Shares are bouncing back after regulators stepped in to protect depositors at the troubled Silicon Valley bank. But that doesn’t mean it’s time to party, according to Mike Wilson, chief US equity strategist and chief investment officer at Morgan Stanley.
“We suggest selling any bounce on government intervention to ease the immediate liquidity crisis at SVB and other institutions, at least until we see a fresh bear market,” he wrote in a note to investors on Monday. making.”
Wilson’s team does not consider the recent bank failures to be “random or idiosyncratic”. Instead, the events served as “another contributing factor” to the team’s negative earnings growth outlook.
The US Federal Reserve has been aggressively raising interest rates to combat inflation. And that’s not good for the bottom line.
“In short, Fed policy has begun to bite, and is unlikely to reverse, even if the Fed halts its rate hikes or quantitative tightening – that is, death for further earnings disappointments relative to consensus and company expectations.” is cast.”
Still, despite the gloomy outlook, Morgan Stanley has a bullish outlook for some stocks. Here’s a look at three that find it particularly appealing.
Apple (AAPL) is a technology giant.
In the latest earnings conference call, management revealed that the company’s active installed base has surpassed two billion devices.
While competitors offer cheaper devices, millions of users don’t want to be left out of the Apple ecosystem. The ecosystem acts as an economic moat, allowing the company to generate enormous profits.
The market likes it: Over the past five years, shares of Apple are up more than 230%.
Morgan Stanley analyst Eric Woodring expects further upside in the stock. The analyst has an ‘overweight’ rating on Apple and a $180 price target — an upside of about 19% from current levels.
Big data is touted by many as the next big thing. And that’s where Snowflake (SNOW) shines.
The cloud-based data warehousing company, founded in 2012, serves thousands of customers across a wide range of industries, including 573 of the Forbes Global 2000 companies.
Snowflake’s business is booming. In the three months ended January 31, revenue increased 53% year over year to $589.0 million. Notably, the net revenue retention rate clocked in at a solid 158%.
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The company continued to win big customers. It now has 330 customers with trailing 12-month product revenue of more than $1 million, compared to 184 a year ago.
Morgan Stanley analyst Keith Weiss has an ‘overweight’ rating on Snowflake with a price target of $215, indicating a potential upside of 56%.
In an era where physical stores are under serious threat from online merchants, Costco remains a brick-and-mortar beast.
Shares of Costco are up more than 150% over the past five years.
The membership-only big-box store operator is known for selling many consumer staple products at low prices. When people become more budget-conscious as a result of inflation, it’s hard to ignore a warehouse retailer’s value proposition.
In Costco’s most recent fiscal quarter, net sales rose 6.5% year over year to $54.24 billion.
Morgan Stanley analyst Simeon Gutman has an ‘overweight’ rating on Costco and a price target of $520 — about 9% upside from where the stock sits today.
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