With lower than two weeks remaining in 2021, the key Wall Street companies and analysts have pulled out their crystal balls to see by way of the curtains at what awaits for 2022. It’s an annual behavior, and one which traders pay shut consideration to; whereas the forecasts aren’t at all times good, they do give a good perspective of promoting terrain.
According to funding banking agency Raymond James, there are going to be loads of alternatives within the 12 months forward. The agency’s inventory analysts have been busy selecting the equities they see as winners in 2022. These are Strong Buy selections, and never simply from Raymond James – the Street usually agrees.
We’ve used the TipRanks platform to drag up the small print on three of those Raymond James picks, shares which the agency sees with 50% upside within the coming 12 months – or higher.
EngageSmart (ESMT)
The first inventory on Raymond James’ radar is EngageSmart, a buyer engagement and built-in cost software program supplier, providing options and subscriptions on the Software-as-a-Service mannequin. The firm’s options ease the trail for enterprise and enterprise clients, enhancing appointment scheduling, invoice cost, and different widespread processes for extra worthwhile operations. EngageSmart boasts that it has empowered over 74,000 small- and medium-sized enterprise, and over 3,000 enterprise purchasers.
This is a brand new firm within the public markets – it held its IPO on the finish of September this 12 months. In the occasion, EngageSmart upsized the providing, placing 14.6 million shares available on the market as an alternative of 13 million initially deliberate, and pricing them at $26 every, above the anticipated $23 to $25 vary. The IPO raised in extra of $378 million in gross proceeds, above the $338 million forecast.
The IPO was adopted in November by the corporate’s first monetary launch as a public entity. EngageSmart reported a strong achieve in revenues, together with a deepening loss in earnings. At the highest line, income got here in at $55.5 million, up 42% from the earlier 12 months, whereas on the backside line, the EPS lack of 6 cents was worse than the year-ago quarter’s break-even.
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In a number of different essential metrics, the corporate confirmed further features. Gross earnings rose year-over-year, from $29.5 million to $41.3 million, and reflecting the success of the IPO, the corporate’s money holdings elevated from $29.4 million on the finish of final 12 months to $253.8 million on the finish of 3Q21. The firm’s whole buyer rose by 40% yoy, to 77,400, and the whole transactions processed additionally grew 40%, to succeed in 28.6 million. All in all, it’s an image of a fast-growing tech firm.
At the identical time, ESMT shares fell sharply, beginning on the November 10 date of the earnings launch. Raymond James analyst John Davis is blunt in his evaluation of that improvement, writing: “We believe the severe stock reaction is largely due to technical factors coupled with general weakness of high growth fintech/software peers and recent IPO’s, rather than any true fundamental concerns, and as such think it has created a tremendous buying opportunity.”
Davis goes on to stipulate a few of the positives right here: “ESMT has a first/early mover advantage and product leadership that puts the company in pole position to capture share, driving 30%+ growth for the foreseeable future. More importantly, we believe there is a convincing bull case given tailwinds in both SMB (pricing + new specialties) and Enterprise (bill pay 2.0) that could result in material upside… While the 3Q top line may have modestly missed bulls’ lofty expectations, we think the potential for significant out year estimate revisions is little changed.”
In line with these bullish feedback, Davis provides ESMT a Strong Buy score, and a $40 value goal to recommend a one-year upside potential of ~84%. (To watch Davis’ observe report, click on right here)
ESMT will get one other Strong Buy from the analyst consensus view, primarily based on 8 current Buy rankings and a pair of Holds. The shares are priced at $21.47 and their common value goal of $36.89 implies ~72% upside from that stage. (See ESMT inventory evaluation on TipRanks)
UserTesting (USER)
Next up is one other tech firm – however one in a really distinctive area of interest. UserTesting is a human insights platform, providing its clients a ‘user eye’ view of how their software program performs. UserTesting’s platform permits clients to obtain video of their customers, utilizing merchandise. The product brings a strong perspective to builders, who can see how end-users work together with apps and react to designs and processes, ideas and types.
