Whether the markets are moving up or down, every investor loves a deal. There is excitement in finding a great stock at a low, low price – and then watching it appreciate over the medium to long term. This kind of portfolio development is one of the reasons why investors are getting into the investment game.
So how are investors supposed to distinguish between names that are ready to get back on their feet and those that are going to remain in the dustbin? That’s why Wall Street professionals are here.
Using TipRanks’ platform, we’ve identified three bearish stocks that analysts believe are poised for a rebound. Despite massive losses in 2022, the two players have earned enough praise from the Street to earn a consensus “Strong Buy” rating.
The first stock we’ll look at is Magnite, a billion dollar independent tech advertising platform. The company was founded through a merger of equals between Rubicon and Telaria in April 2020 and quickly recorded impressive revenue and impressive revenue growth. In the company’s first year as its own entity, 2020, Magnite saw $221.7 million on top. this number grew 111% to $468.4 million in 2021. The company offers clients ad serving across a wide range of available formats, from CTV to desktop and mobile to audio channels.
Magnite continued this growth in 2022. The company’s revenue typically falls from Q4 to Q1, and the recent 1Q22 was no exception – but the $118.1 million total was up 94% year-over-year . EPS was reported at 8 cents. Like total revenue, this was down sharply from 4Q11, but up sharply year-over-year, more than double the 3 cents reported in 1Q11. Magnite will report 2Q12 numbers on August 8.
Despite these positive results, shares of Magnite are down 57% so far this year. Several factors brought headwinds ahead for MGNI, including global supply issues as advertisers pulled ads when they couldn’t bring products to market. travel-related ad spending that has yet to return to pre-pandemic levels; and the combination of high inflation and rising interest rates, which are eating into thin margins.
Despite facing tough times, Benchmark analyst Daniel Kurnos maintains a Buy rating on Magnite shares, along with an $18 price target. If correct, the analyst’s target could yield one-year returns of ~141%. (To follow the history of Kurnos, Click here)
Supporting his bullish stance, Kurnos writes: “We expect Magnite to continue to be a winner in what is likely to be a consolidated ecosystem… We continue to believe that being closer to the ad exchange has material advantages, the which may be more emphasized And while CTV is expected to be the most catalytic growth driver, the mid-teens TAC revenue growth rate for non-CTV operations looks sustainable, in our view .”
Benchmark’s view is clearly bullish, but it’s also far from extreme. Out of 6 recent analyst ratings recorded for MGNI, 5 are Buy versus just 1 for Hold, for a consensus rating of Strong Buy. Shares trade for $7.60, and the average target price of $16.50 suggests room for the stock to rise 117% over the next 12 months. (See MGNI stock prediction on TipRanks)
Ranpak Holdings (PACK)
Next is Ranpak, an industrial stock that lives in the packaging sector. We may not think much about packaging, but most of the products we use in our daily lives come to us wrapped in one way or another, and Ranpak operates in this niche. The company develops and produces a full range of packaging solutions using environmentally sound manufacturing processes to produce products that are biodegradable, recyclable and renewable, with the long-term aim of improving the very real problem of plastic residue and waste in our landfills. and landscapes.
To achieve these goals, Ranpak has over 40 years of hands-on experience in the field, more than 250 global distribution partners and over 400 related patents to protect its intellectual property.
While this is a viable position to work in, Ranpak’s 2022 results have disappointed the market. In its most recent quarterly results, 2Q12, the company saw revenue fall 3.6% year over year, from $90 million in the previous quarter to $86.8 million in the current report. Earnings, which have been running on a net loss since 2Q11, came in at minus 14 cents per share. This was double the loss seen in the previous quarter.
What really hurt the stock, however, was the forecast miss. Ranpak’s EPS loss was 4 cents worse than the forecast of 10 cents. The company attributes the smell to a worsening economic environment, especially in Europe, where energy shortages are beginning to affect economic activity. With that in mind, we can see why the stock peaked in November of last year and has been falling ever since. Year over year, the loss amounts to 86%.
At the same time, Ranpak can be proud of a solid foundation on which to find its footing for future activities. The company has no net debt drawn on its $45 million revolving credit facility, and better yet, has $59.2 million in available balance.
The combination of cash on hand and leadership in place has 5-star analyst Ghansham Panjabi, from Baird, bullish on this stock’s future.
“While 2022 is shaping up to be an extreme transition year for the company, we reiterate our previously published view that the stock has already been heavily discounted of late—with the stock at/below March 2020 lows, even with a higher established machine base (indicative of franchise value) and a stronger liquidity profile,” noted Panjabi.
“We believe the pressures of the current operating environment will ease in the coming quarters, noting that PACK has significant franchise value based purely on its installed machine base—making the company an attractive asset in a consolidating industry,” the analyst added.
Following this line of thinking, Panjabi gives PACK shares an Outperform (i.e. Buy) rating and sets a $10 price target to imply ~90% upside potential in the one-year time frame. (To follow the history of Panjabi, Click here.)
Overall, the Street agrees with the bullish view on this stock’s potential. 4 recent analyst ratings are split 3 to 1 in favor of Buy over Hold, supporting a Strong Buy consensus, and the average price target of $18 suggests a strong upside of 205% from the stock’s current $5.20 price . (See PACK Stock Prediction on TipRanks)
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Denial of responsibility: The views expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.