John Foley, co-founder and chief executive officer of Peloton Interactive Inc., stands for a photograph during the company’s initial public offering (IPO) in front of the Nasdaq MarketSite in New York, on Thursday, Sept. 26, 2019.
Michael Nagle | Bloomberg | Getty Images
Peloton
Wedbush recently initiated coverage of the exercise equipment maker with an outperform rating and believes the sky’s the limit for the company.
The firm called Peloton’s business an “enduring force” and is bullish on the company’s ability to hold and retain customers in its subscription business.
“Today, this business is seeing exponential growth, with gross new subscriptions growing 70%+ Y/Y and monthly churn of less than 1%,” analyst James Hardiman said.
The firm said that continuing to produce that many subscribers may not be feasible long term, but it believes there’s plenty of room to go.
“While neither number is sustainable, we believe that PTON will build a prosperous subscription business with strong growth characteristics, low turnover, and 60%+ gross margins,” he said.
Charter
KeyBanc named Charter Communications a “key” idea to watch in 2020.
The firm said it sees growth in broadband this year and expects the cable operator to be a big beneficiary.
“CHTR should benefit from its business mix moving toward its growth businesses of residential broadband and commercial services,” analyst Brandon Nispel, who also raised his price target on the stock to $576 from $515.
Charter’s Spectrum Mobile brand should be an “upside driver” for the company as well according to the firm.
“With very strong growth prospects in 2020, we maintain there is upside remaining in shares,” he said.
SciPlay
This week, DA Davidson initiated coverage of SciPlay with an overweight rating. The company develops and publishes free digital games on mobile and web platforms.
SciPlay is simply “one of the best ways to play the gaming industry,” the firm told investors in a note to clients.
“Our bullish multi-year outlook on SciPlay is based on best-in-class margins, an attractive game portfolio aimed squarely at the interesting social casino gaming market, and the possibility of organic and inorganic expansion of geographic regions and genres,” analyst Franco Granda said.
The firm sees plenty of upside in the stock and urged clients that now is the time to buy.
“All in, we believe this growth story is still in its early innings and expect a meaningful revenue and profitability ramp in the years ahead,” he said.
Here are other stocks analysts say have strong growth stories:
Wells Fargo – Abbott Laboratories, Overweight rating
“Nutrition sales of $1.87B beat consensus of $1.83B and our $1.82B estimate. Organic Nutrition growth accelerated from +3.8% in Q3 to +5.8% in Q4, driven by strong growth across several countries in both sides of the business – pediatric and adult. Specifically, ABT mentioned that it experienced very strong growth in Southeast Asia and Latin America though China continues to experience softness. That said, management noted that ABT is not overly reliant on China and have developed a plan to increase its success in the region.”
JPMorgan – OneConnect Financial Technology, Overweight rating
“Early mover to deliver strong growth in a sizable market; initiate at OW.We initiate coverage on OneConnect, a leading technology-as-a-service platform for financial institutions in China that provides cloudnative technology applications and business solutions with full-scope coverage, at OW. OC’s early-mover advantage gives it good potential to tap into a US$20b+ total addressable market by 2023E, in our view. We forecast that its revenue will grow at a CAGR of 53% over 2018-23, with its bottom line turning profitable by 2022. Its growth ranks in the top 5% of the J.P. Morgan coverage universe.”
Wedbush – Peloton, Outperform rating
“Long-term, we believe that PTON’s business will be judged on the effectiveness and stability of its budding subscription
business. Today, this business is seeing exponential growth, with gross new subscriptions growing 70%+ Y/Y and monthly churn of less than 1%. While neither number is sustainable, we believe that PTON will build a prosperous subscription business with strong growth characteristics, low turnover, and 60%+ gross margins. These types of companies are held in extremely high regard by the market, and so a high revenue growth trajectory by PTON is likely to be amplified by an expanding multiple as the company develops its SaaS bona fides.”
DA Davidson – SciPlay, Buy rating
“SCPL is a leading developer of free-to-play mobile games aimed at the social casino and casual gaming markets and one of the best ways to play the gaming industry, in our view. Our bullish multi-year outlook on SciPlay is based on best-in-class margins, an attractive game portfolio aimed squarely at the interesting social casino gaming market, and the possibility of organic and inorganic expansion of geographic regions and genres. All in, we believe this growth story is still in its early innings and expect a meaningful revenue and profitability ramp in the years ahead. … New markets, new genres set to unlock next leg of growth.”
KeyBanc – Charter Communications, Overweight rating
“CHTR should benefit from its business mix moving toward its growth businesses of residential broadband and commercial services. We continue to model moderate broadband subscriber deceleration, which could be conservative, and believe Spectrum mobile remains an upside driver in 2020 and beyond. With very strong growth prospects in 2020, we maintain there is upside remaining in shares.”
Pinterest – Wells Fargo, Overweight rating
“PINS shares have materially underperformed the broader market since the company’s April 2019 IPO, despite our view that the company’s fundamentals remain on solid footing, as PINS has delivered generally solid results, handily exceeding pre-IPO targets with healthy audience and engagement growth, strong revenue growth and solid progress toward profitability.”
