Like they say, the trend is your friend, and it's best to trade with your friend. Stocks like Palo Alto Networks (NASDAQ: PANW), Salesforce (NYSE: CRM), and Booking Holdings (NASDAQ: BKNG) are trending higher and are forecasted to provide friendly returns this year and next. Trends that support their price action include growth, outperformance, cash flow, and outlook for growth and cash flow growth to continue.
Trends supporting their price action also include the analysts, who are bullish and lifting their price targets. The average forecasted gain is a solid double-digit advance and likely a low forecast because of each company’s industry-leading position and operational quality.
Palo Alto Analysts Shift Gears: Lift Targets to New Highs
Palo Alto analysts did a head fake in 2024, downgrading sentiment, lowering their price targets, and then quickly reverting to the trend. The trend is upward and includes a price target that is up 40% over the last year and rising in the wake of the CQ3 2024 earnings report.
The consensus stock price target assumes fair value with the stock trading at a critical support level, but the revision trend suggests a move to the high-end range is coming. That would put the stock near $455 and in alignment with the technical targets. The technical targets put the stock in the range of $450 to $500 in 2025 and above $600 towards the end of 2026.
The analysts' head-fake was caused by platformization. Palo Alto is the leading cyber security provider, but its cyber security portfolio was fractured. Platformization is intended to make it easier to use and resonate with clients. The plan is working so well that an expected temporary slowdown in growth and impact on profitability is much less than feared, and now the company is set up to sustain mid-teens growth in 2024 and the long term.
The drivers for Palo Alto’s growth are widening business digitization and accelerating cyber threats. The rise of AI is accelerating cyber-attacks, increasing the frequency, time, and cost of mitigating them.
Salesforce is a Force to be Reckoned With
Salesforce is among the earliest adopters of AI, having integrated machine learning and data mining into its platform from the start. In 2024, growth is slowing but not as rapidly as forecasted, and margins are widening, strengthening the already robust cash flow and improving shareholder value and the capital return outlook.
Salesforce’s capital return includes dividends, which are a token amount but are on track for significant increases over the coming years, and share buybacks. The company pays out only 8.5% of 2024’s consensus forecast for a yield near 0.5% with shares near $3.25; the buybacks are worth 10X the dividend in dollars and reduced the count by 0.5% at the end of FQ3.
MarketBeat.com tracks 38 analysts covering Salesforce. They show a high conviction in the Moderate Buy rating and are lifting their price targets in 2024. Like with Palo Alto Networks, the consensus target assumes fair value near current trading levels. However, the revision trend is positive and suggests a move above the consensus is likely. The high-end range puts this market near $400 or 25% above the critical support target.
Booking Holdings: Slowing Growth Offset by Outperformance and Quality
Booking Holdings is another stock whose share price experienced headwinds because of an expectation for slowing growth. It is also experiencing tailwinds in late 2024 because the slowdown is less than feared, and operational quality is high.
Results in 2024 include growth slowing into the high-single-digit range and outperforming by a wide margin. Margin is an area of strength, with the adjusted EPS growing at double the pace. The outlook for 2025 is for similar performance, and the consensus figures are likely low. The combination of easing interest rates and a business-friendly president will likely create business tailwinds in the back half of the year.
MarketBeat tracks 32 analysts who rate this stock as a Moderate Buy. They see it fairly valued with a consensus of $4750, but the trend is positive, and the figure is rising. The most recent targets have this stock trading near $5550, or about 10% above all-time highs near $5000.
