Investors always pay close attention to earnings season, eagerly awaiting results from tech giants and sector leaders to influence their investment decisions. While these updates provide key insights into a company’s performance, it’s important not to base investment decisions solely on a single quarter’s results. This is where the recommendations of top Wall Street analysts come into play, as they delve into an in-depth analysis of a company’s fundamentals to highlight stocks with solid long-term growth potential.
One such top pick by the Street’s leading analysts is Google parent Alphabet (GOOGL). The company recently reported results for the second quarter, showcasing the strength of its Search and Cloud businesses. Despite the growth in YouTube advertising revenue slowing down and missing analysts’ expectations in the quarter, BMO Capital analyst Brian Pitz reiterated a buy rating on GOOGL stock with a price target of $222. Pitz sees artificial intelligence-related tailwinds benefiting Alphabet’s Search business, with higher query volume and lower incremental costs pointing towards multi-year AI benefits to Search.
Additionally, Pitz raised his 2024 and 2025 estimates for the Cloud business to reflect AI-led gains. The adoption of the company’s AI infrastructure and generative AI solutions for cloud clients by over 2 million developers has already contributed “billions” in revenue. Despite the Q2 revenue miss for YouTube, Pitz remains optimistic about its future prospects. He believes that YouTube is well-positioned to capitalize on the expected shift of a significant portion of the $150 billion global linear TV ad dollars to the digital realm. Furthermore, Pitz expects YouTube’s superior AI Creator tools to boost its growth potential in the future. With Pitz ranking at No. 189 among more than 8,900 analysts tracked by TipRanks and boasting a 74% success rate with an average return of 17.1%, his endorsement of Alphabet is worth considering.
Another top stock recommendation by Wall Street analysts is ServiceNow (NOW), a cloud-based software company that impressed investors with its strong second-quarter results. The workflow automation platform exceeded expectations in net new annual contract value and generative AI contributions, leading to an increase in its 2024 subscription revenue outlook. Following these results, Goldman Sachs analyst Kash Rangan raised the price target for NOW stock to $940 from $910 and maintained a buy rating.
The strong results and guidance from ServiceNow triggered a 13% surge in shares on the day following the quarterly report. Rangan suggests that this rally signifies investors’ renewed confidence in ServiceNow’s go-to-market execution and the quality of its platform, which is resonating well with IT buyers regardless of the macro conditions. With a 22.5% growth at constant currency in ServiceNow’s current remaining performance obligation, derived from robust NNACV and early renewals, the company’s adaptability across the enterprise is evident. Rangan is optimistic about the company’s future growth prospects, foreseeing a sustained growth rate of over 20% driven by continued AI momentum and an accelerating backlog. Ranking No. 579 among TipRanks’ pool of analysts, Rangan maintains a 57% success rate with an average return of 8.7%, making his recommendations for ServiceNow worth considering.
Lastly, analysts have singled out Travel + Leisure (TNL), a membership and leisure travel company, as a top stock pick for investors. Even though TNL exceeded earnings expectations for the second quarter, it fell short on revenue estimates. The company raised its full-year adjusted earnings guidance due to solid consumer demand for vacation ownership or timeshares. Tigress Financial analyst Ivan Feinseth reaffirmed a buy rating on TNL stock and increased the price target to $58 from $54, emphasizing the anticipated benefits from vacation ownership and lower interest rates in the second half of the year and further rate cuts in 2025.
Feinseth expects TNL’s revenue and cash flows to be bolstered by property development, membership sales, and increases in subscription and resort operating fees in line with strong travel trends. The strategic partnership with Sports Illustrated Resorts and the launch of the Ultimate Sports-Themed and Active Lifestyle Resort Network are seen as major growth catalysts for TNL. Additionally, technology investments, marketing partnerships, and acquisitions, including the purchase of Accor Vacation Club, are expected to further drive the company’s growth. Feinseth, ranked No. 235 among TipRanks’ analysts, boasts a 60% success rate with an average return of 12.8%, making his endorsement of Travel + Leisure compelling for investors seeking growth opportunities in the leisure travel industry.
Investors looking for stock recommendations with strong long-term growth potential should pay attention to these top picks by leading Wall Street analysts. By considering the insights and analysis provided by experts like Pitz, Rangan, and Feinseth, investors can make informed decisions and navigate the market with greater confidence. It’s crucial to remember that investment decisions should be based on comprehensive research and analysis, rather than short-term fluctuations in a company’s quarterly results.