The major stock market indexes have experienced a massive correction this year on mounting concerns about multi-decade high inflation, the prospect of further interest rate increases, the Russia-Ukraine war, and several other factors. The S&P 500, which returned nearly 27% to investors last year, has lost more than 15% year-to-date. And Bank of America’s chief investment strategist Michael Hartnett asserted that based on historical bear market trends, there could be months of pain ahead.
Furthermore, a negative GDP rate in the first quarter of 2022 and high energy prices indicate the possibility of the economy slipping into recession. However, amid the current market turmoil, market strategists believe that there are still opportunities for investors to generate returns, though they may need to be highly selective.
The stocks of fundamentally sound companies McKesson Corporation (MCK), GoDaddy Inc. (GDDY), and LyondellBasell Industries N.V. (LYB), whose price targets were recently raised by Wall Street Analysts, could be solid picks now.
McKesson Corporation (MCK)
Headquartered in Irving, Tex., MCK offers healthcare supply chain management, retail pharmacy, community oncology and specialty care, and healthcare information solutions in the United States and internationally. It operates through four segments: U.S. Pharmaceutical, International, Medical-Surgical Solutions, and Prescription Technology Solutions (RxTS).
During the fourth quarter, ending March 31, 2022, MCK’s revenues increased 12% year-over-year to $66.10 billion. Its operating income came in at $633.00 million, while its adjusted earnings grew 7% from its year-ago value to $870.00 million. The company’s adjusted EPS improved 15% from its prior-year quarter to $5.83.
Analysts expect MCK’s revenue to increase 2% year-over-year to $63.95 billion for the first quarter ending June 30, 2022. The company’s EPS is expected to grow 9.5% year-over-year to $23.23 for its fiscal year 2023. In addition, it has an impressive earnings surprise history; it surpassed the consensus EPS estimates in three of the trailing four quarters. The stock has gained 32.7% in price year-to-date and 69.1% over the past nine months.
MCK’s price target was increased by stock analysts at Mizuho to $331.00 from $280.00.. Among other analysts covering the stock, Credit Suisse gave an “outperform” rating and a $333.00 price target for the company. Also, Morgan Stanley lifted its price target on MCK to $370.00 from $292.00 and gave the stock an “overweight” rating.
GoDaddy Inc. (GDDY)
Headquartered in Tempe, Arizona, GDDY designs and develops cloud-based technology products in the United States and internationally. The company offers a domain name registration product that allows customers to engage at the initial stage of establishing a digital identity.
For the first quarter, ending March 31, 2022, GDDY’s total revenue increased 11.3% year-over-year to $1.00 billion. Its operating income grew 188.4% from its year-ago value to $109.6 million, while its net income amounted to $68.4 million, up 533.3% from its prior-year quarter. The company’s EPS improved 583.3% year-over-year to $0.43.
The $0.71 consensus EPS estimate for the second quarter, ending June 30, 2022, represents 13.7% year-over-year growth. Analysts expect GDDY’s revenue to increase 9.1% year-over-year to $1.02 billion for the same period.
GDDY’s price target was raised by Benchmark to $106.00 from $102.00, according to a report from The Fly. In addition, Morgan Stanley increased its price target for shares of GDDY to $95.00 from $81.00.
LyondellBasell Industries N.V. (LYB)
LYB functions as a chemical company worldwide. The Houston, Tex.-based company has six operational segments: Olefins and Polyolefins Americas; Olefins and Polyolefins Europe, Asia, International; Intermediates and Derivatives; Advanced Polymer Solutions; Refining; and Technology.
LYB’s sales and other operating revenues increased 44.9% year-over-year to $13.16 billion during the first quarter, ending March 31, 2022. Its EBITDA grew 27.4% from its year-ago value to $2.02 billion, while its net income grew 23.4% from its year-ago value to $1.32 billion. The company’s EPS has risen 25.8% year-over-year to $4.00.
The $3.83 consensus EPS estimate for the fourth-quarter, ending Dec.31, 2022, represents 74.2% year-over-year growth. And analysts expect LYB’s revenue to increase 16.9% year-over-year to $13.51 billion for the second quarter, ending June 30, 2022. The stock has gained 14.5% in price year-to-date.
Analysts at BMO Capital Markets raised LYB’s price target to $128.00 from $108.00. Also, Barclays increased the price target for LYB to $130.00 from $125.00.
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MCK shares were trading at $333.60 per share on Wednesday morning, up $3.77 (+1.14%). Year-to-date, MCK has gained 34.44%, versus a -15.53% rise in the benchmark S&P 500 index during the same period.
About the Author: Spandan Khandelwal
Spandan's is a financial journalist and investment analyst focused on the stock market. With her ability to interpret financial data, she aims to help investors evaluate the fundamentals of a company before investing. More...
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