The broad markets were bouncing back after a rough start to August. While there are questions swirling about whether a true recovery is underway, investors are still looking for upside. The last haul of this earnings season has proven fairly positive, that in conjunction with a solid July employment report, CPI inflation and jobless claims have contributed to recent gains. One major Wall Street investment house has a couple picks that should ride out this recent push higher, and then some.
Goldman Sachs issued calls across industries where it sees significant potential upside. Considering the current inflationary climate, finding upside is key to keeping pace with the recovery from the market lows this summer.
It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Disney
Goldman Sachs reiterated a Buy rating on Walt Disney Co. (NYSE: DIS) and raised its $130 price target to $140. That implies upside of 25% from the most recent closing price of $112.43. Brett Feldman made the Disney call following the company’s “across the board financial beat” in the fiscal third quarter.
The results were driven by record Parks profitability that more than offset increased losses in DTC. Disney+ net additions of 14.4 million represent a “material beat,” and Feldman expects a positive response to Disney’s revised fiscal 2024 Disney+ subscriber targets and its planned price increases across its various streaming services in the United States and Canada.
While this call on Disney was fairly positive, some other analysts see Disney as a value trap, among other major stocks in the Dow Jones industrial average.
The stock traded at around $121 on Wednesday, in a 52-week range of $90.23 to $187.58. Shares are down 27% year to date.
Tempur Sealy
On Tempur Sealy International Inc. (NYSE: TPX), Goldman Sachs initiated coverage with a Buy rating and a $34 price target. The implied upside from the most recent closing price of $27.76 is 22%.
Susan Maklari was the lead analyst on the call, and she noted that Tempur Sealy is well positioned for above-average growth as it delivers on company-specific initiatives that should drive organic expansion and further share gains that lead to earnings ahead of expectations. Furthermore, she forecasts per-share earnings to rise at an 8% compound annual growth rate for 2021 to 2024 and for revenues to be up 4% over the same time.
The stock traded at around $29 on Wednesday, in a 52-week range of $20.03 to $50.51. Shares are down roughly 41% year to date.
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