By the tip of 3Q21, UserTesting boasted greater than 2,100 clients in over 50 nations – a buyer base that features greater than half of the world’s most respected model names. This progress, and the rising inventory markets of the previous 12 months, supported an IPO, which was held in November. The USER ticker debuted on Wall Street on November 17 with 10 million shares put available on the market at $14 every. The IPO raised $140 million in gross proceeds.
After the IPO, shares started to fall, and have thus far didn’t recuperate. The inventory is down 35% because it hit the market. Looking on the state of affairs from Raymond James, 5-star analyst Brian Peterson acknowledges this reverse, however sees the inventory nonetheless in a sound place for future progress.
“We think the secular shift toward technology-enabled methods of market research and customer analytics are creating a number of new software categories, leading to substantial spend opportunities for a number of software vendors. USER should be a prime beneficiary of this dynamic, given that it’s video-oriented platform can often provide more human insights than other data/survey focused applications. While the market remains early in its adoption curve, we believe the quick time to value for customers vs. legacy approaches should allow USER to deliver 30% growth for the foreseeable future,” Peterson opined.
These feedback assist a Strong Buy score from Peterson, and his $14 value goal reveals in confidence in an upside of 68%. (To watch Peterson’s observe report, click on right here)
It’s clear from the Wall Street response that UserTesting has extra followers than simply the Raymond James analyst; it has a unanimous Strong Buy consensus score, primarily based on 11 constructive opinions. The inventory is at present value at $8.31 and has a $13.70 common value goal, for ~65% one-year upside potential. (See USER inventory evaluation on TipRanks)
Dave & Buster’s Entertainment (PLAY)
We began our checklist with two tech shares, and we’ll end it up with a shift in focus, to leisure and leisure. Dave & Buster’s is a widely known chain of venues, that includes a mixture of full-service restaurant and bar seating and menus with high-end video arcades that includes the newest video games. It’s an amusement middle for grown-ups, who nonetheless have a connection to their internal youngster – and it has confirmed profitable. The chain has 143 shops, within the US and Canada; its most up-to-date location opened within the third quarter of this 12 months. Dave & Buster’s boasts that, throughout 3Q21, it had recouped its losses from the pandemic shutdowns of 2020.
Despite the sturdy rebound from final 12 months, gross sales in Q3 have been down barely from Q2. The quarterly income of $317.9 million was down 16% sequentially. Looking again to 2019, nonetheless, on the final pre-pandemic Q3, the present report fares higher – 3Q21 confirmed revenues up 5.6% from the pre-pandemic 3Q19. This raises the likelihood that the sequential fall was on account of an artifact of the rebound, and a surge of shoppers as quickly as companies reopened, reasonably than a scarcity of recognition or declining enterprise.
Earnings have been additionally strong. EPS for the quarter was 21 cents per share; this compares favorably to the $1.01 web loss per share in 3Q20 and the slim 2-cent per share revenue in 3Q19.
In his protection for Raymond James, analyst Brian Vaccaro notes D&B’s sound efficiency, and makes the case that the inventory’s present underperformance relative to the broader market.
“Simply put, we consider PLAY shares are materially undervalued at an EV/EBITDA within the mid-5’s given 1) a path in direction of greater margins (200-300 bp) and EBITDA($~400M vs. $316M) in ‘22 vs. ‘19, 2) accelerating unit growth in ‘22 (mid-SD %) and beyond (strong ROI’s bolstered by smaller prototype), and three) its a lot improved B/S (potential to refi HY notes in ‘22) and liquidity position that could allow the company to opportunistically buy back stock through ‘22 (new $100M repo authorization),” Vaccaro explained.
To this end, Vaccaro rates PLAY as a Strong Buy, and his $55 price target implies a one-year upside of ~53%. (To watch Vaccaro’s observe report, click on right here)
Once once more, we’re a inventory with a Strong Buy from the Street in addition to Raymond James. PLAY shares have 9 opinions, breaking down 7 to 2 in favor of Buy over Hold. The common value goal of $50.43 suggests an upside of 40% from the buying and selling value of $35.95. (See PLAY inventory evaluation on TipRanks)
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Disclaimer: The opinions expressed on this article are solely these of the featured analysts. The content material is meant for use for informational functions solely. It is essential to do your individual evaluation earlier than making any funding.
