Earnings Season: 6 Stocks with Upside Potential – Nvidia, Dover, Arista Networks, Xcel Energy, Pfizer, and Costco
As earnings season kicks into high gear, Wall Street analysts have highlighted several stocks that they believe have significant upside potential. These companies are firing on all cylinders and have room to run. CNBC Pro has examined recent research from Wall Street to identify six stocks that analysts are optimistic about heading into their quarterly results. These stocks include Nvidia, Dover, Arista Networks, Xcel Energy, Pfizer, and Costco.
Dover, a maker of industrial products, has seen its shares decline about 3.5% in October. However, analysts at Oppenheimer believe that the weakness presents an attractive buying opportunity. According to analyst Bryan Blair, investors should take advantage of this dip to accumulate shares. Oppenheimer appreciates Dover’s significant transformation, shedding non-industrial assets to establish a streamlined multi-industry portfolio. The firm is particularly bullish on Dover’s wide array of businesses, including climate and sustainability technologies, clean energy, and its underappreciated biopharma unit. In addition, Dover’s recent acquisition of FW Murphy Production Controls is expected to leverage momentum into 2024.
Computer networking company Arista Networks is poised for a big quarter, as noted by analysts at Evercore ISI. The firm added a tactical outperform rating to the stock ahead of its earnings announcement. Evercore ISI expects Arista to continue its track record of beating guidance and potentially increase its full-year guidance. Analyst Amit Daryanani highlights the importance of Arista’s upcoming 2024 events, such as the company’s analyst day, which should confirm its outlook of double-digit growth. Artificial intelligence is also a key factor to watch, as it could serve as a positive catalyst for the company. Despite already being up 53% this year, there is still room for further growth in Arista’s shares.
Xcel Energy, a utility company, has caught the attention of Bank of America analysts due to its attractive growth prospects. The firm upgraded Xcel’s stock to a buy rating ahead of its upcoming earnings report. Analyst Julien Dumoulin-Smith believes that Xcel’s emerging growth story is compelling, particularly in a sector that is largely playing defense amid interest rate and inflationary pressures. Dumoulin-Smith also highlights Xcel as a key beneficiary of the Inflation Reduction Act and expects the stock to offer solid earnings upside and act as a premium defensive core regulated investment. Despite a 17% decline in shares this year, Bank of America sees strong potential in Xcel Energy.
Among the six stocks identified, Costco has received an outperform rating from William Blair. While multiple expansion is expected, the driving force behind the potential appreciation in the stock lies in sustainable earnings growth. William Blair predicts low-double-digit growth for Costco, led by its value proposition, strong member engagement, warehouse expansion efforts, and shareholder returns. Furthermore, a potential increase in membership fees could provide additional earnings upside.
Pharmaceutical giant Pfizer is highlighted by Cantor Fitzgerald with an overweight rating. Following recent updates, including the amendment of its US government Paxlovid supply agreement and the launch of a cost savings program, Cantor Fitzgerald believes that Pfizer’s stock is worth considering once again. The updates have increased earnings visibility into 2023 and beyond, removing an overhang on the stock. Cantor Fitzgerald advises investors to take another look at Pfizer, especially considering the reset of earnings expectations.
In summary, these six stocks have caught the attention of Wall Street analysts as earnings season progresses. While each company faces its unique opportunities and challenges, these stocks are seen as well-positioned for growth and have the potential to outperform in their respective sectors. Investors may want to keep a close eye on Nvidia, Dover, Arista Networks, Xcel Energy, Pfizer, and Costco as they release their quarterly earnings.
