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Home›Search Engine Stocks›Top Wall Street analysts say buy Alphabet and Carvana

Top Wall Street analysts say buy Alphabet and Carvana

By Katharine Fleischmann
April 24, 2022
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Earnings season is upon us again, with some big names reporting back this week. Volatility remains a top concern for investors and inflation continues to add pressure across all sectors. Short-term uncertainty remains hazy, although long-term investing can often cut through the day-to-day noise.

Let’s take a look at five stocks that analysts see performing well going forward.

eBay

Rising inflation does not affect everyone equally, with people from lower socio-economic strata and young people feeling the full force of the impact. When a business is involved in e-commerce, it helps to have lower cost options in its offering. For eBay (EBAY), this comes in the form of refurbished and used product categories, an area the company is expected to expand.

Robert W. Baird’s Colin Sebastian recently reported on the online marketplace and auction site, noting that when it comes to inflation “eBay’s unique offering of used and valuable merchandise should mitigate these headwinds, or even benefit the platform”. He went on to explain that Gen Z consumers are very interested in this segment, with 80% buying the products, according to a survey conducted by the company.

Sebastian priced the stock as a buy and added a price target of $80 per share.

The top-ranked analyst went on to explain that “the platform’s value-price orientation could help offset weak consumer spending by low- and middle-income consumers.”

In the near term, the analyst expects EBAY to make several announcements such as a digital wallet and increased focus on auto parts sales. (See Ebay website visits on TipRanks.)

E-commerce companies struggled to beat pandemic-era comparisons as slowing consumer trends worsen amid supply-side constraints and an inflationary environment. Sebastian expects Ebay to meet its forecast on May 4, although a beat and a rise would be very bullish given these challenges.

Out of nearly 8,000 analysts on TipRanks, Sebastian ranks 158th. His success rate is 52% and he maintains an average return of 37.1% per odds.

Alphabet

Technology has been one of the hardest hit sectors of late, as many of its big companies were still seen as risky and overvalued when the economy took a turn. However, Google’s parent company, Alphabet (GOOGL) was largely immune to harm, in part because its advertising segment was primarily shielded from Apple’s (AAPL) iOS 14.5 privacy update last summer.

Now, having weathered the storm, Monness’ Brian White said he expects the stock to be stable and strong ahead of his earnings call on Tuesday. In its recent report, it noted that GOOGL performed better than the average stock in its coverage and clarified that “we believe Alphabet will continue to benefit from the secular trend in digital advertising and the strength of the cloud experience”.

White priced the stock as a buy and added a price target of $3,850 per share.

He’s also excited about Alphabet’s investor conference in mid-May, which could spark encouraging investor sentiment for the tech conglomerate.

So far, White said platforms such as Google Search and Youtube Ads have driven growth, largely undisturbed by Apple’s software changes. Companies like Meta Platforms (Facebook) and Snap (INSTANTANEOUS), however, have cause for concern. (See alphabetical stock charts on TipRanks)

On the legislative side, the very specific analyst admitted that Alphabet will most likely see continued antitrust litigation in the United States and is currently facing some disruption from the recently passed European Digital Markets Act (DMA).

On TipRanks, White is ranked No. 171 out of nearly 8,000 analysts. He was right on 65% of his stock picks and averaged a return of 29.7% on each one.

Reserve credits

Just by going to any travel search engine, you can tell that the global rebound in demand is in full swing. Prices have skyrocketed across the board as repressed consumers finally seek to spend a summer vacation, see family or simply experience something new for a change. After last summer was derailed by the delta variant, it seems that this one has come to a standstill. Compounded by mask mandates emerging nationally, Booking Holdings (BKNG) expects a good Q2.

Tigress Financial’s Ivan Feinseth identified these benefits in his recent publication, noting that the travel search engine conglomerate stands to benefit as it is already experiencing strong growth in its hotel, flight and rental car segments.

Feinseth priced the stock as a buy and raised its price target higher to $3,210 from $3,150.

In addition to the obvious resurgence in business and leisure travel and excursions, the five-star analyst mentioned that “BKNG continues to benefit from advertising, merchants and other business sectors which are also seeing strong growth”.

Booking is expected to release its first quarter results on May 4.

The company has also made several encouraging acquisitions that have strengthened its vertically integrated ecosystem. Companies like Getaroom, FareHarbor, and Etraveli should all deliver a robust customer experience.

Feinseth wrote that “BKNG’s market-leading position, bolstered by its strong brand equity and diverse global footprint, as well as its strong ability to execute, technologically advanced platform and value realization of its complementary acquisition strategy” should all continue to generate gains.

Out of nearly 8,000 TipRanks analysts, Feinseth ranks 65th. He managed to value stocks 68% of the time and has an average return of 30.1%.

Digital Kornit

Over the past few years, the world of fast fashion has seen massive growth, but the industry’s manufacturing methods continue to remain in the past. Environmental concerns remain important for the big players in the industry, and the smaller ones would not hesitate to cut costs either. Enter Kornit Digital (KRNT), an Israeli digital printing systems company that is currently disrupting supply chains.

While stocks are down significantly year-to-date at last glance, some analysts see a newly discounted growth opportunity.

One such optimistic voice in the crowd is Needham & Co.’s James Ricchiuti, who wrote that “Kornit’s business remains sound” and he predicts “strong tailwinds” for the next year and a half. KRNT’s business model leverages its direct-to-garment and direct-to-fabric waterless printing systems, and is well positioned to continue to capture market share in its industry.

Ricchiuti reiterated a buy rating on the stock and lowered his price target to $155 from $202. The downward revision to the price target stems from an overall decline in growth and technology names in the stock market. (See Kornit Digital’s risk factors on TipRanks)

Kornit has acquired customers both large and small and is seeing strong momentum from customers wanting to focus on sustainability. The five-star analyst wrote: “Major apparel retailers in recent weeks have underscored the need to reduce supply chain risks through proximity and offshoring strategies, while at the same time large corporations e-commerce apparel companies have highlighted the importance of adopting advanced digital production workflows to deliver short-term and custom orders faster.”

Out of nearly 8,000 expert analysts, Ricchiuti retains position #144. He was right on his stock picks 62% of the time and has an average return of 27.8% on each one.

carvana

Along with the rest of technology, e-commerce and pandemic stocks, Carvana (CVNA) has declined significantly over the past two quarters. The shares are down more than 77% from their August 2021 highs, and now macroeconomic headwinds are dampening its business model. The large e-commerce used-car dealer saw its volumes, and therefore its margins, even as its management said the path to a rebound was clear.

Agreeing with this sentiment is Scott Devitt of Stifel Nicolaus, who noted that Carvana has taken steps to “standardize service levels, shorten delivery times and improve inventory levels”. If the right decisions are to be made, the current challenges facing the business could be short-lived.

Devitt priced the stock as a buy and lowered his price target slightly to $140 from $170.

The highly ranked analyst argued that the current narrative surrounding the company and its concurrent downward trend in share price is overblown, and that its shares now represent a huge discount. (See Carvana website hits on TipRanks)

In his report, he wrote that “Operational improvements are expected to drive sequential growth in unit volumes, revenue and GPU [gross profit per unit]”, although the overall market slowdown is clouding near-term visibility.

Citing his stock hypothesis, Devitt mentioned that Carvana is “the leading e-commerce platform and is well positioned with the infrastructure, technology and expertise to operate a national network.”

Out of nearly 8,000 professional analysts, Devitt ranks 538th. It maintains a success rate of 49% and an average return of 19.7%.

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