A little optimism shines through whenever the market doesn't have to roll with any outside shocks. Naturally the cheer spreads to BMR stocks, where prominent Wall Street voices have been waiting for the right moment to tell their clients about the stocks we've loved all along
We're going to focus on three of them this morning. Alteryx (AYX: $116, up 5% yesterday) is an obvious rebound candidate. Barely a month ago it was a $147 stock with the whole world at its feet. Earnings were solid, with revenue beating our target by 7% and guidance confirming that our long-term projections were accurate, but a little on the low side. There was absolutely nothing wrong with this company.
The Technology analysts at Wedbush weren't blind to that. They were cautious on Alteryx before, but after doing all the math and checking with the company's customers they now think it can rebound to at least $135 in the near term. That's still hesitant by our standard (our Target remains $160) but it's a nice note of confidence after a few weeks of unjustified and sometimes irrational selling. Even the cautious calculations say this stock was deeply oversold. We agree with that.
Then there's Square (SQ: $62, down 1%), which has receded a lot from its $95 peak even though management's revenue guidance has actually come up significantly over that period and the long-term profit outlook remains unchanged. A year ago this stock commanded a valuation of 80X anticipated 2020 earnings. Here at 38X the 2021 target, it doesn't look overextended at all. That's a reasonable price to pay for the growth Square keeps generating, no matter how many holes in the income statement naysayers try to find. Many of those analysts are softening now that the stock has declined. KeyBanc now says Square is worth at least $75 ahead of substantial improvements to the company's Payment platform next summer. We agree with that sentiment as far as it goes, but we're much more ambitious. Our Target is $105.
Spotify (SPOT: $116, flat) has spent a fair amount of time drifting in Apple's (AAPL: $227, flat) digital shadow. We remain convinced that this will be a $198 stock one of these days, but getting there will require patience. Some of the most negative analysts now concede that it's fallen too far. That's a good start.