The S&P 500 closed at a new all-time high on Tuesday, surpassing its last record set on February 19.
The index has effectively wiped out its coronavirus pandemic sell-off losses, rising just over 51% since the market hit bottom on March 23.
But with the S&P 500 index at all-time highs, it can be tough to pinpoint stocks that still have upside ahead.
Luckily, some of Wall Streets top analysts recommend a few stocks that still look undervalued and are delivering strong growth with significant opportunities ahead.
RBC Capital analyst Alex Zukin rates Dropbox (NASDAQ: DBX) shares a buy, and recently issued a price target for the stock of $30 – indicating around 49% upside from the current price.
“We view underlying business as healthy, and the company remains on track to deliver material margin expansion through CY24,” Zukin said in a note to clients following the file-storing and sharing company’s second quarter earnings results.
Zukin says that Dropbox is undervalued on both a growth-adjusted and absolute basis, and believes there’s potential for more strong quarters to change the narrative on the stock.
Jefferies analyst Brent Thill also rates Dropbox a Buy, and argued in a recent note that the stock has been largely left out of the work-from-home investing frenzy.
Beyond that, Thill wrote that Dropbox shares trade at an “attractive discount” to peers, and “has shown it can deliver on margin goals.”
“First, COVID-19 has acted as a growth catalyst for the space,” Thill wrote. “We believe remote work is here to stay post-COVID as well. Second, the company has announced and delivered on aggressive margin leverage and cash flow goals for a quarter. Finally, Dropbox continues to be attractively valued relative to the rest of the Software space.”
Oppenheimer analyst Rupesh Parikh, on the other hand, likes Estee Lauder (NYSE: EL) now.
Parikh upgraded the makeup stock last week writing, “EL shares again positioned for outperformance; upgrading to outperform,” and issued a Street-high price target of $240 – 21% higher than the price as of this writing.
The Oppenheimer analyst had previously downgraded Estee Lauder shares over concerns of severe near-term headwinds related to the coronavirus in China.
“In hindsight, we underestimated both the severity of the pandemic and the pace of a potential recovery from the bottom,” Parikh said, adding that he now “see[s] a more rapid profit recovery than previously envisioned driven by the Chinese consumer, a resilient skincare category, and accelerated online growth.”
“We believe the low interest rate backdrop and the company’s superior growth prospects support a premium valuation,” Parikh added.
And finally, HC Wainwright analyst Ram Selvaraju is bullish on BridgeBio Pharma (NASDAQ: BBIO).
Selvaraju reiterated his Buy rating on the stock last week, boosting his price target to $50—77% higher than the current price—writing that the company’s partnership with LianBio should expand the company’s global reach into China, the second-largest pharma market in the world.
Under the terms of the agreement, BridgeBio will get an upfront payment of $26.5 million, and up to $505 million in milestone and sales-based royalty payments.
“Conservatively, we do not currently include contributions from the LianBio partnership in our valuation model; any future revenues from this relationship would thus constitute upside to our forecasts,” Selvaraju wrote.
Aside from the deal with LianBio, Selvaraju sees “multiple catalysts across an extensive portfolio” for BridgeBio, adding that he expects rapid regulatory progress for its two New Drug Applications with the FDA, especially for BBP-870 for the treatment of patients with MoCD Type A, a rare condition characterized by brain dysfunction.
“We anticipate that this NDA could be the subject of approval on an accelerated schedule (six-month review), potentially facilitating the U.S. launch of BBP-870” in the first half of 2021, Selvaraju concluded.