Sell-side analysts continually re-evaluate their research universe as new information becomes available. Whether it be financial results, guidance, or shifting industry dynamics, there are many factors that can cause ratings and price targets to be altered.
Wall Street gets extra busy during the earnings season. Conference calls, meetings with management, and financial model tweaks go into overdrive. When it's all said and done, the Street’s opinion of a particular company can change dramatically.
The third-quarter earnings season is off to a strong start. Most companies are exceeding expectations despite global supply chain issues, commodity inflation, and rising labor costs. This is forcing analysts to re-calibrate their outlooks and modify price targets.
Here are three stocks that are getting a lot of attention when it comes to increased price targets.
What are Analysts’ New Price Targets on Amazon Stock?
Amazon.com (NASDAQ: AMZN) is no stranger to price target hikes. Sell-side firms are seemingly always playing catch up with the online retail beast. Not even a disappointing third-quarter report could deter some analysts from raising their Amazon price targets.
Amazon couldn’t even overcome the supply chain constraints and other economic headwinds facing corporations everywhere. Last week, the company fell short of consensus revenue and profit forecasts and offered tepid guidance for the all-important holiday quarter. Analysts know better than to count out Amazon especially given the strength of its less talked about Amazon Web Services (AWS) cloud business.
Not a single firm was willing to downgrade Amazon following Thursday’s news. Instead, more than 20 firms reiterated their ‘buy’ ratings on the stock keeping the Street’s unanimously bullish opinion intact. On Friday, J.P. Morgan made the bold move of raising its price target to $4,350, roughly $1,000 above current levels. Truist Securities hiked their target to $4,000.
There were, however, far more firms that lowered their price targets in the wake of Amazon’s Q3 dud. Still, even those revised targets are in the $3,800 to $4,100 range which suggests a modest upside from here. Even the mighty Amazon can be subject to downward price revisions, but Wall Street just won’t budge from its bullish long-term outlook.
How Did the Street React to Atlassian’s Latest Report?
Atlassian (NASDAQ: TEAM) shares rode a five-month winning streak into last week’s earnings report. Things only got better. For the second straight quarter, the stock gapped higher in heavy volume and set yet another all-time high.
The provider of collaborative software for teams reported that revenues were up 34% and adjusted EPS rose 53%. Both figures beat consensus expectations and showed that Atlassian’s products remain in high demand as enterprises migrate to cloud-based setups.
On Friday, ten analysts raised their price targets on Atlassian. While Cowen took a contrarian stance in raising its target to a mere $380, most firms expect the stock to climb to the $500 level and beyond. Mizuho Securities took the most bullish stance lifting its target $85 to a Street-high $525.
Atlassian continues to ride the remote workforce trend even as companies reopen their offices. Many businesses are pivoting to hybrid work environments that analysts say have staying power in the post-pandemic economy.
Atlassian is in the midst of a transition to an exclusively cloud-based model. Out are expensive software licenses, in are subscription software offerings. The cloud-based versions of its Trello collaboration platform and Jira project management system are expected to stay popular and drive recurring revenue growth. This is what has analysts excited about the next chapter in Atlassian’s impressive growth story.
What are the Street’s Price Targets for Hershey?
Hershey (NYSE: HSY) didn’t just beat earnings expectations last week it also raised its full-year outlook. This ‘beat and raise’ quarter is considered the ideal scenario for a stock when it comes to garnering higher price targets.
The main reason for management’s brighter outlook was strong demand for Halloween candy. With trick-or-treaters expected to return to the streets this year, the confectioner is seeing a hearty appetite from retailers for Reese’s cups, KitKats, and other popular goodies.
According to the National Retail Federation, overall Halloween spending is forecast to reach a record $10.1 billion this year. In addition to decorations and costumes, much of the money will go towards candy. And while mini-size treats are still a mainstay, Hershey has noted a developing trend in dishing out full-size candy bars. Not even higher prices due to rising input costs are expected to squelch the Halloween spirit.
Whether its an odd form of pent-up demand or people feeling they need to “keep with the Jones’s’” Hershey is on a sugar high heading into the key holiday season that stretches into Valentine’s Day. The company now sees full year sales increasing 8.5% at the midpoint and EPS climbing as high as $7.11.
The raised guidance prompted five analysts to sweeten their Hershey price targets on Friday. The revised targets ranged from Deutsche Bank’s $187 to Piper Sandler’s $205. Interestingly though, the revised targets did little to boost the stock which retreated from record levels and closed last week at $173. It could be an opportunity to bite into the tasty defensive play.
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