The stock market has been inundated by high-performing companies recently. A large number of shares doubled or tripled last year, and some gained even more. And for many of these stocks, a good portion of the gains have come recently.
But Wall Street experts are not always so optimistic about these investments. For some of these now popular stocks, analysts have set price targets that are well below current levels. This suggests that the best on Wall Street believe that recent increases in their share prices have passed the mark – and that they can get back to reality in no time.
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Next, we’ll see three popular stocks on the rise, all of which have at least tripled since the end of October, and consider whether any of them still need to compete. Stock analysts are pessimistic – but there is more to this story.
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1. MicroStrategy
MicroStrategy (NASDAQ: MSTR) has had an incredible run on the market recently – its shares have quadrupled since the end of October. However, this increase does not have much to do with the company’s core business.
MicroStrategy is an application software developer that helps companies analyze their data. This has been a high-growth niche lately, but MicroStrategy has not reaped the rewards. Total revenue has been stagnating for a decade, as the company tries to transition to a subscription-based model that depends less on licensing revenue.
Last summer, however, MicroStrategy took advantage of the cryptocurrency craze, saying it would take the money it had on its balance sheet and use it to buy bitcoin. This linked the company’s shares to changes in the price of bitcoin and, with the rise of cryptocurrency, took MicroStrategy’s stock price along with it.
Stock analysts have been unable to keep up. Citi increased its share price target by $ 75 per share on Friday, but did not change its share sale rating. In addition, even the increase only raised the price target to $ 325 per share – more than 50% below the $ 680 per share that MicroStrategy shares reached on Friday morning.
In the future, MicroStrategy’s luck will be almost entirely linked to bitcoin, especially as it contemplates greater leverage to take a greater position in cryptocurrency. This may be worth it, but Wall Street seems to think the share price is too high.
2. SunPower
The solar industry has performed well in the market lately. The stock price of the industry leader Sun power (NASDAQ: SPWR) increased 230% since the end of October.
SunPower has done a little bit of everything in the solar industry at times, but recently it has been working to reduce its capital footprint by focusing on businesses with higher margins. It transformed its solar panel manufacturing division into a new company, Maxeon (NASDAQ: MAXN), and is now working to promote technological innovation in the solar area, along with marketing and offering cutting edge solar products and services, such as battery storage solutions.
SunPower recently raised $ 55 a share, but stock analysts are not so enthusiastic about the company. The average price target among those covering SunPower is just over $ 24 per share, which implies a drop of about 55% from current levels. The minimum target is $ 12 per share, which would be a drop of almost 80% from here.
Even relatively optimistic analysts are losing some confidence in SunPower. On Friday, Piper Sandler cut its solar energy stock rating from overweight to neutral and, although it left the target of $ 35 per share unchanged, said the huge increase in share prices does not seem to have a good explanation. fundamental. Without obvious catalysts to further stimulate investor interest, SunPower could find it difficult to rise from here.
3. Appian
Finally, Appian (NASDAQ: APPN) capitalized on the digital transformation that is taking place around the world. The provider of low-code software platforms allows its customers to produce custom applications much more quickly and efficiently, and Appian has enjoyed considerable growth in sales – and, specifically, recurring revenue. This helped to send the stock 240% higher in three months.
Appian is just one of many software as a service actions that have sparked some controversy over its price movements. Its core business is definitely getting stronger, but the size of the recent jump in stock prices has worried many analysts. That is why, while trading at around $ 220, the average target price among analysts is only $ 98 per share.
However, that target number has recently increased. This month alone, Needham more than doubled his price target to $ 193 per share, and Morgan Stanley (NYSE: MS) gave a more modest boost of $ 20 to bring its target to $ 100. If Appian can continue to perform well, then it may well keep its stock price where it is – and allow analysts to continue raising their goals accordingly.
Make your own calls
Wall Street has professionals who scrutinize company finances all day, but they are not foolproof. Among these actions, MicroStrategy’s link to bitcoin will give its shares as much volatility as the cryptocurrency itself, while the arguments that SunPower got too far quickly are compelling. Appian, however, may be in the early stages of a much broader secular trend, which may take it to a much higher level in the long run.
If you like what you see at these companies, don’t let the concerns of Wall Street analysts stop you. Do your own research and come to your own conclusions, and then invest accordingly.