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Morgan Stanley recommends 2 stocks to buy


The bearish stance has worked well into 2022, but as in most areas of life, flexibility is often a key ingredient to success. With this in mind, Mike Wilson, Morgan Stanley’s Director of US Equity Strategy, thinks it’s more important than ever to have an open mind as 2023 enters the timeframe.

“After a 12-month period when stubborn bearishness has paid off, we think we are now entering the final phase of a bear market where risk is two-way,” said Wilson. must be respected”.

It’s not that Wilson thinks we’re done with the bear market; The strategist does not expect the road ahead to be “smooth sailing” and thinks the consensus earnings are still “too high.”

However, Wilson has switched to a “more upbeat tactical view” and this also applies to investors, who will need to be “more tactical and make choices with no regrets”.

Against this backdrop, analysts at the banking giant pointed to two names that they consider good investment choices in the current environment. Do other analysts agree? Follow TipRanks database, they certainly do; Both stocks are rated as Strong Buy by consensus analysts and are expected to accelerate in the coming months.

Palo Alto . Network (PANW)

Today, cybersecurity is an essential component of any online activity and the first choice of Morgan Stanley we will look at is the leader in the field. Palo Alto Networks specializes in cybersecurity services that run the full gamut from firewall software and appliances, trustless network security, security analytics and automation to professional, educational services. and cybersecurity consulting, among other products. The company divides its operations into three distinct platforms: Cybersecurity, Cloud Security, and Security Operations.

It’s a pattern that has defended the stock relatively well during the 2022 drop; stocks may be down 7% on a year-over-year basis, but that performance represents much better than the 29% drop of the tech-heavy NASDAQ.

And it’s earnings monitors like the latest that support the relative out-of-the-box performance. In the context of other big tech giants falling heavily, in the recently released FQ1 (October quarter) report, the company surpassed Street’s expectations. Revenue grew 24.8% year-over-year to $1.56 billion, outpacing Street calls of $10 million, while bills grew 27% year-over-year to 1.7. billion dollars. At the other end of the scale, the company delivered adj. EPS was $0.83, slightly above the $0.69 expected on Wall Street.

That performance drew Morgan Stanley’s applause. Hamza foragewho see more developments ahead.

“We continue to believe that PANW will be the first company with a $100 billion market cap in cybersecurity, or nearly double its current share price in two years,” the analyst confidently said. know. “Our argument is based on PANW’s broad platform development, market leadership in Cloud security, and improved profitability over a multi-year investment cycle. The FQ1 results highlighted all these aspects, as the company once again delivered positive results amid macro uncertainty in which several security firms cut their outlooks. .”

Accordingly, Fodderwala rates PANW as Overweight (i.e. Buy), supported by a $268 price target. Consequences for investors? Up 56% from current levels. (To see Fodderwala’s achievements, click here)

Overall, PANW is widely covered on Wall Street and mostly positive; Out of the 36 analyst reviews on file, 4 suggest an outsider, but all the rest are positive, leading to a consensus view of Strong Buy. Going by the median target of $228.24, the stock should move 32% higher in the coming months. (View PANW stock forecast on TipRanks)

Body hygiene (BBWI)

Let’s move on to the next name endorsed by Morgan Stanley. Bath & Body Works is a retailer that sells personal care products such as soaps and lotions and other items such as candles and lotions. The company’s products are distributed through chain stores, websites and partner locations. While the majority of operations take place in the United States, it has a growing Canadian and international business.

With consumers tightening their wallets due to the effects of high inflation, many retailers have been hit hard this year and although that is reflected in BBWI’s declining sales, but the company has demonstrated excellence in its response to the downturn. This is clearly shown in the Q3 financial statements that have just been released.

Although revenue fell 5% year-over-year to $1.6 billion, the figure was $40 million higher than Street expectations. But the really good news is the bottom line; The company delivered EPS of $0.40, double analysts’ forecasts of $0.20, and increased its full-year outlook for diluted earnings per share from $2.70 to $2.70. $3.00 up from $3.00 to $3.20. Consensus has that figure at $2.89.

BBWI also ended the quarter with inventory up just 10 percent year-over-year, a performance 20 points higher than Q2’s 33 percent increase. Going forward, the company’s Q4 guidance calls for an increase. Annual inventory chief is + teens.

This is a particularly impressive feat, according to Morgan Stanley. Alexandra Straton.

“In our view, this is likely to be one of the best inventory results in our coverage this earnings season and should help with margin pressure,” the analyst explained. as promotions and discounts in the fourth quarter onwards may be less than those of other specialized retailers.” “This speaks to BBWI’s largely domestic and extremely flexible supply chain.”

Straton continued: “We are bullish on BBWI because of its fundamentally attractive business model, its ability to continue to rise and fall, and its valuation re-ranking opportunity.

Therefore, it is not surprising that Straton rates the stock as Overweight (i.e. Buy) while the price target given is a hit; this goes from $72 to $76, suggesting the stock will go 92% higher next year. (To see Straton’s achievements, click here)

BBWI also enjoys strong support from Straton’s colleagues; ratings split from 8 to 2 in favor of Buy over Hold, all of which culminate in a strong Buy consensus rating. The forecast calls for a 12-month return of 27%, considering an average target of $50.27. (View BBWI stock forecast on TipRanks)

To find great ideas for trading stocks at attractive valuations, visit TipRanks’ Best stocks to buya newly launched tool that consolidates all of TipRanks’ equity insights.

Disclaimer: The opinions expressed in this article are those of the featured analyst only. Content is used for informational purposes only. It is very important that you do your own analysis before making any investment.

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