The first stock favored by the Street’s top pros is Netflix (NFLX). The streaming giant recently reported better-than-expected results for the first quarter of 2024. Despite the positive earnings report, investors were disappointed with the company’s decision to stop reporting quarterly subscriber numbers. Netflix emphasized a shift in focus towards revenue and operating margin metrics. Following the earnings release, BMO Capital analyst Brian Pitz maintained a buy rating on NFLX stock with a price target of $713. Pitz highlighted the company’s addition of 9.3 million subscribers, surpassing BMO’s estimate of 6.2 million and the Street’s expectation of 4.8 million. Additionally, Netflix showed strong growth in the U.S. with 2.5 million net additions in the first quarter. Pitz predicts continued membership growth driven by paid sharing efforts and content innovation. The analyst is bullish on Netflix’s future, citing $17 billion of content investments in 2024 positioning the company for ongoing wallet share gains as traditional TV viewership declines. Despite the growth investments, Pitz expects an improvement in operating margin and foresees potential benefits from the shift of $20 billion in linear TV ad dollars to connected TV/online platforms over the next three years.
General Motors (GM)
Another top stock on analysts’ radar is General Motors (GM). The automaker recently announced impressive first-quarter results and raised its full-year guidance, supported by strong performance in North America. In response to the positive results and outlook, Goldman Sachs analyst Mark Delaney reiterated a buy rating on the stock and raised the price target to $52 from $50. Delaney adjusted his EPS estimates for 2024, 2025, and 2026 to reflect improved margin expectations. He expressed confidence in GM’s ability to maintain resilient margins through cost efficiencies and firm pricing. Delaney also praised the company’s progress in electric vehicle profitability, expecting positive variable profit in the second half of this year and a mid-single-digit EBIT margin by 2025. The analyst emphasized GM’s capital allocation strategy, projecting increased returns to shareholders beyond 2024. Delaney’s optimistic outlook is driven by GM’s expectations for EV demand, production growth, and the benefits of the battery production tax credit. He believes that GM is well-positioned for sustained success in the coming years.
Wingstop (WING)
The third stock catching the attention of analysts is the restaurant chain Wingstop (WING), which operates and franchises in over 2,200 locations globally. Following a detailed analysis of the U.S. total addressable market, Baird analyst David Tarantino identified potential for growth in WING’s long-term target for the domestic market. While the company aims to expand to over 7,000 global locations, Baird’s assessment suggests room for at least 5,000 U.S. locations. Moreover, BMO’s analysis indicates a positive trend in the total addressable market, indicating potential for further growth. Tarantino reiterated a buy rating on WING stock with a price target of $390, citing the company’s strong unit-level cash-on-cash returns and promising growth prospects. He foresees double-digit unit growth for Wingstop in the long run, supported by its capital-efficient growth model and solid operating momentum. Tarantino is optimistic about Wingstop’s ability to sustain mid-teens revenue growth annually while maintaining a profitable and scalable business model. Overall, he believes that WING warrants a significant valuation premium given its current performance and future growth potential.
Top analysts are closely monitoring Netflix, General Motors, and Wingstop as promising investment opportunities with favorable long-term prospects. Investors may find these stocks appealing based on the analysts’ assessments of their financial performance, growth strategies, and market positioning. As always, it is advisable for investors to conduct their research and consider their risk tolerance before making investment decisions based on analyst recommendations.