Salesforce signage outside its office building in New York.
Scott Mlyn | CNBC
Retail investors are grappling with the gyrations of the stock market as economic data rolls in and the Federal Reserve’s rate decision looms.
To avoid making knee-jerk decisions based on short-term market activity, investors may want to consider input from Wall Street’s analysts, who have been combing through the financial details on an array of companies and have insight into their long-term prospects.
With that in mind, here are three stocks favored by Wall Street’s top pros, according to TipRanks, a platform that ranks analysts based on their past performance.
The week’s first pick is cloud-based customer relationship management software provider Salesforce (CRM). The company recently reported market-beating fiscal third-quarter earnings and in-line revenue. Despite macro headwinds, Salesforce delivered solid earnings growth due to its productivity and cost reduction measures.
Mizuho analyst Gregg Moskowitz highlighted that the current remaining performance obligation, a leading indicator of revenue, grew 14% in the fiscal third quarter, well above management’s projection of around 11% growth. This outperformance was driven by strong early renewal activity and one large deal.
The analyst also noted several other positives, including robust operating margin expansion, solid growth in cash flow from operations, greater multi-cloud traction and the early success of the company’s artificial intelligence-related offerings.
Moskowitz increased his price target for Salesforce stock to $280 from $255 and reiterated a buy rating. He said, “CRM remains well situated to help its vast customer base manage revenue and process optimization via digital transformation.”
Interestingly, Moskowitz ranks No. 94 among more than 8,600 analysts tracked by TipRanks. His ratings have been profitable 62% of the time, with each delivering an average return of 16.3%, on average. (See Salesforce Technical Analysis on TipRanks)
We move to fintech company Block (SQ). Last month, the company impressed investors with strong third-quarter performance, fueled by impressive growth in both its Cash App and Square platforms. The company also raised its earnings guidance and announced a $1 billion share buyback plan.
Recently, Deutsche Bank analyst Bryan Keane increased his price target for SQ stock to $90 from $75 and reaffirmed a buy rating. He pointed out that Block shares have started to regain some momentum following the results.
Keane added that the Street’s consensus expectations for operating income and earnings before interest, taxes, depreciation and amortization have increased through 2026 due to better margins, driving substantial free cash flow generation.
For Cash App, the analyst is optimistic that the company will be able to enhance its monetization rate above his core estimate of nearly 1.43% through 2024 via growth in e-commerce, continued adoption of its existing products, and upcoming product launches. For the Square ecosystem, the analyst expects Block to maintain positive yields by increasing Square Banking and other efforts.
“We remain bullish on the company’s long-term outlook with what we see as sustainably high growth with significant profitability improvements,” said Keane.
Keane holds the 868th position among more than 8,600 analysts on TipRanks. His ratings have been successful 57% of the time, with each rating delivering an average return of 6.5%. (See Block Options Activity on TipRanks).
In a research note to investors, Tigress Financial analyst Ivan Feinseth highlighted that MSFT recently reported its strongest sales gain in six quarters, thanks to the performance of its cloud computing business, which is benefiting from the traction in its new AI products. The analyst thinks that Microsoft is at the forefront of the AI revolution, with the continued integration of AI functionality and ChatGPT across its offerings.
Feinseth expects ongoing cloud migrations, growing enterprise AI projects focused on business optimization, and expanding Microsoft 365 applications to boost the company’s performance. He also expects the Activision Blizzard acquisition will strengthen the company’s gaming business.
“MSFT’s strong balance sheet and cash flow will continue to fund ongoing growth initiatives and business-expanding strategic acquisitions and enhance shareholder returns through ongoing dividend increases and share repurchases,” said Feinseth.
Feinseth increased the price target for MSFT stock to $475 from $433 and reiterated a buy rating on the stock. He ranks No. 311 among more than 8,600 analysts tracked by TipRanks. His ratings have been profitable 60% of the time, with each delivering a return of 9.8%, on average. (See Microsoft Insider Trading Activity on TipRanks)