As October comes to a close, Oppenheimer is looking at certain stocks that it believes are poised for gains in the next year. October has historically been a volatile month for stocks, and this year has been no exception. Both the S&P 500 and the Dow Jones Industrial Average experienced their third consecutive day of losses on Wednesday. Despite this, the broad market index and the Nasdaq Composite are still set to end the month in positive territory. These movements come amidst a strong earnings season thus far. With 32% of S&P companies having reported, their earnings and revenue have surpassed analysts’ expectations by 6% and 1.3% respectively, according to LSEG. This performance is significantly better than the same period last year, with earnings up by 4.3% and revenue up by 4.2%. Looking forward to November, Oppenheimer has updated its list of top stock ideas, including additions such as CarMax, Mastercard, and Atlassian. The investment bank has also removed names like Dick’s Sporting Goods, International Flavors & Fragrances, and Uber. Here are some of the stocks on the list.
Shares of global health company Cigna have seen a nearly 7% increase in 2024 but have dropped by almost 8% this month. Analyst Michael Wiederhorn points out that the stock typically trades at a discount compared to its peers, leaving potential for upside from future multiple expansion. Additionally, the analyst believes that the market has undervalued the benefits of Cigna’s $54 billion acquisition of Express Scripts in 2018, which should yield strong returns in the long run. Wiederhorn has an outperform rating on the stock, with a price target suggesting nearly 26% upside from Wednesday’s closing price. Earlier this week, Cigna shares declined after reports surfaced that the company has reopened merger discussions with rival Humana, following talks that ended last year. While the discussions are in the early stages, sources familiar with the matter revealed this information to Bloomberg News.
There may be further growth ahead for newly added Atlassian. Analyst Ittai Kidron has an outperform rating on the stock, with a target of $230 indicating nearly 22% upside from Wednesday’s close. Although shares have fallen by 20% this year, they have risen by almost 20% this month. Kidron believes that Atlassian is well-positioned in the long term to benefit from the increasing importance of software and application development. The analyst also predicts that the company’s focus on product innovation in its go-to-market strategy will continue to drive the success of its land-and-expand approach. Kidron is not the only one bullish on the stock, as Morgan Stanley also recently named it one of its top picks based on similar beliefs that its expanding product portfolio will drive share prices higher.
In the semiconductor sector, Broadcom could be on track for further growth. The stock has already seen a 53% increase in 2024. Analyst Rick Schafer has given Broadcom an outperform rating, with a target of $200 indicating over 15% upside from Wednesday’s close. Schafer attributes this potential growth to a sustained competitive edge in the high-end filter market and a manufacturing advantage. Evercore ISI has also included Broadcom in its list of top chip stock picks ahead of its upcoming earnings report. Following its latest quarterly results, CEO Hock Tan stated that the company is projecting $12 billion in sales for 2024 from artificial intelligence components and custom chips.