We are now in the last trading session of 2022 with Christmas and New Year’s Eve in between. 2022 has been a rough road for most segments of the market, so the majority of investors will undoubtedly be happy to say goodbye to 2022.
Truist Securities’ five-star stock experts look ahead to the year ahead Youssef Squali It reminds investors to exercise caution as “many uncertainties remain.”
He goes on to mention some of these, including the extent and length of a potential recession, the magnitude and duration of rate hikes, and the consequent impact on the cost of capital, currency headwinds, and industry changes such as cookie deprecation. doing. Disrupting the growth trajectory of some industries. “
The final section specifically mentions Squali’s area of expertise: Internet and digital media stocks. And despite these potential challenges, Squali believes investors have reason to be optimistic. At least, that’s about certain names in the space, with analysts saying “2023 will be a particularly good year for stock picking because not all internet companies are created equal.” says.
Now let’s move on to stock selection. Starting with his three picks from two top analysts, including Truist’s Squali.these strains TipRanks datawith ample upside potential even in today’s volatile market environment, we found them all to be strong buy ratings.
Nerd Wallet Co., Ltd. (NRDS)
Start with NerdWallet, a small online personal finance company. The company will enter the public market through its IPO in November 2021, offering a wide range of online banking solutions including personal and mortgage loans, credit cards, insurance products, personal and small business banking, as well as student loans. is provided to customers. management. The company also provides personalized, unbiased, actionable advice to customers making financial decisions, comparing shopping with expert content, data-driven experiences, and online financial marketplaces. provide functionality.
In its most recent quarter, Q322, NerdWallet brought $142.6 million to the topline. This is the highest quarterly earnings in his four reported quarters since the company went public. More importantly, his NerdWallet turned positive in Q3 2022. The last three reported quarters have seen a net EPS loss.
NerdWallet’s fourth quarter success was driven by its credit card business, where revenue reached $57.4 million, up 59% year over year. This offset $28.4 million in loan income, down 12% year over year. The company’s other industries as a group posted solid profits, collectively achieving a total of $56.8 million, up 87% year-over-year.
In a NerdWallet article, Squali highlights qualities that he believes will set NRDS apart in the year ahead. “While the company is exposed to a segment that will be adversely affected by rising interest rates, we believe its diversified model, strong execution to date and continued share growth will be a strong differentiator from its peers in 2023. The current valuation is compelling and the risk/reward profile is compelling,” the analyst explained.
Applying some numbers to this view, Squali rates the stock as a buy with a price target of $26, suggesting a solid 197% gain over the next 12 months. (To see the achievements of Squali, click here.)
Of the 4 recent analyst reviews recorded on NerdWallet, 3 were buy-to-1 hold, strong buy consensus ratings. The stock is selling at $8.75, with an average price target of $16.75 suggesting a 91% gain over the course of the year. (Get NerdWallet stock forecasts on TipRanks.)
Godadi (GDDY)
Next on the list is GoDaddy. GoDaddy is a popular web domain host and registrar with over 84 million domain names hosted and regular service to over 21 million entrepreneurs. The company has a market capitalization of $11.71 billion and its business is supported by annual recurring revenues of $1.3 billion.
That number, ARR, increased by 10% year-over-year in Q3 2022. This is an important fact that points to future business growth. The company’s total revenue for the quarter he surpassed $1.03 billion, up 7% year-over-year. The top line for the last four quarters has been stable at or near $1 billion.
Ultimately, net income of $100 million increased slightly by 2.4% year-on-year while diluted EPS was 63 cents, up 8.6% year-on-year. GoDaddy’s free cash flow was $296.6 million in the third quarter, up nearly 18% from his $251.5 million in Q3 2021.
Looking ahead, the company expects cash flow to remain strong, targeting full-year 2022 free cash flow of $1.09 billion to $1.1 billion. Achieving that target would result in 14% year-over-year growth in FCF.
This strain caught the attention of Truist’s Nabed Khan5-Star Analyst Explains “Top Reasons” to Prefer 2023’s GDDY These include: Significant contribution to FY23 P&L, c) room for continued margin expansion, which will be positive for FCF generation, and d) aggressive share repurchase program averaging over $1 billion/year will drive healthy double-digit FCF per share growth. “
For this reason, Khan rates GDDY as a purchase. He complements that with his $110 price target, which shows his confidence in his 50% rise next year. (To see Khan’s achievements, click here.)
With 6 analyst reviews on record, 5 to 1 in favor of buy over hold, GoDaddy’s strong Buy Consensus Rating shows strong analyst support. The stock is trading at $74.65 and an average price target of $94.50 means a 26% increase from that level. (See GoDaddy stock predictions on TipRanks.)
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Double Verify Holdings (DV)
Last on our list of reliable is DoubleVerify. DoubleVerify works to increase trust in digital advertising by improving the safety and security of the online advertising ecosystem. The company combines both fraud verification and brand reputation to build stronger trust from both sides of the equation. DoubleVerify is a pioneer in digital ad verification, and its media verification services are used by customers in the financial services, retail, automotive, travel, telecommunications, and pharmaceutical sectors.
Since going public in the spring of 2021, DoubleVerify has been on a mostly revenue-increasing trend, reaching $112.3 million in total revenue in the third quarter of 2022. The result was a company record, with activation revenue up 48% year over year to $62.2 million. The company’s measured revenues increased 14% year-on-year, totaling $38.8 million, while supply-side revenues were $11.2 million, up 57% year-on-year.
During the quarter, DoubleVerify expanded its partnership with TikTok. The program leverages DV’s AI technology to improve and support ad security, so advertisers on the TikTok platform can ensure their ads are displayed alongside the right content.
In a significant step towards improving DV’s own reputation in ad security, the company achieved ISO 27001:2013 certification in the third quarter. It is the most widely recognized international standard for information security management. Adherence to this demonstrates his DV commitment to building both operational excellence and trust among clients.
Check again with Youssef Squali, who covers DoubleVerify for Truist. In his memo on the stock, Squali points to multiple growth opportunities, including notably his growing social media sector. and he has Twitch (owned by AMZN), the two largest channels Facebook/Instagram (only 7% of revenue), and YouTube, aside. Social media as a channel believes he has unleashed increased spending for domestic violence attacks within the walled gardens. As identifiers and cookies disappear, marketers will turn to his 3P solution providers like his DV to compensate for signal loss due to lower ROAS (return on advertising spend). “
Looking ahead to DV prospects next year, Squali rates the stock as a buy with a target price of $36 suggesting a 65% return over the next 12 months.
DoubleVerify brings to the table strong buy consensus ratings backed by five recent analyst reviews, including four buys and one hold. The stock sells for $21.74 and an average price target of $30.50 implies a 40% profit over a one year period. (See DoubleVerify stock quotes on TipRanks.)
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Disclaimer: The opinions expressed in this article are those of the featured analyst only. This content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
