Several stocks are on the verge of an explosion, Wall Street analysts wrote this week. According to analysts, these companies are not yet perfectly priced and should be bought now. CNBC Pro combed through the best research on Wall Street to find stocks with high upside potential. They include: AECOM, Lululemon, Workday, Transocean and Intercontinental Exchange. Lululemon “Standing out is an understatement,” Morgan Stanley analyst Alexandra Straton said of the sports retailer’s strong earnings report last week. The company said the widespread pace gave it even more confidence that Lululemon knew how to outperform in a tough macro environment. Straton also raised its price target to $343 per share from $313 and said it saw “revaluation opportunity.” “After trading sympathetically with the broader retail space since mid-August, as peer reports confirmed mainline/margin and guidance risk for fiscal 2Q22, LULU reversed the trend in space with its 2T22 report and increasing guidance for exercise,” she said. Straton was particularly intrigued by management’s comment indicating no change in consumer behavior. The analyst concluded his analysis by writing that Lululemon’s valuation is simply too attractive to ignore at current levels. “And we believe there is no more room to run from here,” she wrote. Lululemon shares are up 16.2% over the past month. Workday “Despite a turbulent environment, WDAY shines in Q2 with excellent execution,” Monness Crespi Hardt analyst Brian White said in late August following the company’s latest earnings report. The provider of on-demand financial management and human capital management services delivered strong revenue and bottom line results. Monness Crespi said investors should be impressed with the company’s execution given the economic uncertainty. On Workday’s conference call, which White described as positive, management said trends appeared healthy, with Workday outlining steps taken to combat uncertainty. White says a recession would be a setback, but one the company can overcome. “Workday is prepared for a more uncertain environment in H2:FY23, acknowledging that some transactions are coming under greater scrutiny, which could lead to longer selling cycles,” White’s August report said. Whatever happens, however, the company expects Workday to emerge in a stronger position. “Given the long-term transition to the cloud and broader digital transformation trends, we believe Workday still has some breathing room in the HCM (human capital management) market…” he writes. The stock is up 3.2% this month. Intercontinental Exchange Rosenblatt analyst Andrew Bond is betting it will be a “happy ending” for investors at the global exchange and capital markets firm. The company recently launched Intercontinental Exchange coverage with a buy rating. The shares are down 24% this year, but Bond says he sees minimal downside in the stock’s current valuation, as well as several positive catalysts. “We believe the street is overlooking the strength of its higher-margin futures and data business, while giving no credence to a defensible equity business with a number of market structures and tailwinds. in terms of regulations,” he said. Additionally, Bond wrote that ICE is at the forefront of the growing value of data as well as the electronicization of markets. “While equity markets are way down the growth curve with mostly electronically traded cash, options and exchange-traded derivatives, fixed-income securities are lagging behind with more leeway,” he said. -he adds. Add an underrated energy company and Bond says investors should immediately start hoarding stocks. “Given past results, we like the setup and believe, as usual, ICE investors will be rewarded,” the company said. AECOM- KeyBanc, overweight rating “Following the F3Q22 print, we are increasingly confident that on the NTM ACM can continue to deliver: 1) consistent bookings >1.0x; 2) accelerated revenue growth; and 3) Healthy Margin Expansion, While Maintaining Strong FCF Conversion and Reduced Shares Outstanding….ACM has a track record of nearly three years of strong quarterly performance (no misfires), its profile headroom is now at the top of the peer group, and management is signaling that there is more headroom.” Transocean – BTIG, buy note “Peak drill rates over $400,000 with much more room to operate. We’re upgrading RIG to buy (from neutral) with a PT of $8. … . We upgrade RIG to buy and start with an $8 PT, thanks to improved daily rates in the floating market which will allow the company to re-charter its rigs at higher levels. Bottom line: We believe we are in the early innings of the offshore platform’s ongoing bull cycle, which should provide strong cash flow and refinancing opportunities for RIG to improve its balance sheet.” Workday- Monness Crespi Hardt, Buy rating “Despite a turbulent environment, WDAY shined in 2Q with excellent execution. could lead to longer sales cycles. ….Given the long-term transition to the cloud and broader digital transformation trends, we believe that Workday still has room to maneuver in the HCM (human capital management) market…” Lululemon-Morgan Stanley, Overweight Note “Standing out is an understatement. ….This leaves room for continued positive BPA reviews, and we continue to see an oppty reassessment. … . After declining in sympathy with the broader retail space since mid-August, as peer reports confirmed topline/margin and guidance risk for fiscal 2Q22, LULU reversed the trend in space with its 2T22 ratio and the increase in exercise orientation. ….And we believe there is only wiggle room from here.” Intercontinental Exchange – Rosenblatt, Buy rating “ICE is in transformation mode again, making it history of execution…luckily for investors, we’ve seen this story before, and we’re betting on another happy ending. ….We think the street overlooks the strength of its higher-margin futures and data business, while giving no credence to a defensible equity business with a number of market structures and regulatory tailwinds. ….While equity markets are way down the growth curve with cash, options and mostly electronically traded exchange-traded derivatives, fixed-income securities are lagging behind with more room to maneuver. ….Given past results, we like the setup and believe, as usual, that ICE investors will be rewarded.”
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