Goldman Sachs unveils two stocks it believes have room to jump as much as 70%.
In this 2022 that is about to end, most of the market has experienced a difficult period, characterized by the combination of the soaring inflation, the aggressive interest rate hikes adopted to tame it and a global macro environment shaken by theRussia’s invasion of Ukraine and from policies zero-Covid of China.
The fear is that a recession in 2023 is practically inevitableboth mild and long and painful.
Investors therefore find themselves on uncertain ground it is difficult to understand which are the right stocks to focus on in such a context. This is where the help of analysts from major investment companies can be useful, even more so if the experts are part of the team of a giant of the caliber of Goldman Sachs.
Analysts in the giant’s equity division have singled out two names that they believe are ripe right now. Even in the face of a weak economic backdrop, analysts believe both stocks can deliver earnings above +70% during 2023.
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Braze: 77% upside
The first choice of Goldman and Braze, American company specializing in cloud-based software.
The platform of customer engagement of this company helps clients automate and analyze their marketing activities, with the aim of improving communication channels between consumers and brands.
The company has operations in the US, UK, Germany, Japan and Singapore and has over 1,700 customers, including some big names: Burger King, HBO Max, Skyscanner, PureGym, Grubhub, NASCAR e CleanChoice Energy.
I software vendors they were hit by the economic slowdown, but Braze still showed excellent growth.
In the third quarter of the year, i revenues increased by 45.6% year-over-year to $93.13 million, beating market forecasts by $2.53 million.
The financial statements showed a loss per share of -0.15 dollars, lower than analysts’ forecasts of -0.22 dollars.
Sure, Braze remains loss making, but it’s a company that it beat budget expectations in every quarter since it went public towards the end of last year.
Its IPO took place at an unfortunate moment and the stock was by no means immune to the market difficulties of 2022. suffering a loss of as much as -65% since the start of the year.
Nonetheless, Gabriela Borges at Goldman Sachs believes that the company has many commendable points.
“Despite macro uncertainty in 2023, we remain positive about Braze’s long-term opportunity to grow sustainably, consolidating spend at existing customers and gaining significant new business… in our view, Braze’s technology is structured in such a way as to allow the company to gain significant share over the next few years”.
Borges has assigned the shares of Braze a “Buy” rating, against a target price of $48, which leaves room for a 77% gain over 12 months.
Splunk, the other choice of Goldman Sachs has rallied +70%
The other Goldman-approved name is Splunk, a big data analytics company.
Companies make use of advanced machine learning technology from Splunk to mine large amounts of data in search of information.
The information can be used to support business decisions and ensure efficient operations. With a customer base of over 20,000, Splunk is a recognized leader in the IT security and operations industry and is known as an innovator in his field.
Thanks to strong licensing revenues, which increased 54% over the previous year, revenue reached $930 million, with an increase of 40% over the same period a year earlier and exceeding consensus estimates by $83.47 million.
Particularly, cloud revenues grew 54% to $374 million year-on-year, albeit down from +59% in the second quarter and +66% in the first.
As for the bottom line, after a pre-period loss of -$0.37 per share Splunk to $0.83 EPS, clearly beating the $0.25 analysts expected.
The company also raised its full-year revenue forecast from $3.35 billion to $3.4 billion. at 3.455 and 3.485 billion dollars. The consensus indicated $3.38 billion.
Yet, Splunk’s operating margin it is expected to be between 12 and 13%, up from the previous 8%.
Among the bulls is the Goldman Sachs analyst Kash Ranganwho likes the look of the company’s offering.
“Despite the slowdown in cloud growth, we are encouraged by the support for overall revenue growth from strong base of license renewals. We remain positive on Splunk’s underappreciated cloud story as the company navigates its successful transition under the new CEO’s leadership.”
Rangan assigned Splunk (SPLK) stock a ‘Buy’ rating at a target price of $173. Which means that whoever buys the security could take home a profitapproximately 105%.