With fourth quarter 2023 earnings season just about done, some clear winners have emerged. Strong prints and bullish outlooks have catapulted some stocks higher by 20% or more in recent weeks. At the same time, exceptional financial results have sent analysts running to revise their ratings and price targets on certain stocks. Smart investors should be paying attention to the analysts’ top stock picks as these ratings and targets can go a long way in influencing sentiment and the buying intentions of investors. Some stocks that had been in decline for years have now turned around their operations and finances, requiring a total rerating.
Beyond earnings, some securities are seeing their share prices rise due to other catalysts that range from dividend increases and new partnerships to an improved economic outlook and the adoption of cutting edge technologies. Whatever the reasons, analysts clearly favor certain stocks in this bull market and their ratings reflect this fact. Here are three of the analysts’ top stock picks right now.
Dick’s Sporting Goods (DKS)
Analysts have been scrambling to upgrade the stock of Dick’s Sporting Goods (NYSE:DKS) ever since the sporting goods retailer issued strong financial results a few weeks back. Loop Capital raised its price target on DKS stock to $220 a share from $150, while Barclays lifted its price target to $239 from $194 and maintained a “buy” rating on the shares. The upgrades come with DKS stock up 52% year-to-date (YTD).
DKS stock has been surging ever since the company reported the biggest quarterly sales in its history and raised its dividend by 10%. Going forward, Dick’s will pay a quarterly dividend of $1.10 per share. Last year, the company doubled its dividend payment as sales and profits continued to rise coming out of the pandemic. Dick’s Sporting Goods also provided bullish guidance for 2024, leaving analysts drooling at the growth prospects.
Chipotle Mexican Grill (CMG)
Analysts are loving the plan by Chipotle Mexican Grill (NYSE:CMG) to execute a 50-for-1 stock split in June of this year. Analysts at Baird raised their price target on CMG stock to $3,150 a day after the split was announced. That implies nearly 9% upside from current levels and comes after the stock has already risen 78% in the last 12 months. Baird notes that the stock split will provide liquidity and attract price-conscious retail investors.
Similarly, Deutsche Bank just raised its price target on CMG stock to $3,300 a share, implying 14% upside from current levels while maintaining a “buy” rating on the shares. The stock split is the first ever by Chipotle, which went public in 2006. Analysts on Wall Street have called for a stock split over many years, arguing that lowering the share price will make the stock more accessible to people.
Gap (GPS)
The turnaround story at clothing retailer Gap (NYSE:GPS) also has Wall Street drooling. Analysts at Barclays, Evercore, Baird and Bank of America each raised their price targets on GPS stock and placed “buy” equivalent ratings on the shares after Gap crushed its most recent earnings print. A year ago, GPS stock was in the doldrums. So far this year, the shares are up 36%.
While Gap’s financial results have been strong, what Wall Street really likes is the turnaround story the company is telling. The company’s Old Navy brand saw sales grow in the most recent quarter for the first time in more than a year, overall gross margins rose 5.3% to 38.9% due to fewer markdowns and inventory levels decreased by 16% last year, enabling Gap to again sell its clothing items at full price.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.