2020 has gotten off to a blistering start. In just the last two days, the Dow posted its first closing above 29,000, and the S&P broke above 3,300.
As the market rises higher, analysts say there’s no shortage of stocks with upside ahead and some stocks with the highest ratings include Estee Lauder (NYSE: EL), Facebook (NASDAQ: FB), McDonald’s (NYSE: MCD), ViacomCBS (NASDAQ: VIAC), and Verizon (NYSE: VZ).
Last week, Oppenheimer issued an Outperform rating for Estee Lauder shares and boosted their price target on the stock from $210 to $230, calling the stock a “top pick” for the year ahead.
“We expect continued strength in China, travel retail, and skincare to continue driving above-peer top- and bottom-line delivery,” Oppenheimer analyst Rupesh Parikh wrote. “On a relative basis, Estee Lauder’s valuation is now off a multi-year high, and [we] continue to believe a premium valuation is warranted.”
This week, Guggenheim analyst Michael Morris reiterated his Buy rating on Facebook shares, and raised his price target from $230 to $275 – 24% higher than the current price.
“We see significant further appreciation potential for Facebook shares in 2020,” Morris wrote. “We expect company revenue, spending, and operating profit to each exceed consensus expectations through 2021, supporting additional investor enthusiasm.”
And according to Canaccord, given that 2020 is a big election year, a surge in political advertising spending is sure to give the social media giant a boost and believes Facebook’s Stories feature will lead to more users viewing ads.
“The election year should be a tailwind as the majority of digital political ad spend lands on Facebook’s properties… Looking forward, we think Facebook likely has the biggest upside to estimates in 2020, given the ongoing transition to Stories monetization and likely conservative outlook,” Canaccord analysts wrote.
Evercore ISI is bullish on McDonald’s shares and called it their “top pick entering 2020.”
“We believe McDonald’s offers the most favorable risk/reward in our coverage into 2020,” they wrote.
The firm said in a recent note that it believes McDonald’s will put a stronger focus on breakfast this year, and will debut its first new advertising campaign in years. McDonald’s is also working to introduce a new and “improved premium chicken sandwich” to better compete with Chick-fil-A and Popeye’s Chicken.
Evercore ISI analyst Vijay Jayant is also bullish on ViacomCBS, and said in a note that the recent merger of the two creates a “content powerhouse” with 20% of U.S. TV viewers tuning in to its programming. Jayant rates the stock an Outperform and has a $51 price target on the stocks, suggesting 27.5% upside from the current price.
“We subscribe to the idea that the company will be able to have its cake (continue monetizing a robust content library) and eat it, too (invest in new productions while building direct-to-consumer digital platforms),” Jayant wrote.
Imperial Capital also issued an Outperform rating for ViacomCBS shares with an $59 price target – 47.5% higher than the price as of this writing.
“We believe investors long this stock will enjoy a number of unique catalysts throughout 2020,” the firm wrote in a note, adding that the market has “placed too much importance on subscribership to CBS All Access and showtime OTT and have forgotten that the new VIAC will also produce a panoply of content for third parties, which we appreciate because it gives the combined company optionality in retaining the series for exploitation in later windows within its own platform.”
Imperial Capital also noted that the company’s Paramount business has a movie slate for this year that “is as good as we have ever seen it, with titles that include The Rhythm Section, A Quiet Place 2, another Spongebob movie and the big one, Top Gun Maverick, which could be a rare $1 billion grosser for VIAC’s Studio line.”
And last, but not least, Wells Fargo recently issued an Outperform rating for Verizon shares.
“The proverbial ‘elevator pitch’ of VZ is a simple one… it is all about the network! The company has kept this disciplined focus, even while its peers around it venture into new silos (such as media and content). While we acknowledge it is difficult to identify near-term tangible catalysts, we believe 2020 will be a year of important milestones for the company,” Wells Fargo analysts wrote in a note. “In our view, VZ’s ambitious fiber roll-out is laying the hardest and most necessary building blocks for a premium 5G network experience.”