One firm followed here at 24/7 Wall St. is regional boutique broker Wedbush, which over the years has built a strong reputation on stock picking, often following companies that have smaller market capitalizations than the blue chips.
Here, 24/7 Wall St. has included some of the companies Wedbush has included in its Best Ideas List going into the fourth quarter. Thus far, in 2018, the Wedbush Best Ideas List returned 20.4%, compared to 9.0% for the S&P 500.
Activision Blizzard
Activision Blizzard Inc. (NASDAQ: ATVI) makes the Best Ideas list yet again. Wedbush has a Buy rating with a $100 price target. The firm believes that Activision Blizzard could deliver outsized earnings growth by optimizing King’s untapped ad opportunity and monetizing its Overwatch League. Wedbush expects Activision Blizzard to outpace its peers with its in-game monetization, and expect dramatic growth in its mobile business as it launches new titles based on its successful PC and console games.
Shares of Activision Blizzard were last seen at $82.99, with a consensus analyst price target of $81.15 and a 52-week trading range of $57.29 to $84.68.
EA
Electronic Arts Inc. (NYSE: EA) has a Buy rating with a $158 price target. Wedbush stated its case:
We expect significant growth for the foreseeable future driven by cost discipline, digital sales growth, and several key evergreen franchises. EA has delivered the leverage inherent in its business model on a combination of higher margin from an increasing mix of digital sales and better-than-expected cost control. With its dominant sports franchises and well-developed recurring revenue model, we believe that EA represents a solid opportunity for investors to benefit from continued digital growth for the industry over the next several years
EA shares were last seen at $117.67, in a 52-week range of $99.63 to $151.26 and with a consensus price target of $140.92.
Facebook Inc. (NASDAQ: FB) was issued a Buy rating with a $250 price target. The brokerage firm gave its view as follows:
We expect Facebook to get back on track by the end of 2019, and expect revenues and profits to grow for many years. However, the Q2:18 “miss” caused us to rethink the company’s growth trajectory, and given that we lowered our estimates based upon Q2 results and high-level full year commentary, we also lowered our price target accordingly at that time. We continue to believe that it is appropriate to value Facebook shares at an EV/EBITDA multiple of 20x, particularly given that the company’s EBITDA is not adjusted for stock-based compensation (in contrast to many of its peers). Applying this multiple to our FY:19 EBITDA estimate of $34.51 billion leads us to our 12-month price target of $250 per share.
Facebook was last seen trading at $162.60 a share. The consensus price target is $210.06, and the 52-week range is $149.02 to $218.62.
PayPal
PayPal Inc. (NYSE: PYPL) was maintained with an Outperform rating and a $100 price target. Wedbush believes that ongoing/recent monetization efforts on both, consumer and merchant-facing platforms, as well as post-eBay separation potential opportunities, could accelerate top-line growth while expanding margins. During the next six to 12 months, the firm thinks that monetization efforts from Venmo and recently acquired iZettle likely will improve the company’s take-rates, which are beginning to provide incremental revenue/margin enhancement opportunities.
Shares of PayPal were trading at $88.26. The consensus analyst target is $97.62. The 52-week range is $63.69 to $93.70.
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