With President’s Day and Valentine’s Day almost here, and just six weeks left in the first quarter of 2021, many investors are looking past earnings season to next quarter and the rest of 2021 and starting to reset portfolios. Many investors remain very nervous, especially given the massive rally since the election that has pushed the major indexes and the Russell 2000 to all-time highs. Yet, the overall take is one of slow but steady growth going forward, given the incredible run in the equity markets and the potential for a growing economy as the COVID-19 vaccine is distributed nationally.
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A series of new Goldman Sachs reports raises the price targets on stocks of some companies that delivered the goods in a big way during earnings season and still look to have some very solid upside potential. We spotlight four stocks rated Buy for which the analysts have raised the price targets significantly. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

Avaya

This company broke out to a 52-week high on the back of stellar earnings this week. Avaya Holdings Corp. (NYSE: AVYA) is a global company engaged in the provision of business collaboration and communication solutions.

Its Products and Solutions segment includes unified communications and contact center platforms, applications and devices. The Services segment consists of three business areas: Global Support Services, Enterprise Cloud and Managed Services and Professional Services.

Avaya reported revenues of $743 million. OneCloud ARR was $262 million, up 38% sequentially. Cloud, Alliance Partner and Subscription revenue was 34%, up from 18% a year ago. Software and services were 88% of revenue, up from 86% a year ago, while recurring revenue was 65%, up from 59% a year ago.

The Goldman Sachs price target was raised to $33 from $26. The Wall Street consensus target is $24.89, and Wednesday’s closing print was $32.91, after almost a 13% gain for the day.

Lyft

This stock gapped up back in the fall and could be headed much higher with the reopening of the economy. Lyft Inc. (NASDAQ: LYFT) engages in the provision and management of online social rideshare community platforms. It provides access to a network of shared bikes and scooters for shorter rides and first-mile and last-mile legs of multimodal trips, information about nearby public transit routes, and Lyft Rentals to offer riders a view of transportation options when planning any trip.

The company beat fourth-quarter earnings expectations, and if ride-share demand does accelerate in the spring and summer as Lyft expects, a substantial jump in earnings should be forthcoming. In the fourth quarter, the company reduced fixed costs by $360 million on an annualized basis, surpassing its cost reduction goal by 20%. In particular, Lyft pulled back on driver acquisition costs in December as the spike in virus cases curtailed ride-share activity.

Goldman Sachs raised its $44 price target all the way to $74. The posted consensus target is $51.79, and Lyft stock climbed almost 5% on Wednesday to close at $56.21 a share.

After years of so-so performance, this technology giant and social media leader’s stock has taken off. Twitter Inc. (NYSE: TWTR) operates as a platform for public self-expression and conversation in real time in the United States and internationally.
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The company offers various products and services, including Twitter, a platform that allows users to consume, create, distribute and discover content. Periscope is a mobile application that enables users to broadcast and watch video live with others. The company also provides promoted products and services, such as promoted tweets, promoted accounts and promoted trends, which enable its advertisers to promote their brands, products and services.

In addition, the company offers a set of tools and public application programming interfaces for developers to contribute their content to its platform, syndicate and distribute Twitter content across their properties, and enhance their websites and applications with Twitter content. Further, it provides subscription access to its public data feed for data partners.

The $55 Goldman Sachs price target was raised to $78, while the consensus target is $48.08. Twitter stock jumped almost 14% after the stellar results were posted, and shares closed at $67.77 on Wednesday.

Yelp

This is another top internet play from the Goldman Sachs team. Yelp Inc. (NYSE: YELP) provides free and paid business listing services to businesses of various sizes, as well as enabling businesses to deliver targeted search advertising to large local audiences through its website and mobile app.

Yelp also provides other services, including Yelp Platform, which allows consumers to transact directly on Yelp. The platform also enables consumers to complete food delivery transactions, book spa and salon appointments, order flowers, make winery reservations and so on. Yelp Deals allows local business owners to create promotional discounted deals for their products and services, and gift certificates products for local business owners to sell full-price gift certificates directly to customers.

Yelp reported fourth-quarter revenue above Wall Street estimates, and several analysts raised price targets. The Goldman Sachs hike was from $30 a share to $44. The consensus target is $29.92. After a strong open on Wednesday, Yelp stock reversed and closed at $36.79, down almost 5%.

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These four stocks have been absolutely on fire. While all remain great ideas for aggressive growth investors, it may make sense to just buy partial positions here and see if there is not some sell-the-news action after sizable gains. Many on Wall Street feel that we may see a 5% to 10% correction in the first quarter, so caution makes sense now.

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