Analysts at Bank of America say stocks with a heavy buy rating are well-positioned heading into earnings season. CNBC Pro compiles the company’s research at the start of its quarterly report to find companies the company likes. These include: Warner Bros Discovery, Birkenstock, Spotify and United Airlines. Analyst Andrew Didora is bullish on United Airlines stock following Delta Air Lines’ strong earnings report last week. “We expect UAL to report strong 4Q24 results when it reports after the close on January 21 and guidance for 1Q25 ahead of consensus,” he wrote. The stock price target was raised to $120 from $100 per share, and it said it expected continued strong revenue growth. Furthermore, Didora said that despite macroeconomic uncertainties, travel demand remains strong. “The airline is the biggest beneficiary of the strong premium, corporate and transatlantic growth noted in DAL’s earnings report last week,” he wrote. United is also named to Bank of America’s prestigious US1 Best Ideas list. The stock price is up 183% from last year. Analyst Jessica Reif Ehrlich says Warner Bros Discovery is buying shares of the media and entertainment company on the dip. The stock fell 6.3% last year, but the company said the buying opportunity was too compelling to ignore. “WBD’s fourth-quarter earnings should reflect the persistence of various headwinds for the industry,” she wrote, acknowledging the challenges facing the industry. Still, the company said positive catalysts outweighed negative ones. These include “an easing of studio comparisons, a potential recovery in advertising, further growth in DTC (direct-to-consumer) and a potential profit inflection point.” “We continue to believe WBD has a compelling portfolio of assets,” she added. The company is scheduled to report earnings later this quarter. Birkenstock analyst Lorraine Hutchinson wrote after a recent meeting with the company’s management that the shoe company is firing on all cylinders ahead of its earnings report in late February. The company said several tailwinds will emerge in the coming months, including pricing power, product diversification and international growth. “We see Asia as a largely untapped opportunity,” she noted. Additionally, the company recently reiterated its fiscal 2025 revenue growth target of 15% to 17%, which Bank of America said is “fully achievable.” Meanwhile, Birkenstock shares are up 20% in the past 12 months and have plenty of room to rise, Hutchinson said. “We maintain our buy rating and view BIRK as a brand that will continue to capture share globally,” she continued. Spotify “We reiterate our Buy rating and $515 PO. We believe SPOT is at an inflection point in profitability and FCF driven by: 1) deeper penetration into the existing market, 2) recent/future price increases, 3) New pricing tiers, 4) improvements in advertising driven by digital initiatives and 5) new businesses such as audiobooks. Birkenstock “BIRK reiterates its guidance for FY25 revenue growth of 15-17%. Considering current conditions Brand momentum, we think this is achievable. We maintain a Buy rating and see BIRK as a brand that will continue to gain share globally in 4Q25 and ahead of consensus guidance for 1Q25. Discovery Channel “WBD Q4 earnings should reflect the persistence of various headwinds in the business… We continue to believe WBD has compelling variety. Upcoming catalysts include: 1) moderation in studio comparisons, 2 ) a potential resurgence in advertising, 3) further growth in DTC, and 4) a potential profit inflection point.
Bank of America said stocks have room to rise. | Real Time Headlines
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