Stock markets saw spectacular drop yesterday, as rising hospitalizations in states such as Texas and Arizona promoted fears that an uptick in coronavirus cases could cause more economic damage. It’s a clear sign that traders are not going to be easily reassured in the current crisis. Yet, according to J.P. Morgan strategist Nikolaos Panigirtzoglou there's a light at the end of the tunnel. Panigirtzoglou argues that the massive amount of cash currently in the financial system could be the spark that pushes risk assets higher, noting that billions could be pumped into equities. This potential, however, could come at the expense of bonds as portfolios are rebalanced.To support this stance, the strategist cited the fact that $1.2 trillion have been put into money-market funds, with fund managers holding on to cash, $591 billion overall, like never before, based on data reported by Bank of America. This means that investors can still prop up the market even during a tumultuous period of time. “Investors are still underweight equities and signs of overextension are confined to momentum traders. There is still plenty of room for investors to raise their equity allocations,” Panigirtzoglou wrote.Bearing this in mind, we wanted to take a closer look at two stocks that just received a thumbs up from J.P. Morgan. With the firm’s analysts projecting more than 25% upside potential for each, we ran the tickers through TipRanks’ database to get the rest of the Street’s take. As it turns out, both have been praised by other analysts.Viavi Solutions (VIAV)Offering intuitive instruments, systems and technologies, Viavi Solutions helps service providers and IT organizations manage the network lifecycle for complex 5G and Fiber networks. Given the progress related to its field work and its compelling valuation, J.P. Morgan is jumping on board.Representing the firm, analyst Samik Chatterjee tells clients the field instruments segment was hit hard by COVID-19. “VIAV on its latest earnings call highlighted that within the revenue shortfall in the NSE group, the portion attributable to lower demand in C1Q largely related to field instruments, which remains largely a book & ship business for every quarter… Production equipment has seen modest headwinds, more specific to end-markets with severe challenges, but have still been more resilient relative to Field instruments, which are impacted by the absence of technicians in the field,” he commented.Having said that, Chatterjee argues that the easing of social distancing measures and outdoor field work restrictions will allow demand for test and measurement equipment to recover in the near-term. This is essential for VIAV as field instruments make up 60% of its core NE revenue. Long-term, the demand should remain largely unimpacted. He also pointed out, “Companies in our coverage universe are citing unchanged robust plans from service providers to drive 5G as well as 400G adoption, both of which VIAV has leverage to.”On top of this, Chatterjee believes any M&A activity could serve as a major catalyst for shares. “The test & measurement landscape remains fragmented relative to suppliers and the disruption offers an opportunity for VIAV to further consolidate its position. Recent actions to establish a $300 million short-term credit line despite ample liquidity hints to similar intent,” the analyst explained.Should the company acquire an asset with a complementary portfolio, Opex leverage could emerge as a possible synergy. Not to mention if the asset has profits from the U.S., Chatterjee thinks it “will enable the company to accelerate usage of NOLs driving a higher valuation.”Expounding on VIAV’s valuation, the analyst stated, “Additionally, with VIAV shares now trading at ~18x NTM EPS, i.e., below recent year P/E of ~20x, unlike most companies in the coverage universe that are trading at premiums to their recent year valuation multiples on account of credit for trough earnings during the pandemic, we see an attractive opportunity for investors to position themselves for upside.”Based on all of the above, Chatterjee upgraded his rating from Neutral to Overweight, and bumped up the price target from $14 to $16. This target implies shares could climb 25% higher in the next twelve months. (To watch Chatterjee’s track record, click here) Like Chatterjee, most other analysts also take a bullish approach. VIAV’s Strong Buy consensus rating breaks down into 7 Buys and 1 Hold. Given the $15.25 average price target, the upside potential lands at 20%. (See Viavi stock analysis on TipRanks)Stratasys (SSYS)As for J.P. Morgan’s second pick, we have Stratasys, which provides 3D printing and additive solutions. With its materials and services delivering speed, innovation, performance and customization, it’s no wonder the firm handed out a ratings upgrade.Analyst Paul Coster highlights the fact that in Q2 and Q3, SSYS is going to place a significant focus on resizing actions in order to cut operating expenses by 10% and yield $30 million in annualized run-rate savings, which should also bode well for COGS.Weighing in on this development, Coster said, “We previously anticipated cost reductions in 2020 but not of this magnitude, so we are only taking about $15 million out of 2021 PF operating expenses, nonetheless the action – overdue, in our view – is significantly accretive for shareholders. The new CEO is delivering for shareholders.”While Coster reduced his estimates for 2020-2021 gross margins to account for lower product volumes, it should be noted that this is his second upgrade for SSYS recently. Citing the launch of new products expected to come over the next 12-18 months, the analyst believes the company will slowly start to see growth again. “With the expense reductions that the new CEO is pushing through, a return to modest