This is the time of year when conclusions are drawn, and resolutions made. A process not to be overlooked by Wall Street research firms, as analyzing the past and using it to forecast the future is part and parcel of the job.
Each year, global investment banking firm William Blair reassesses its individual sector groups and delivers an outlook for the year ahead. With 2020 on the horizon, the investment bank points out a number of themes to consider in the year ahead: experiential offerings should continue to gain share, the collection and utilization of data remains key to consumer engagement, membership offerings are becoming more commonplace, and the ability to own or create unique content and services is becoming increasingly important.
With the help of TipRanks’ Stock Screener tool, we homed in on three stocks which, according to William Blair analysts, are set to make headway in the new year. It also doesn’t hurt that each of the tickers has amassed enough support from analysts, in general, to earn a “Strong Buy” consensus rating. With that in mind, let’s dive right in.
While 2019 has been a stellar year for US stocks, smart-tax solutions provider Blucora has had a poor twelve months, tumbling nearly 10%. Interestingly, the downturn has piqued William Blair’s Christopher Shutler’s interest.
“Many of the stocks we cover appreciated strongly in 2019. Blucora’s stock has significantly lagged the market, even with the nicely accretive 1st Global deal, pointing to low investor expectations,” The 4-star analyst said. Shutler has BCOR as one of the investment firms’ 2020 ‘Best One-Year Ideas.’
Earlier this year, Blucora acquired 1st Global, a tax-focused wealth management company. Following the acquisition, the company announced a rebranding of its wealth management business to Avantax Wealth Management, combining the newly acquired company with its existent wealth management division, HD Vest. The merger has made Blucora the largest tax-focused wealth management firm in the US.
While acknowledging the tax business to be highly seasonal and competitive, and noting both company segments are presently in a period of transition, Shutler said, “We believe management has taken a highly analytical approach to modeling the tax business over the last one to two years and has done quite a bit of testing around a new marketing message that is differentiated and will resonate with a certain “attitudinal segment” of the market.”
Accordingly, Shutler maintained an Outperform rating on Blucora shares, without suggesting a price target. (To watch Shutler’s track record, click here)
It looks like the Street is reading from the same hymn sheet as the William Blair analyst, as Blucora currently has a Strong Buy consensus rating, with all 5 analysts tracked over the last 3 months unanimously handing the smart-tax company a Buy rating. An average price target of $35 is set to provide gains in the magnitude of 45%, should the target materialize. (See Blucora stock analysis on TipRanks)
Yeti Holdings (YETI)
In stark contrast to Blucora, Yeti has had a stellar 2019, outperforming the market and recording gains of over 100%.
The growth hasn’t gone unnoticed by Blair’s Sharon Zackfia, who said, “Yeti has developed into a trusted lifestyle brand for outdoor and recreational activities, with a growing base of evangelical customers. From its roots in hard coolers, Yeti has successfully expanded into soft coolers, drinkware, bags, and other products—most of which sport lower price points than its heritage product and have contributed to greater brand relevancy.”
The outdoor product manufacturer has seen its customer base broaden considerably, increasing female consumers to 33% (compared to 9% in 2015), with 64% of sales to customers under 45 years old. Additionally, its DTC (direct to customer) business represented 40% of total sales over the last 12 months, multiplying by nearly 900% since 2015.
Zackfia thinks Yeti has an opportunity for significant expansion and notes that domestic brand awareness remains low, at 12%, with no region of the country over 20%.
“We believe raising Yeti’s brand awareness is the single largest opportunity for the company, as we estimate that replicating Yeti’s sales per capita in its core East South Central market would translate into a near doubling of domestic revenue to roughly $1.5 billion,” the 4-star analyst said.
Not surprisingly, Zackfia considers Yeti a Consumer Sector Best Pick for 2020, while maintaining an Outperform rating on the cooler manufacturer. (To watch Zackfia’s track record, click here)
After such a strong year, is the Street cooling down on Yeti? Not a chance. The lifestyle brand’s consensus rating breaks down into 7 Buys and a singular Hold, bestowing Strong Buy status on Yeti for 2020. Furthermore, the average price target of $40.67 indicates upside potential of 29.44%. (See Yeti stock analysis on TipRanks)
Live Nation Entertainment (LYV)
In the olden days, artists/bands used the live platform mainly to promote new product - the cost of touring and putting on a show often incurring losses yet generating more record sales. Since the turn of the century and the internet’s complete disruption of the music industry, the tables have turned, and now many artists’ main source of income is often from live performances.
Live Nation is one such company taking advantage of the paradigm shift. As one of the largest live entertainment companies in the world, it produces more than 35000 shows a year, and has a hand in owning and operating over 250 venues and 100 festivals.
The company’s rise has come in tandem with consumers thirst for live engagement. Increased spending on live experiences, and the rise and impact of social media, have helped grow and globalize the live music industry.
As a result, William Blair’s Ryan Sundby says, “The industry has thrived, with aggregate concert ticket revenue growing at an 8% compound annual rate over the past 20 years to $22 billion.” Growth is expected to remain healthy in the years ahead, too; by the end of 2021 concert revenue is projected to reach $25 billion.
“Despite Live Nation’s clear leadership position within this market, there appears to be opportunity for the company to capture additional market share, as it represents just 28% of the global live music industry. Thus, management expects to grow its fan base from nearly 100 million today to 125 million over time through continued share gains and further industry consolidation, particularly abroad,” Sundby said.
Live Nation’s share price has soared by over 40% year-to-date, and according to Sundby, there is room for further growth. To this end, Sundby maintained an Outperform rating on LYV without offering a price target. (To watch Sundby’s track record, click here)
Look like The Street is up for the Live Nation show, too. 4 Buys and 1 Hold from the analysts over the last 3 months, provide the concert promoter with a Strong Buy rating. The stock has upside potential of 13.51%, should the average price target of $79 be reached over the next 12 months.
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