Inflation started last year and is now close to a 40-year high. Last week, the world’s major central banks took a pivot in the direction of an anti-inflationary policy, raising interest rates in a move that was expected but also a cause for concern. While the prospect of a central bank move to control inflation is quite positive, the necessary interest rate shocks could push the economy into recession.
Meanwhile, investors are busy waiting. Waiting for the Fed to take the next step, and waiting for the next data to be released, and waiting to see what happens in the coming months. According to Samir Samana, a senior global market strategist at Wells Fargo, “If we see the worst-case scenario for long-term interest rates, this could make room for equities to do some good.”
With that in mind, our attention has shifted to two stocks that Wells Fargo thinks have strong growth potential, with firm analysts predicting at least a 50% upside for each. Using TipRanks’ database, we found that both tickers also play a “Strong Buy” compliant rating from the rest of the road. Let’s take a closer look.
Match Group (MTCH)
The first Wells Fargo Peak is a Texas-based company, Match Group, in the online dating field. The technology company owns and operates an active portfolio of online dating and matching services, including top names like Tinder, Match.com and OKCupid. Match Group has a huge reach from the online world to the real world with more than 750 million downloaded apps – and with 40% of all interpersonal relationships starting online in the United States, Match Group’s total addressable market is large enough.
Although the match group has had a long run of success, the company is now coping with the changes that are coming. Earlier this month, the company announced that longtime CEO Shar Dubey was resigning after 16 years of service. Dubey will be replaced by Bernard Kim, who joined the match group from social gaming firm Zinga.
Match Group controls Tinder, the world’s highest-earning, most-downloaded dating app, and is reflected in the company’s top line. At $ 799 million, a 20% year-over-year increase for Top Line 1Q22, the company acknowledged that a quarter was affected by both the Kovid and Russia-Ukraine wars. The company reported a 13% increase in total payments, to 16.3 million, a profit driven by a 34% increase in the Asia-Pacific region. The company ended Q1 with a strong balance sheet, including $ 921 million in cash and liquid assets.
Despite the widespread use and success of Tinder, the company’s stock has fallen 45% this year. However, Wells Fargo’s 5-star analyst Brian Fitzgerald is not overly concerned, and paints a vivid picture of the group’s chances in the long run.
“For the first time, MTCH has published a company-wide MAU, pushing back the recent beer thesis (induced by third-party app data of dubious accuracy) over the reduction of user engagement. While we expect crosswinds to continue (perhaps for more than a quarter), we see the fundamental opportunity as very intact and assessment as mandatory at current levels, “Fitzgerald said.
What this adds to Fitzgerald is a stock that deserves an overweight (e.g. buy) rating. Wells Fargo analysts also set a price target of $ 115, suggesting a% 58% advance. (To view Fitzgerald’s track record, Click here)
Match Group-sized tech companies lack Wall Street attention, and MTCH shares have a record 17 analyst reviews. These include 15 buy and 2 hold, for a strong buy consensus rating. The মূল্য 119.59 average price target of $ 73.07 indicates a one-year uptrend of% 64% from the current trading price. (See MTCH Stock Forecast at TipRanks)
MaxLinear, Inc. (MXL)
Now we turn our attention to a semiconductor chip company, the inhabitant of a niche that literally turns the digital world around. MaxLinear is a designer and distributor of integrated radio-frequency analog and mixed-signal semiconductors, applications from automotive and industrial connections to wireless access and from Ethernet switches to routers and extender hardware applications. MaxLinear’s products have been widely used in the continuous rollout of 5G infrastructure systems.
This alone will give the company a strong position in the chip world – but Maxliner has recently taken steps to consolidate that position. On May 5, the company announced that it would acquire peer-to-peer chip firm Silicon Motion. The merger of the two companies will create an entity whose combined revenue will exceed $ 2 billion, a total addressable market worth $ 15 billion, and instant access to the list of the ten largest fableless chip suppliers. The transaction is expected to close at 1H23, and the value of Silicon Motion will be $ 3.8 billion, to be paid in both cash and stock.
Shortly before the merger was announced, MaxLinear announced the financial results of 1Q22. At the top line, quarterly revenue reached a record level of $ 263.9 million, up 26% year-over-year. On earnings, the company’s non-GAAP EPS jumped 55 cents to $ 1 in the most recent quarter of this year, according to the latest report. And, the company ended the quarter with a net cash flow of $ 132.2 million, up from $ 40 million in 1Q21 and $ 16 million in 4Q21. MaxLinear led revenue from $ 275 million to $ 285 million for 2Q22, with a sequential gain of 6% in midpoint. That guideline, of course, came before the announcement of the Silicon Motion acquisition.
Looking at the Silicon Motion deal, Gary Mobley, a 5-star analyst at Wells Fargo, wrote: “Although the initial investor feedback was negative, we see this deal as a long-term opportunity for MXL. Although investors do not always respond favorably to financially engineered EPS growth (for example, consequently EPS growth does not always get multiples of market valuation), we value this MXL + SIMO transaction to increase shareholder value.
Unfortunately for investors, Maxliner stock is falling, and the year-to-date is down 46%. However, excited about the prospects for Mobli, he wrote: “We are even more excited about the MXL story because the shares traded at a point where we have to say that the share price is very low … has little to do with direct consumer spending and is telco in the current macro background. , Only MSO and data center cap ex, bound to more sustainable areas. “
Based on the above, Mobley MXL shares an extra weight (e.g. buy) and sets a ্যের 66 price target, indicating its confidence above ~ 63% this year. (To view Moby’s track record, Click here)
All in all, Wall Street clearly likes what it sees on the MXL, as the stock has a unanimously strong buy consensus rating based on 7 positive reviews. The stock is priced at $ 40.51 and its মূল্য 63 average price target suggests that it will rise ~ 55% over the next 12 months. (See MXL Stock Forecast at TipRanks)
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Disclaimer: The views expressed in this article are those of the featured analysts only. Content is intended for informational purposes only. It is very important to do your own analysis before making any investment.