Given recent market movements, investors are looking for direction. Advice from the Federal Reserve or analysts can offer some credibility, in terms of a sign. But it eventually became a stock picker’s market. A major Wall Street firm thinks it has found a few stocks with huge upside potential.
RBC Capital Markets has made a few calls recently, and while there’s no particular focus in terms of sector or industry, the main idea is on the upside. Each call is fairly positive, predicting both short-term and long-term upside, but one idea offers nearly 80% upside potential.
While market headwinds have weighed on markets generally in recent months, RBC Capital Markets believes these stocks could offer solid upside in the months and years ahead.
It is important to remember that no single analyst report should be used as the sole basis for any buy or sell decision.
Matthew Hedberg reiterated an outperform rating on Couchbase Inc. (NASDAQ:BASE) but lowered the price target from $27 to $25 to reflect the peer group’s multiple contraction with earnings coming later. The price target implies a 78% upside from the most recent close price of $14.06. Hedberg noted that he would expect a slight uptick in consensus estimates and also believes the stock’s valuation is “attractive” at three times company value over expected 2023 sales.
The 52-week trading range is $11.68 to $52.26, and the stock traded at $14 on Wednesday morning. The stock is up around 44% since the start of the year.
Jonathan Atkin reiterated an outperform rating on Cyxtera Technologies Inc. (NASDAQ: CYXT) and raised the price target to $16 from $14, implying an 8% upside from the most recent close price of $14.76. Atkin said in the report that his recent discussion with Chief Financial Officer Carlos Sagasta at RBC’s Global Communications Infrastructure conference suggests that there is good demand visibility for one to three years and that an inflationary and recessionary environment will be actually positive for Cyxtera.
The stock traded near $14 on Wednesday, in a 52-week range of $7.51 to $15.42. Shares are up more than 13% since the start of the year.
Dun & Bradstreet
Ashish Sabadra downgraded Dun & Bradstreet Holdings Inc. (NYSE: DNB) to a Sector Perform rating of Outperform but raised the price target from $16 to $18. This implies a 9% upside from the most recent closing price of $16.56. Sabadra noted that the company’s investments this year are “front-loaded” and will weigh on EBITDA growth in the first half. He expects Dun & Bradstreet’s free cash flow to remain below most news services peers.
Dun & Bradstreet stock has a 52-week trading range of $14.31 to $22.88, and it traded near $16 per share early Wednesday. The stock is down about 21% since the start of the year.
RBC’s Craig Wong-Pan upgraded ResMed Inc. (NYSE: RMD) to a Sector Perform outperform rating and raised the price target to $244 from $233, implying a 16% upside from the most recent closing price of $210.85. The stock has fallen significantly over the past three months due to revised sales forecasts caused by commodity constraints. Wong-Pan thinks ResMed shares are now “too penalized”, creating a buying opportunity, given its strengthened leadership position in the obstructive sleep apnea market and the risk of upside earnings associated with price increases.
The stock traded near $212 on Wednesday, within a 52-week range of $189.40 to $301.34. Shares are down more than 17% since the start of the year. It has a dividend yield of 0.8%.
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