Earnings results from the Q2 reporting cycle are mixed. Some are good, and some are bad. The takeaway is that some are good, and the analysts reward those companies with upgrades and price target revisions to increase their share prices. That is the focus of this article: the three stocks the most analysts love coming out of the Q2 earnings reporting cycle that aren’t NVIDIA. The single unifying factor aside from analysts' attention is their buy-and-hold quality. Palo Alto Networks (NASDAQ: PANW), Meta Platforms (NASDAQ: META), and Walmart (NYSE: WMT) are all industry leaders producing solid cash flows with an outlook for growth, building value for their shareholders today and over the long term.
Palo Alto Cements Leadership Position With Platformization
Palo Alto’s story for the last year has been about its shift to platformization. The near-term impact was reduced earnings power, but the long-term benefits outweighed it. Platformization means unifying and simplifying the offerings to resonate with clients and drive growth. The result is better than expected, with FQ4 results outpacing the consensus at the top and bottom line, compounded by favorable guidance. The guidance calls for sustained growth at a low-teen pace, improved profitability, and balance sheet strength.
The analysts' response was robust, with MarketBeat tracking 27 revisions within days of the report, 93% of which included price target increases. Analysts view the results as strong and aligning with the outlook for sequential acceleration and point to the rise of cyber attacks as supportive of growth. Cyber attacks are increasing in volume and impact, driving demand for cybersecurity services.
The activity lifted consensus by $40 or more than 12% in under a week, suggesting a move into the $375 to $415 range is likely. A move to $375 is worth 7% and aligns with the all-time high; a move to $415 is worth 18% and would set a new all-time high. A move to new all-time highs is significant because it aligns with the technical outlook, suggesting a move to $450 could come before year’s end.
Meta Platforms: Using AI to Make Money
The critical takeaway from Meta Platform’s Q2 report is that it spends a lot of money on AI, and investors don't mind. AI is driving results and should continue to do so long into the future.
Highlights from the report include 22% revenue growth that outpaced by 200 bps, wider margins, and robust cash flow. Margin and cash flow were driven by increased user count, increased ad delivery, and higher revenue per ad aided by AI across the family of apps. The net income grew more than 70% regarding margin and cash flow, securing the dividend outlook and paving the way to distribution increases and other forms of capital return.
Since the release date, 25 of the 39 analysts tracked by MarketBeat have revised their price targets, with about 92% raising their target. Their activity shows a high conviction the stock price will continue to advance and could gain at least 10% over the next year. However, consensus is up 80% in the last year and rising, with most fresh targets ranging above consensus suggesting 15% to 25% upside is more likely.
Walmart Beats-and-Raises: Analysts Raise Targets
Walmart’s Q2 results were solid, with top and bottom line strengths compounded by favorable guidance. Details include stronger-than-expected comps, increased market share, strength in the ad business, and results underpinned by transaction volume, not price increases.
Other notable details include the strength of Sam’s Club, which is driven by membership growth and eCommerce. eCommerce contributed the bulk of strength to the systemwide comp-store increase.
Following the release, 18 of 28 analysts tracked by MarketBeat issued revisions, with 95% including a price target increase. They see this stock advancing into the low $80s, an 8% to 10% increase from the current action. Most fresh revisions have this stock trading between $82 and $85, worth a 12% upside at the high end.