growth should deliver operating leverage, and we think the stock will appreciate on upward revisions to estimates,” he stated.That said, it will take some time for these gains to materialize, according to Coster. With COVID-19 still impacting activity in several of SSYS’s end-markets, including autos and aerospace, lackluster Q2 revenues and near-term pressure on gross margins could be on the horizon.This fact, however, does not offset all of the positives, in Coster’s opinion. In line with his more bullish take, the analyst gave his rating a boost, from Neutral to Overweight. The price target got a lift as well, increasing to $22 from $19. Should the target be met, a twelve-month gain of 32% could be in store. (To watch Coster’s track record, click here) What does the rest of the Street think about SSYS? Opinions are split evenly down the middle, with the stock receiving 2 Buys and 2 Holds in the last three months. As a result, the consensus rating is a Moderate Buy. Additionally, the $20.33 average price target suggests 13% upside potential. (See Stratasys stock analysis on TipRanks)To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
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Yahoo Finance’s Ethan Wolff-Mann joins Heidi Chung to explain why Barclays says Robinhood traders have not driven the recent market rally. In this article you are going to find out whether hedge funds think Tellurian Inc. (NASDAQ:TELL) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among […]
The reopening of the Las Vegas Strip has gone relatively well for casino operators since resorts began opening back up last week.Even more properties returned to operations this week, but the latest room rate numbers suggest Vegas still has a long way to go in recovering from its shutdown, according to BofA Securities.What Happened? A limited number of Las Vegas casinos opened back up starting June 4, and initial demand was strong enough for operators to expand those openings ahead of schedule this week.Unfortunately, Vegas Strip operators Las Vegas Sands Corp. (NYSE: LVS), MGM Resorts International (NYSE: MGM), Wynn Resorts, Limited (NASDAQ: WYNN) and Caesars Entertainment Corporation (NASDAQ: CZR) are all seeing extreme declines in hotel room rates, BofA analyst Shaun Kelley said in a Friday note. As of Friday, Wynn and Las Vegas Sands have all their Strip properties open. MGM is planning to reopen Luxor on June 25 and Mandalay Bay, Delano Mirage and Park on July 1. Caesars is reopening Linq on Friday and Planet Hollywood, Rio, Paris, Bally's and Cromwell next week.Why It's Important Initial demand in Vegas so far this month has been better than feared, but Kelley said "demand still appears low" for hotel rooms in the near-term. The analyst estimates Vegas room rates are down 38%, 47% and 31% in June, July and August, respectively. Cumulative website traffic for Vegas resorts is down more than 40% year-over-year, he said. Kelley said the cancellation of Vegas events and conferences will continue to weigh on room rates given these events drive demand for some of the Strip's highest-priced rooms."We are cautious on the pent-up demand narrative for the Strip and believe without group/convention business, the recovery will continue to lag other areas of Gaming," the analyst said. Bank of America estimates that Las Vegas Sands will endure the smallest drops in average room rates in the near term, with average rates in June and July falling 24% and 43%, respectively.Wynn has the highest average room rates on the Strip, and Kelley estimates it will endure the largest drop in average rates. He projects 43% and 53% declines in June and July, respectively.Benzinga's Take Reopening properties was the first hurdle for Vegas casino stocks to overcome on the road to recovery. Now that the Strip is reopened, the focus will shift to room rates and margins to determine just how profitable these casino stocks can be in a sub-optimal environment.For investors looking to play the Vegas recovery, Bank of America has the following ratings and price targets for major Las Vegas casino operators: * Las Vegas Sands, Buy rating and $61 target. * Wynn, Buy rating and $95 target. * MGM Resorts, Underperform rating and $15 target.Do you agree with this take? Email feedback@benzinga.com with your thoughts.Related Links:'Long Lines And Packed Flights': Casino Stocks Rise Following Vegas Reopening Las Vegas Casinos Reopen This Week, And Here's What Investors Should ExpectLatest Ratings for LVS DateFirmActionFromTo Jun 2020UBSMaintainsNeutral May 2020UBSMaintainsNeutral May 2020Credit SuisseUpgradesNeutralOutperform View More Analyst Ratings for LVS View the Latest Analyst RatingsSee more from Benzinga * Las Vegas Casinos Reopen This Week, And Here's What Investors Should Expect * 7 Sin Stocks To Buy During The Coronavirus Shutdown(C) 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Cresset Capital Chief Investment Officer Jack Ablin joins Yahoo Finance’s Heidi Chung to discuss his outlook on the markets, as White House Economic Adviser Larry Kudlow says “there is no second wave” of the coronavirus in the U.S.Broyhill Asset Management, a boutique investment firm based in North Carolina, released its Q1 2020 Investor letter – a copy of which can be downloaded here. Established as a family office, the company invests with a long-term, objective, and rational perspective. You should check out Broyhill Asset Management's top 5 stock picks for investors to […]
In this article we will check out the progression of hedge fund sentiment towards Tailored Brands, Inc. (NYSE:TLRD) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and […]
In this article we will take a look at whether hedge funds think Workhorse Group, Inc. (NASDAQ:WKHS) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips […]