 264th among over 8,700 analysts tracked by TipRanks, Tarantino boasts a success rate of 65% and an average return of 11.5%.
While short-term stock movements can be captivating, it is essential for investors to heed the advice of top analysts who focus on companies’ long-term prospects. Stocks like Netflix, General Motors, and Wingstop, favored by leading analysts, demonstrate promising growth potential and may present lucrative opportunities for investors looking beyond the immediate market fluctuations.