Wall Street analysts understand that their reputations and careers are on the line each time they issue a recommendation for—or against—a stock. Knowing this, investors would find the weight of the decision-making and stock rating all the more important now that the S&P 500 has survived one of the worst weeks of 2024. During volatile times, each analyst boost carries double weight.
After the so-called “Carry Trade” between U.S. dollars and the Japanese yen started to unwind due to interest rate hikes in Japan, stock markets worldwide took a nose dive. The good news is that some low-hanging fruit became available for investors and analysts as newly low prices proved near irresistible. Presented with the opportunity to cement their careers, analysts picked three stocks to boost last week.
Topping the list is a recent runner in the technology sector. Shares of Reddit Inc. (NYSE: RDDT) now trade at 76% of their 52-week high, and analysts think the price should be much higher. The same opinion applies to this building and construction materials maker, who trades at a reasonable discount; Owens Corning (NYSE: OC) is worth a look. Last, rideshare and delivery platform Uber Technologies Inc. (NYSE: UBER) earned some attention.
Reddit Stock’s Strong Financial Momentum Boosts Analyst Confidence
In the company’s recent quarterly earnings, investors will note that all essential drivers for Reddit stock look the same way, up and to the right. Starting with revenue, the company reached $281.2 million for a 54% annual growth rate, blowing past most peers in the space.
More importantly, the user base behind this revenue also grew significantly. Daily Active Users (DAU) reached 91.2 million, 51% higher than a year ago. And even though Reddit still posted a narrower loss of $10.1 million for the quarter, one more critical metric came out in the green.
Free cash flow (operating cash flow minus capital expenditures) grew to $27.2 million from a net outflow 12 months prior. Facing all this bullish evidence, analysts on Wall Street now forecast a 23.9% upside from where the stock trades today, as implied by the consensus $65.6 price target.
Those at Needham & Co. stood out from the pack. They placed a $75 price target on Reddit stock, calling for an even bigger upside of 42% from today’s stock price.
Real Estate Rebound Sparks Positive Sentiment for Owens Corning Stock
Whether investors know it or not, the Federal Reserve (the Fed) aims to cut interest rates by the end of 2024. According to the CME’s FedWatch tool, these cuts could be here as soon as September 2024, in fact, and that is going to affect plenty of interest, with real estate being one of them.
As the United States building permits returned to pre-COVID levels and the mortgage market index came down to 1997 readings, investors need to focus on what’s next for the real estate sector rather than worry about the present state of affairs.
When interest rates come down, mortgage rates will closely follow, causing new demand for housing and, therefore, an uptick in building permits. All of this new construction, or at least the willingness to remodel and renovate existing homes with cheaper credit rates, will call upon Owens Corning to deliver on this demand.
This could be the trend making those at the Royal Bank of Canada push a price target for Owens Corning stock up to $213 a share, which directly calls for as much as 35.6% upside from where the company trades today.
Inflation Set to Boost Uber Stock by Expanding Driver Base
As consumers in the United States struggle with inflation and rising costs across the board, looking for a second job might not be as feasible as it once was. This is why a side ‘hustle,’ as they call it today, might be a better fix. Uber allows everyday drivers to monetize their vehicles by joining a driver network.
In this case, Uber’s earning power could be about to hit a tailwind on the back of potentially growing driver bases; considering the stock only trades at 74% of its 52-week high, investors can probably guess that there could be a discount in the making.
Wall Street analysts agree, as they now forecast up to 157.1% EPS growth for Uber stock's next 12 months. This helped Citigroup slap a price target of $98 a share for Uber stock as recently as August 2024. To prove these targets right, the stock must rally by as much as 43% from where it trades today.