Global Courant
Goldman Sachs has released its list of high-conviction stocks – with a new twist. The company bought buy-rated shares from its U.S. research analysts. What makes this list unique from the typical top pick list is that members of Goldman’s Investment Review Committee were the ones who chose the names, adding a second layer of analysis. Steven Kron, director of Americas equity research, wrote in Thursday’s note. Check out some of the names that made the list and where Goldman sees them in the future. Bath & Body Works is a “turnaround story with new management,” according to the company. Analyst Kate McShane expects the company to do better with revenue growth above conservative guidelines. Category expansion, improved online presence and momentum from the loyalty program introduced in 2022 should drive the company’s growth story, the company found. Goldman expects shares to rise 42% over the next 12 months. Shares are down about 16% so far. Pharmaceutical giant Merck also made the directors’ cut. While shares are flat in 2023, the company estimates an increase of about 17% in the coming months. “MRK is expanding its capabilities beyond its strong oncology and vaccine franchises to create a meaningful runway for growth in immunology and cardiovascular treatments, an advancement that should allay concerns about a patent cliff in 2028,” said Goldman. Analyst Chris Shibutani noted that while Merck’s patent for its prominent oncology treatment Keytruda expires in 2028, the company’s core business remains strong. Goldman stressed that Shibutani’s revenue and earnings per share projections for 2023 are above guidance and Wall Street. The company expects Amazon shares to rise 37% over the next 12 months. According to analyst Eric Sheridan, the e-commerce platform will recover and Amazon Web Services’ cloud business will benefit from artificial intelligence. “Look for AMZN to continue delivering strong revenue and margin performance over a multi-year investment cycle as eCommerce margins normalize. … and as AWS continues to benefit from a long-term structural growth opportunity in the evolving needs of enterprise customers that can be matched to an emerging opportunity around an AI-driven computing cycle,” Goldman noted. The scale, breadth of the platform, diversification of categories and exposure to the end market will further fuel the tech giant’s upside opportunities in the coming years, according to Sheridan. Finally, Warner Bros. Discovery a media name on the list. The bank estimates stocks are up 86% from current levels, putting it in the top five of estimated gains. “WBD represents something of a unique financial proposition in traditional media: a company that can grow EBITDA significantly over the next 2-3 years through synergy realization of the still recent merger of WarnerMedia and Discovery – growth that should support rapid deleveraging. that appears to lead to being undervalued by investors,” the company noted. According to analyst Brett Feldman, the company’s new streaming service, Max, a combination of HBO Max and Discovery+, is an additional catalyst for growth. — CNBC’s Michael Bloom contributed to this report.
