The Q2 earnings cycle results are mixed. Some are good, some are bad. The takeaway is that some are good, and analysts are rewarding those companies with upgrades and price target revisions to boost their share prices. That’s the focus of this article: the three stocks analysts love the most coming out of the Q2 earnings cycle that aren’t NVIDIA. The only common factor besides analyst attention is their buy-and-hold quality. Palo Alto Networks NASDAQ: PANW, Meta-platforms NASDAQ: METAAnd Walmart NYSE: WMT are all industry leaders that generate solid cash flows with growth prospects, thereby increasing value for their shareholders today and in the long term.
Palo Alto consolidates leadership position through platformization
Palo Alto Networks
(As of 11:39 a.m. ET)
- 52-week range
- $224.64
▼
$380.84
- P/E
- 50.47
- Target price
- $363.49
Palo Alto’s story over the past year has been about moving to a platform. The short-term impact was lower profitability, but the long-term benefits outweighed this. Platformization means unifying and simplifying offerings to resonate with customers and drive growth. The result is better than expected, with fourth-quarter results beating consensus on both revenue and profit, reinforced by positive guidance. Guidance calls for sustained low-double-digit growth, improved profitability and a strong balance sheet.
Analyst reaction has been robust, with MarketBeat recording 27 revisions within days of the report’s release, 93% of which included price target increases. Analysts view the results as strong and consistent with the outlook for sequential acceleration, pointing to the rise in cyberattacks as supporting growth. Cyberattacks are increasing in volume and impact, driving demand for cybersecurity services.
The activity added $40 to the consensus, or more than 12%, in less than a week, suggesting that a move to the $375-$415 range is likely. A move to $375 is worth 7% and is the all-time high; a move to $415 is worth 18% and would mark a new all-time high. A move to new all-time highs is significant because it aligns with the technical forecast that suggests a move to $450 could happen before the end of the year.
Meta-platforms: Making money with AI
(As of 11:29 a.m. ET)
- 52-week range
- $279.40
▼
$544.23
- Dividend yield
- 0.39%
- P/E
- 29.53
- Target price
- $574.41
The key takeaway from Meta Platform’s Q2 report is that the company is spending big on AI and investors don’t see any fault in that. AI is the driver of results and should remain so in the future.
Highlights of the report include revenue growth of 22%, up 200 basis points, higher margins and robust cash flow. Margins and cash flow were driven by higher user numbers, improved ad delivery and higher revenue per ad using AI across the app family. Net income grew more than 70% in terms of margin and cash flow, securing dividend prospects and paving the way for payout increases and other forms of return on capital.
Since the publication date, 25 of the 39 analysts tracked by MarketBeat have revised their price targets, with about 92% raising their target. Their activity shows they have a strong belief that the stock price will continue to rise and could gain at least 10% over the next year. However, the consensus is up 80% over the past year and continues to rise, with most of the new targets above consensus, suggesting 15% to 25% upside is more likely.
Walmart exceeds and raises expectations: Analysts raise targets
(As of 11:30 a.m. ET)
- 52-week range
- $49.85
▼
$76.45
- Dividend yield
- 1.09%
- P/E
- 32.57
- Target price
- $78.64
Walmart’s second-quarter results were solid, with strong sales and earnings boosted by positive guidance. Details include stronger-than-expected comparables, increased market share, strength in the advertising business and results underpinned by transaction volume rather than price increases.
Other notable details include Sam’s Club’s strength driven by membership growth and e-commerce. E-commerce contributed the largest portion of the systemwide comparable store increase.
Following the release, 18 of 28 analysts tracked by MarketBeat issued revisions, with 95% of them increasing their price target. They expect the stock to rise to just under $80, representing an increase of 8% to 10% from the current price. Most of the new revisions see the stock trading between $82 and $85, representing 12% upside potential.
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