U.S. stocks failed to sustain last week’s momentum. The S&P 500 dropped 0.3%, while the Dow Jones Industrial Average and the Nasdaq Composite retreated 0.2% and 0.7%, respectively, in the last trading session, as investors struggled to determine whether the stocks have hit bottom or are just briefly rebounding from oversold conditions.
Moreover, the stock market seems to be prepping for its worst first half in more than 50 years. And the volatility is expected to remain. "We don't expect the choppiness and volatility we've seen over the first half of the year to subside," said Timothy Braude, global head of OCIO at Goldman Sachs Asset Management.
Despite the market volatility, Goldman Sachs analysts expect quality stocks Adobe Inc. (ADBE), Global-e Online Ltd. (GLBE), and Innoviz Technologies Ltd. (INVZ) to soar significantly in the next 12 months. So, we think it could be wise to add them to your watchlist.
Adobe Inc. (ADBE)
ADBE is a diversified software company. It operates through three segments: Digital Media; Digital Experience; and Publishing and Advertising. The company’s products and services are used by professionals, marketers, application developers, consumers, and enterprises for creating, managing, optimizing and engaging with compelling content and experiences.
On June 14, ADBE unveiled innovations for its customer data platform (CDP), Adobe Real-Time CDP, to assist global brands in transitioning from third-party cookies to first-party data. To accelerate the first-part data strategy, Adobe introduced enriched customer profiles with commerce, AI-powered targeting, new privacy tools, and Segment Match across channels.
On the same day, ADBE announced major updates to Adobe Substance 3D, a suite of tools and services that support 3D content creation. The updates include a 3D Materials SDK for developers, powerful new plugins, and native Apple M-series chips support for Painter, Designer, and Sampler. Substance 3D applications demonstrate strong demand by surpassing 100% year-over-year growth.
In the fiscal second quarter ended June 3, 2022, ADBE's revenue increased 14.4% year-over-year to $4.39 billion. Its non-GAAP operating income grew 12% from the year-ago value to $1.97 billion. The company's non-GAAP net income and non-GAAP net income per share came in at $1.59 billion and $3.35, up 8.9% and 10.6%, respectively, year-over-year.
The consensus revenue estimate of $17.70 billion for the fiscal year 2022 (ending November 2022) represents a 12.1% year-over-year growth from the previous year. Analysts expect the company’s EPS to rise 8.5% year-over-year in the current year to $13.54.
The company has an impressive revenue and earnings surprise history, as it has surpassed the consensus revenue and EPS estimates in each of the trailing four quarters.
Over the past three months, the stock has decreased 11.7% to close the last trading session at $381.07.
Covering Adobe for Goldman Sachs, analyst Kash Rangan pegged a $540 price target indicating a 41.7% upside potential. Also, of the 22 Wall Street analysts that rated ADBE, 18 rated it Buy, while four rated it Hold. The 12-month median price target of $463.73 indicates a 21.7% potential upside. The price targets range from a low of $570.00 to a high of $362.00.
Global-e Online Ltd. (GLBE)
Headquartered in Petah Tikva, Israel, GLBE provides a platform to enable and accelerate direct-to-consumer cross-border e-commerce in Israel, the United Kingdom, the United States, and internationally. The company’s platform allows international shoppers to buy and merchants to sell online.
Last week, GLBE entered into a definitive agreement with Pitney Bowes (PBI), a global shipping and mailing company, to acquire the latter’s Borderfree cross-border e-commerce solutions business. This acquisition might strengthen GLBE’s platform offering for enterprise brands.
GLBE's revenue increased 65.4% year-over-year to $76.32 million in the fiscal 2022 first quarter, ended March 31, 2022. Its non-GAAP gross profit rose 94.3% year-over-year to $29.86 million. As of March 31, 2022, the company’s cash and cash equivalents stood at $187.97 million, while its current assets came in at $382.13 million.
The $93.05 million consensus revenue estimate for the fiscal 2022 third quarter, ending September 2022, represents a 57.4% growth from the prior-year period. Analysts expect GLBE’s EPS for the next quarter to increase 485.9% year-over-year to $0.04. The company has topped the consensus revenue estimates in each of the trailing four quarters, which is impressive.
The stock has gained 11.4% over the past month to close the last trading session at $22.60.
Goldman Sachs analyst Will Nance’s $28 price target suggests a one-year upside of 23.9%. Moreover, each of the nine Wall Street analysts that rated GLBE rated it Buy. The 12-month median price target of $29.89 indicates a 32.3% potential upside. The price targets range from a low of $25.00 to a high of $41.00.
Innoviz Technologies Ltd. (INVZ)
Headquartered in Rosh HaAyin, Israel, INVZ designs and develops high-performance, automotive-grade solid-state LiDAR sensors and perception software that enables the mass production of autonomous vehicles. The company operates in Europe, Asia Pacific, the Middle East, Africa, and North America.
On June 22, INVZ partnered with Visionary.ai, a developer of software-based image signal processor (IS) technology, to improve the power and accuracy of machine vision. Under this new partnership, combining the two technologies, including INVZ’s LiDAR sensors and perception software and Visionary.ai’s imaging technology, will improve 3D machine vision performance for various applications.
On May 2, INVZ got selected for a high-volume project by one of the largest vehicle manufacturers in the world to be its direct LiDAR supplier for series production vehicles. The selection follows more than two years of extensive diligence and qualification and is expected to increase INVZ’s forward-looking order book by $4 billion to $6.6 billion.
In the fiscal 2022 first quarter ended March 31, 2022, INVZ's revenues grew 144% year-over-year to $1.77 million. The company's cash inflows from investing activities came in at $22.59 million. In addition, its cash and cash equivalents amounted to $19.64 million as of March 31, 2022.
Analysts expect INVZ's revenue for the fiscal 2022 second quarter (ending June 2022) to come in at 1.93 million, representing a 91.8% rise year-over-year. Street expects the company's EPS for the current quarter to grow 59.2% from the prior-year period. The company has surpassed the consensus EPS estimates in each of the trailing four quarters.
INVZ’s shares have gained 9.3% over the past three months and closed the last trading session at $3.98.
Analyst Mark Delaney, who covers this stock for Goldman Sachs, pegged his price target to $7, indicating an upside potential of 75.9%. All the Wall Street analysts that rated INVZ rated it Buy. The 12-month median price target of $8.00 implies a 101% potential upside. The price targets range from a low of $7.00 to a high of $10.00.
ADBE shares were trading at $374.48 per share on Tuesday morning, down $6.59 (-1.73%). Year-to-date, ADBE has declined -33.96%, versus a -17.54% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.
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