Activision Blizzard and Spotify were among the stocks Wall Street analysts recommended to clients as undervalued this week.
CNBC combed through company research to find analysts discussing buying opportunities for stocks. Other names cited as possible values include: Newell Brands, Dollar General, Marvell, and Anthem
Activision “is down nearly 50% in the past six months and we believe investors should be ‘kicking the tires,’ given an improving setup in late ’19 and 2020,” Piper Jaffray analyst Michael Olson said.
Last month, on the heels of the wildly successful Epic Games’ ‘Fortnite’, Activision issued a weak forecast and announced it was cutting 8 percent of its staff. But Olson is betting on a rebound.
“Newell shares continue to fade following a disappointing Q4 earnings report on 2/15. At this point, we believe expectations have been sufficiently rebased and that investor sentiment is now ‘so bad, it’s actually good’,” wrote Wells Fargo analyst Bonnie Herzog.
On Thursday, Newell reported weak sales and announced that CEO Michael Polk will leave the company at the end of June. Shares of Newell Brands are about unchanged over the last week to $15.33.
If Spotify shares fall leading up to Apple’s March 25th event, where the iPhone is expected to unveil streaming TV and subscription news services, it could be a reason to buy, noted Rosenblatt Securities analyst Mark Zgutowicz. “Net-net, we are buyers on any weakness in front of Apple’s event,” Zgutowicz said.
Earlier this week, the music-streaming service filed a complaint in Europe saying Apple Music has an unfair advantage.
The stock is down 0.2 percent over the last month.
Analysts finding cheap stocks this week:PiperJaffray- Activision Blizzard, Overweight rating
“ATVI is down nearly 50% in the past six months and we believe investors should be ‘kicking the tires,’ given an improving setup in late ’19 and 2020… We see five reasons to do the work on ATVI, including: increasing near-term talk on FGDL & streaming, potential E3 announcements, anticipation around improving fundamentals in ‘20, management’s re-allocation of resources towards key franchises, and valuation… Investors are in ‘waitand- see’ mode on Activision and we think it’s likely the company set a conservative bar for ’19…. A low bar for revenue & EPS outlook should enable a hardening foundation of investor confidence as the company achieves or exceeds 1H estimates… While it may still be early, with a lack of new game catalysts in ’19, we encourage patient investors to consider chipping away at a position in ATVI at current levels… Maintain OW, $52 PT… ”Rosenblatt Securities- Spotify Technology, Buy rating
“In front of Apple’s March 25th reveal of an exclusive content platform, the Spotify+Hulu $9.99 bundle brings more than buzzkill to the Apple party. SPOT gets better economics with retention benefits and minimal negative impact on ’19E premium gross margin, while Hulu absorbs the majority of its lost $5.99 subscription revenue (both our view)… SPOT makes a smart defensive call against an anticipated attractively priced Apple music/video bundle, while Hulu makes an aggressive offensive play for sticky OTT subscriber scale… We see a net advantage to SPOT/Hulu’s music/content stack vs. what we know of Apple’s content slate, with the exception of potentially attractive HBO and/or Showtime bundled pricing… Net-net, we are buyers on any weakness in front of Apple’s event and raise our PT from $169 to $175 on updated DCF assumptions.. ”Wells Fargo- Newell Brands, Outperform rating
“NWL shares continue to fade following a disappointing Q4 earnings report on 2/15 (-10% vs. S&P +1%)… At this point, we believe expectations have been sufficiently rebased and that investor sentiment is now ‘so bad, it’s actually good.’ Overall, we believe the market has lost sight of the underlying value in NWL’s businesses given all of the moving parts, which exiting FY19 should ultimately be a simpler, faster growing company, with significant exposure to e-commerce… While mgmt’s credibility is deservedly low, we think the stock can work once NWL starts executing/delivering sequential fundamental improvement (next potential catalyst is Q1)… Importantly, we have increased conviction that there’s upside potential to Q1/FY19 guidance based on our detailed, bottom-up analysis of NWL’s seven continuing ops businesses… As such, we raise our FY19/20 EPS ests. to $1.70/$2.15 and our price target to $22, implying just a 10.2x FY20E P/E multiple… Bottom line, we believe the risk/reward is positive & reiterate our Outperform rating… ”Oppenheimer – Dollar General, Outperform rating
“We overall view the Q4:18 results reported by DG as mixed. Comps increased 4.0%, well ahead of a Street expectation of 2.6% aided by early SNAP benefits… Two-year comp trends accelerated to +7.3% from +7.1% in Q3… However, softer than expected gross margins and above-plan expenses led to an EPS shortfall… Management also introduced FY19 EPS guidance of $6.30-$6.50, below a Street figure of $6.64. Excluding the $50M in increased investments, the guide suggests a core business consistent with our expectations… Ahead of the print, we expected a below-consensus guide and recommended investors position to buy on weakness vs. playing for a positive catalyst… We would take advantage of the pullback this morning. DG remains a top pick for us… ”Needham- Marvell Technology, Buy rating
“MRVL’s F4Q19 results were in line with revised guidance, but F1Q20 guidance was below expectations… Storage and Networking are expected to decline again Q/Q in F1Q20 driven by the weak macro environment and inventory digestion by cloud customers… Reflecting improving bookings post CNY and the 5G ramp with Samsung in F2H20, MRVL believes F1Q20 will represent the revenue trough… MRVL believes it undershipped HDD end market demand in F4Q19 and will again in F1Q20, setting up a possible recovery in F2Q20. MRVL announced it is engaged with a 2nd tier-one base station OEM for a 5G design based on a custom Fusion-M, which should sample in early FY21… While we lower estimates, we maintain our $23 PT (~18x our CY20 NG EPS est.) and are buyers on weakness given MRVL’s valuation and 5G growth opportunities… ”BMO- Anthem, Outperform rating
“We reiterate our Outperform rating and raise our target price to $345 (vs. prior $335) on Anthem’s higher 5-year growth targets… Credibility for these targets is driven by strong recent results, high visibility on lower drug pricing, and a range of growth and cost initiatives. Further supporting this is the evident reinvigoration of Anthem under CEO Gail Boudreaux… We see a buying opportunity with ANTM stock down [last Friday] on further selling of managed care (mostly driven by fear of radical health reform, which we think is misguided and therefore will not be sustained)… ”
