Looking for fresh investing ideas as we wrap up 2019? You’re not alone. Investors are hitting the Street, searching high and low for the most compelling opportunities to snap up this holiday season. Stocks worthy of a place in investors’ stockings are the names not only poised to outperform but also backed by the Street’s analysts.
As investors hunt for stock market deals, they are also looking to the pros for some guidance as to what the economic landscape looks like going into 2020. Deutsche Bank Group Chief Economist, David Folkerts-Landau, tells clients that he expects the S&P 500 to climb higher through the first quarter of 2020.
“We believe that after a globally synchronized slow down over the past 18 months global growth is now bottoming out well short of recession territory and will get back on track early next year. While activity may slow a bit further from its current levels in the near term, we are optimistic when looking forward several quarters. Uncertainty about trade policy and national politics are getting resolved, there is limited inventory overhang, and the still unprecedented monetary easing is feeding through into the global economy,” he stated.
Deutsche Bank’s analysts are some of the best-performing on Wall Street, with their selections offering plenty of investing inspiration. Not to mention the firm ranks within the top 10 of TipRanks’ Top Performing Research Firms. With this in mind, we wanted to check out 3 of Deutsche Bank’s stock picks. Upon closer inspection with the use of TipRanks' Stock Screener tool, we found out that the rest of the Street is also in favor of these names, as each has earned a “Strong Buy” consensus rating.
Uber Technologies (UBER)
The popular ride sharing platform has found itself in hot water recently over its operations in London. That being said, Deutsche Bank analyst Lloyd Walmsley actually sees the stock “clawing” its way back after bad news as a positive.
The trouble for Uber started when it lost its license to operate in London thanks to a few key issues brought up by the Transport for London (TfL). The company had been letting unauthorized drivers upload pictures to other Uber accounts as well as allowed suspended or dismissed drivers to create accounts. Adding fuel to the fire, the TfL found “several insurance-related issues” including drivers working without proper insurance. Uber can appeal the decision, with the Wall Street Journal stating that the appeal process could take eight months, during which time the company would still be allowed to operate.
As Walmsley estimates that London accounts for 5% of Uber’s bookings, or about $2.5 billion in 2019, it’s no wonder some investors are worried. Nonetheless, the five-star analyst tells clients that based on conversations with industry sources, he thinks Uber will most likely continue to operate.
“We think Uber will get a license given (1) the new leadership at the company under Dara Khosrowshahi has been making bona fide efforts to improve the safety of the app, work with regulators, and generally improve the culture (e.g. "Do the right thing, period") (2) it is working transparently with regulators, including in London, and the Transport for London (TfL) itself acknowledged such in its press release, and (3) while channel feedback was (not surprisingly) mixed here, one competitor noted Uber's safety processes are as good, if not better than, the other players in the market,” the analyst explained.
With Walmsley adding that the CEO’s recent insider buying, the passing of the lockup expiration, improving competitive and profitability trends in the U.S. and Latin America, tighter private capital markets and improving disclosure point to shares gaining in the long-run, he kept the Buy recommendation. At the $50 price target, the upside potential is 69%. (To watch Walmsley’s track record, click here)
All in all, other analysts agree that Uber still looks like a long-term winner. With 21 Buy ratings vs 5 Holds, the stock is a Strong Buy. While slightly below Walmsley’s forecast, the $45.52 average price target suggests solid upside potential of 60%. (See Uber stock analysis on TipRanks)
Zymeworks wants to help bring patients home disease free, developing treatments for various forms of cancer as well as tumors. After gaining 187% year-to-date, the biotech company is definitely on the Street’s radar.
During the ESMO Asia 2019, the company provided an update on the first part of the Phase 1 trial evaluating single-agent ZW25 in HER2+ cancers, not including breast cancer. The data demonstrated that response rates improved for colorectal cancer and gastroesophageal adenocarcinoma, with ZW25's safety profile still looking promising. Most noteworthy, however, was that one pancreatic cancer patient experienced a 100% decrease in target lesions.
“Overall, we view the ESMO Asia update as continuing to support the broad activity of ZW25 monotherapy in HER2+ cancers, especially in HER2-high cancers, with a safety profile that appears highly amenable to combination approaches. Further, first responses in duodenal and pancreatic tumors expand the breadth of that clinical activity and provide more reasons for us to be enthusiastic with regard to the company,” Deutsche Bank’s Konstantinos Aprilakis commented.
As the analyst also highlights the “potential opportunity for accelerated approval given the lack of any targeted HER2 therapies approved in this setting,” he keep his Buy recommendation. Adding to the good news, Aprilakis bumped up the price target by $10 to $49, implying shares could surge 16% in the next twelve months. (To watch Aprilakis’ track record, click here)
When it comes to the rest of the Street, let’s just say they’ve been pretty impressed with ZYME. Out of 6 analysts that have issued ratings in the last three months, 5 Buys were given compared to 1 Hold. Additionally, the $51 average price target brings the upside potential to 21%. (See Zymeworks stock analysis on TipRanks)
PTC Inc. (PTC)
In terms of digital transformation, PTC is leading the way. With its innovative software solutions, the company provides customers with the capabilities they need to succeed. While PTC has struggled year-to-date, Deutsche Bank’s Alex Tout believes the current share price represents an attractive entry point.
At its investor event in Boston, Massachusetts, the company restated its goal of $850 million free cash flow by full year 2024, or 31% full year 2019 through 2024 CAGR.
Tout argues that this target appears attainable as the prediction is in line with its blended end markets, noting, “While we think investors may still need some convincing that PTC’s ARR growth outlook to FY24 is realistic given the performance in FY19, fundamentally we believe that some acceleration from FY19's level of ARR growth is likely, not least as PTC’s high-growth IoT/AR business (as well as, now, Onshape) becomes an ever larger part of the mix and the headwind from the ‘Productivity Zone’/FSG reduces.”
According to the analyst, PTC’s acquisition of Onshape could lift its historical growth rate as the addition helps PTC cater to SMB companies that were previously out of its reach. On top of this, the company has partnerships with Microsoft, Ansys and Rockwell Automation that are still being developed.
Taking all this into consideration, Tout maintained the bullish call. While he did lower the price target from $105 to $95, he still sees 24% upside potential in store. (To watch Tout’s track record, click here)
Similarly, the rest of the Street is getting onboard. 5 Buys and 1 Hold assigned in the last three months add up to a Strong Buy analyst consensus. In addition, the $87 average price target puts the potential twelve-month gain at 15%. (See PTC stock analysis on TipRanks)