Jefferies Analysts Are Out With Four Daring Summer Growth Stock Picks

More and more, the companies that we cover on Wall Street are starting to agree that while the future’s still bright for the U.S. economy, the future may be one of stock market gains that are much lower than the norm has been over the last 10 years. When that is the case, then investing strategies often shift from indexing to a more disciplined stock picking routine, and that’s when investors need solid growth ideas.

Jefferies highlights the firm’s top growth stocks to buy each week, and this week is no exception. While these companies are better suited for accounts that have a higher risk tolerance, they all make good sense now, and all have outstanding upside potential. We found four that look extremely good now, and they are among Jefferies top U.S. Growth Calls for this week.

Alphabet

The search giant has been under pressure as there have been calls for Congress to break-up the big tech leaders. Alphabet Inc. (NASDAQ: GOOGL) is a global technology company focused around key areas, such as search, advertising, operating systems and platforms, enterprise and hardware products.The Company generates revenue primarily by delivering online advertising and by selling apps and contents on Google Play as well as hardware products.The Company provides its products and services in more than 100 languages and in 190 countries, regions, and territories.

Alphabet offers performance and brand advertising services. It operates through Google and Other Bets segments. The Google segment includes principal Internet products, such as search, Ads, Commerce, Maps, YouTube, Apps, Cloud, Android, Chrome, and Google Play, as well as technical infrastructure and newer efforts, such as Virtual Reality.

Google has outlined expanding capabilities to facilitate commerce, capitalizing on the “treasure trove” of data provided by seven different properties each with at least one billion active users (Android, Search, Chrome, Maps, Play, YouTube, and Gmail). Smart shopping campaigns leverage machine learning to make sense of touch points along the consumer purchase path, including better offline attribution capabilities (locally-oriented searches +200% over the last two years) and improved purchase conversion rates (20% on average).

The Jefferies team said this about the tech Goliath’s potential antitrust issues:

We hosted a conference call with an antitrust focused legal expert this week. Our expert noted that the breakup scenarios for mega cap tech companies is unlikely, and that actual regulation action would likely take more than just a few years. In order to make a case, regulators need to prove that the target company has: 1) gained or maintained monopoly through unlawful practices or 2) a past merger substantially decreased competition. US regulators focus on “consumer welfare” so it might be hard to argue that lower prices or better products are hurting consumers.

The Jefferies price target is posted at $1450, and the Wall Street consensus is set at $1343.80 The shares closed Friday at $1086.30.

FibroGen

This company has big upside potential for investors with only a moderate risk profile. FibroGen, Inc. (NASDAQ: FGEN) engages in the discovery, development, and commercialization of therapeutics. It focuses on hypoxia-inducible factor and connective tissue growth factor biology to develop innovative medicines for the treatment of anemia, fibrotic disease, and cancer.

Fibrogen is focused on the discovery, development and commercialization of novel therapeutics to treat serious unmet medical needs.The company has capitalized on extensive experience in fibrosis and hypoxia-inducible factor (HIF) biology to generate multiple programs targeting various therapeutic areas.

Jefferies has liked the stock for some time and highlighted this after meeting with management. It said:

Our recent discussions with management suggest Roxa is progressing nicely and things are moving ahead with partner Astrazeneca toward meeting with the FDA. We think there could be more disclosure with an FDA agreement soon and an NDA filing in the third quarter time range. In our view, the Street is still uncertain about the Phase 3 results. We think post-FDA meeting disclosure, confirmation of filing and more detailed PhIII data could cause the stock to rebound as uncertainties around the data are cleared.

The Jefferies price target is set at a massive $75, and that compares with the consensus which is posted lower at $70. The stock was last seen on Friday at $40.68.

Haemonetics

This company has been touted recently as a potential takeover target as they may be a very solid fit for a big medical device player. Haemonetics Corporation (NYSE: HAE) is a healthcare company, provides products for processing, handling, and analysis of blood. The company operates through five segments: North America Plasma; America’s Blood Center and Hospital; Europe, Middle East and Africa; Asia Pacific; and Japan.

Haemonetics offers plasma collection and storage products, including PCS brand plasma collection equipment and disposables, plasma collection containers, and intravenous solutions, as well as information technology platforms for plasma customers to manage their donors, operations, and supply chain.

The analysts recently met with company management and noted this in the research report. It said:

The company confirmed NexSys was highlighted by Grilfols in a recent investor presentation. Real-world data on ~3.5M NexSys collections is showing improvements in yield and donor door-to-door time as well as a 90% reduction in errors. Combined it is estimated that this is driving a 10% cost savings per liter of collected plasma. In addition, underlying plasma trends remain strong and the company is on track to achieve up to $85 million in gross cost savings by fiscal year end (ahead of the $80 million target). Our numbers are ahead for fiscal 2020 and 2021 with room for more upside.

The Jefferies price target is posted at $125. The Wall Street consensus price target for the shares is $84.71. The stock closed Friday at $112.11.

Salesforce.com

This top company just mad a huge acquisition that had Wall Street buzzing last week. Salesforce.com, Inc. (NYSE: CRM) provides enterprise cloud computing solutions, with a focus on customer relationship management to various businesses and industries worldwide. It offers enterprise cloud computing applications and platform services, including Sales Cloud that enables companies to store data, monitor leads and progress, forecast opportunities, gain insights through relationship intelligence, and collaborate around sales on desktop and mobile devices.

The company also provides Service Cloud that enables companies to deliver personalized customer service and support, as well as connects their service agents with customers on various devices; and Marketing Cloud, which enables companies to plan, personalize, and optimize customer interactions.

Last week the company announced they had agreed to buy data analytics firm Tableau Software for $15.7 billion in an all-stock deal. The deal sparked a rally in software companies despite lofty valuations. The Tableau purchase continues an acquisition spree. Salesforce.com bought MuleSoft last year for $6.5 billion.

With the deal being discussed widely across Wall Street, the analysts noted this in the report:

We point out that while Salesforce.com already has embedded analytics, the Tableau gives the company an offering that can be sold independent of the existing portfolio. That said, we also note that growth has been slowing at Tableau, and there are some risks to realizing revenue synergies.

The Jefferies price target comes in at $189, and that compares to a Wall Street consensus price objective for the company is $181.32. The shares closed trading on Friday at $150.01.

Despite the potential for volatility in the coming summer months, the Jefferies team is sticking with four top stocks they have long championed, and have remained positive on. Given the second quarter results are only about three weeks off, it many make sense to buy partial positions and see how the earnings reports come in for the quarter.