Plug Power GenDrive Fuel Cell with GenFuel hydrogen.
Source: Plug Power
Finding fresh investment opportunities in the current financial environment isn’t easy, to say the least.
However, following the recommendations of analysts who consistently get it right is one way to find compelling plays that may be overlooked by the investing community. TipRanks analyst forecasting service attempts to pinpoint the best-performing analysts on the Street. These are the pros with the highest success rate and average return per rating, with both metrics factoring in the number of ratings published by each analyst.
Here are five stocks that Wall Street’s best-performing analysts think investors might be overlooking.
Squarespace
Despite Squarespace‘s solid second-quarter performance, Guggenheim analyst Ken Wong is anticipating some concern from investors. However, the analyst’s bullish thesis remains very much intact.
In line with his optimistic approach, Wong kept a Buy rating on the website building and hosting company. Although he trimmed the price target from $70 to $60, this still leaves room for a 40% gain over the next year.
Digging deeper into the print, Squarespace posted revenue and billings of $196 million (a 31% year-over-year increase) and $206 million (a 24% year-over-year gain), respectively. Both results beat the Street’s $189 million and $200 million calls. Additionally, Presence and Commerce revenue surpassed Wong’s estimates. It should also be noted that most of the increase in take rate came from Tock’s contribution, which Squarespace acquired earlier this year.
“Management also highlighted better cash retention this year, which should stave off concerns that pandemic subscription cohorts could see elevated churn as economies normalize,” the analyst added.
That being said, Wong believes the “flattish Q3 trajectory likely to disappoint investors.” For the full year, the company actually bumped up its revenue outlook by $6 million at the midpoint from a range of $764 million to $776 million to a range of $772 million to $780 million.
“We believe the increase would have been just ‘good enough’ in a vacuum. However, we expect investors to scrutinize the Q3 revenue outlook guide ($193-198 million, 19-22%), which projects for a modest sequential decline at the mid-point and falls ~$2 million below consensus estimates ($197.5 million). Management emphasized a prudent approach to outlook due to the uncertain macro and health climate. Investors we caught up with were understanding of the volatile demand environment, but felt the lack of specificity around which business segments and KPIs magnified the confusion,” Wong explained.
Long-term, though, Wong is standing in the bull camp. “We remain positive on SQSP’s long-term opportunity to enable digital commerce… We expect a more thoughtful growth roadmap at the company’s inaugural Analyst Day in November….
Read More: Wall Street analysts say don’t overlook Plug Power & Squarespace