It’s Not The Analysts That Matter But Their Followers Who Count
The analysis and their upgrades are always a great place to find new investment ideas but not because of what any single analyst has to say. It doesn’t matter to us if analysts X is bullish on stock YZ but whether the trend of analyst expectation is getting better or getting worse. You see, it is not the analysts who matter so much as the traders who follow them, and when the analyst’s consensus sentiment towards a stock is improving it can be a powerful tailwind for share prices.
Dave & Buster’s To See Spike In Revenue
Dave & Buster’s (NASDAQ: PLAY) has not had a great pandemic but those days are about to end. With the spreading use of vaccines, declining daily case counts, and a widespread economic reopening on the verge of exploding the outlook for revenue is very bright. And the analysts are starting to notice. While the average rating has held steady over the past few months the average price target has not. The average price target is up 20% over the last 90 days but continues to lag price action by a wide margin.
The latest nod comes from Raymond James whose analysts recently called the stock a top recovery idea. The analysts upped the ante with a follow-up report that maintained the strong-buy rating but raised the price target to $55. The new $55 price target is the highest on Wall Street and a 15% upside to the current price action. We expect to see more analysts get on board with this sentiment as the reopening gets closer and drive price action well above $55 aided by the high 20% short-interest.
"We continue to look through to a post-COVID environment that we believe will be characterized by strong pent-up demand for experiential occasions and further supported by several company-specific sales-building initiatives (improved speed of service, new FOH service model, new games, and marketing capabilities)."
Columbia Sportswear Proves Brand Counts
Analysts at Bank Of America upped their rating on Columbia Sportswear (NASDAQ: COLM) to a buy from neutral after reviewing the company’s metrics. What they discovered is that Columbia Sportswear’s revenue growth is accelerating faster than previously expected and driving value in the stock.
The average rating for the stock has been a buy over the past 90 days but dipped to neutral before the last earnings report and since rebounded to new highs. Now, with 6 of the 11 analysts rating the stock a buy, the consensus target is still below the current price action but that is about to change. Bank of America’s $128 target isn’t the highest on Wall Street but it isn’t far off and represents a near 20% upside.
"We believe COLM was better positioned compared to other brands & retailers for West Coast port congestion delays which are straining the global supply chain as COLM is able to use a great deal of inventory on hand for its Spring/Summer ’21 shipments." says analyst Alexander Perry.
Pepsico Is A Long-Term Value Play
We were not surprised to see Pepsico (NASDAQ: PEP) get a nod from analysts Barclay’s who called it a “multi-year stock opportunity”. In our view, Pepsico’s diversified model makes it not only a better choice than Coca-Cola in terms of the business model but among the most attractive consumer staples stocks today. The company is not only on track for sustained low to mid-single-digit revenue growth but its dividend is growing too. At 3.0% the Pepsico distribution is double the broad market and a nice addition to any portfolio.
"We see the company as one of the few with not just clear visibility into achieving its algorithm in 2021 but also a viable path to accelerating top-line and profit delivery longer-term, providing a multi-year stock appreciation story."
PEP has been the subject of several research analyst reports. Deutsche Bank Aktiengesellschaft upped their price target on shares of PepsiCo from $143.00 to $148.00 and gave the stock a "hold" rating in a research report on Wednesday, February 3rd. Sanford C. Bernstein initiated coverage on shares of PepsiCo in a research report on Tuesday, January 19th. They set an "underperform" rating and a $136.00 price target for the company. Wells Fargo & Company initiated coverage on shares of PepsiCo in a research report on Monday, December 7th. They set an "equal weight" rating and a $157.00 price target for the company. Royal Bank of Canada lowered shares of PepsiCo from an "outperform" rating to a "sector perform" rating and set a $153.00 price target for the company. in a research report on Monday, January 4th. They noted that the move was a valuation call. Finally, Zacks Investment Research upgraded shares of PepsiCo from a "hold" rating to a "buy" rating and set a $142.00 price objective for the company in a research note on Friday, February 12th. One analyst has rated the stock with a sell rating, five have given a hold rating, eight have issued a buy rating and two have given a strong buy rating to the company's stock. The company currently has a consensus rating of "Buy" and a consensus target price of $146.53.
The firm has a market capitalization of $190.52 billion, a PE ratio of 26.63, a P/E/G ratio of 3.63, and a beta of 0.57. The firm's 50 day moving average price is $134.23 and its two-hundred-day moving average price is $139.20. The company has a quick ratio of 0.77, a current ratio of 0.93 and a debt-to-equity ratio of 2.79.
PepsiCo (NASDAQ:PEP) last announced its earnings results on Thursday, February 11th. The company reported $1.47 earnings per share for the quarter, beating the consensus estimate of $1.45 by $0.02. The business had revenue of $22.46 billion during the quarter, compared to the consensus estimate of $22 billion. PepsiCo had a net margin of 10.27% and a return on equity of 56.28%. On average, sell-side analysts anticipate that PepsiCo will post 5.51 earnings per share for the current fiscal year.
The firm also recently announced a quarterly dividend, which will be paid on Wednesday, March 31st. Shareholders of record on Friday, March 5th will be issued a dividend of $1.0225 per share. The ex-dividend date of this dividend is Thursday, March 4th. This represents a $4.09 dividend on an annualized basis and a dividend yield of 2.96%. PepsiCo's dividend payout ratio (DPR) is 73.96%.
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