Has perspective been lost in these chaotic times? People have been emptying supermarkets by stocking up on the essentials, with the bizarre scenes of toilet paper flying off the shelves.
“Good orderly thinking and subsequent actions are what will likely turn things around,” said Oppenheimer’s Chief Investment Strategist John Stoltzfus.“ After all, the economy stateside moved into this Covid-19 challenged period from a position of economic strength across many facets of the economy.”
Along with the advice to keep a level head in such trying times, the investment firm finds some enticing opportunities to consider, and recently initiated coverage on two interesting names. Oppenheimer believes these two can soar in the coming months – by over 20% each, as it happens. Just to be safe, we run them through TipRanks database to ensure that other analysts agree with Oppenheimer. Let’s take a closer look.
Mobile game developer Zynga has held up well since the global crisis began. While the S&P 500 has retreated into bear territory, the maker of popular games such as Farmville, Zynga Poker, and Words with Friends has held steady and is slightly up year-to-date.
It doesn’t take a genius to figure out the reason for its durability in these stay-at-home times. Along with companies like Amazon and Netflix, people spending more time online is a boon for its business. As people fight off cabin fever, video games are likely to get more playing time.
The opportunity for Zynga hasn’t gone unnoticed by Oppenheimer’s Andrew Uerkwitz. The 5-star analyst recently initiated coverage of the social game developer with an Outperform rating and a price target of $7.50. The figure presents investors with possible upside of 20%. (To watch Uerkwitz’s track record, click here)
What instigated Uerkwitz’s bullish call? For starters, Zynga has a proven track record of creating successful games. Amongst the positive metrics in its latest quarterly report, the company’s Words with Friends and Empires & Puzzles games both hit record numbers for revenue and bookings.
Furthermore, Uerkwitz argues that in a crowded sector with low barriers to entry, the companies which will stand out in the long run are those that increase engagement and make good use of data analytics. In this regard, Zynga is “best in class,” as the company’s track record of creating and acquiring games which bring in over $100 million a year across a wide array of subgenres can attest.
Uerkwitz concludes, “We believe ZNGA is unique in capturing strong fundamental growth in the mobile gaming space on leveraging its core competency of customer acquisition/monetization in both organic titles, licensed IP, and further industry consolidation. While we believe mobile gaming is very difficult to predict due to low barriers to entry and changing competitive dynamics, Zynga’s history, scale, and strategy should lower the uncertainty.”
The Street concurs with the Oppenheimer analyst. 9 Buy recommendations, 1 Hold and 1 Sell add up to a Moderate Buy consensus rating. The upside potential is 24%, based on an average price target of $7.73. (See Zynga stock analysis on TipRanks)
Sony needs no introduction. An entertainment and technology empire that has been at the center of popular culture for more than 70 years, it has shaped consumers’ appetite for pioneering products and content.
Fun fact, investors: Sony’s first consumer product was an electric rice cooker. It has come a long way since then; From transistor radios to the first color video cassette recorder, to the Sony Walkman and onto the PlayStation, the list of the company’s achievements alongside its omnipresent market penetration is significant.
Nevertheless, following another hot streak in 2019, like other market giants, Sony has taken a beating with the markets’ downturn, losing 20% year-to-date.
But things aren’t as bad as they may seem, argues Uerkwitz (who also covers Zynga). The 5-star analyst kicked off his Sony coverage with an Outperform rating and set a price target of $70. From current levels, the upside potential comes in at 28%.
There are a number of key points Uerkwitz makes to back up his bullish call. The analyst highlights the fact that Sony owns “key content IP assets” across many areas including gaming, music, movies and TV. What’s more, the analyst expects Sony to stay at the forefront of the game console market as it upgrades to next generation hardware. The lack of competition outside the big three music companies also stands to benefit Sony, as music streaming further penetrates markets all over the world.
Uerkwitz reasons, “We believe recent market weakness creates an attractive entry point to own Sony for the long term. Despite the near-term impact on its sales in FY20, we believe Sony’s business-portfolio shift to leading digital entertainment IP and best-in-class image sensor will provide more stable sales growth and margin improvement in the long-term.”
Turning now to the rest of the Street, there hasn’t been much Sony-related activity among analysts lately. The entertainment technology giant’s Strong Buy consensus rating consists of 3 recent Buy ratings. The average price target is, like the Oppenheimer analyst’s, $70. (See Sony stock analysis on TipRanks)