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The Five Hottest Calls From The Q2 Earnings Season

The Five Hottest Calls From The Q2 Earnings Season 

Hot analyst's calls can be sure-fire catalysts for higher stock prices and those catalysts gain strength when more than one analyst makes the call. The Q2 earnings reporting season was lackluster, but not all companies delivered the same results and the analysts are noticing. Some, like Enphase (NASDAQ: ENPH), Tesla (NASDAQ: TSLA), Cigna(NYSE: CI), Paypal (NASDAQ: PYPL), and FedEx (NYSE: FDX) put in better than expected performance and issued positive guidance that has them on track to outperform in the back half of the year.

Enphase Energy Has Double-Catalysts

Enphase Energy received a flurry of analysts' calls following the release of its CQ2 report and that catalyst was amplified with the passage of the Inflation Reduction Act. The Inflation Reduction Act includes multiple concessions for the green energy industry and has the entire complex moving higher. In regard to Enphase, the company logged 15 analyst calls over the past two weeks to make it the most upgraded stock of the Q2 reporting season. The 15 calls include 1 Initiated coverage at Equal Weight and 1 upgrade to Buy from Neutral that has the consensus estimate moving higher as well. The price target is still lagging the market but it is up in the 12, 3, and 1-month comparisons and adding upward pressure to the price action. Enphase is the most upwardly revised stock of the season. 

Tesla, Still The King Of EVs

Tesla competitors like Ford (NYSE: F) and GM (NYSE: GM) are gearing up for a try at the #1 spot in terms of EV production but they are still years away from nabbing it if they can at all. Tesla’s Q2 report was a bit mixed but the mitigating factor of China’s COVID-related lockdowns took most of the sting out of it. The takeaway from the report is that production is ramping, headwinds are diminishing, and the gigafactories are on track to boost total production to well over 1 million annually this year. The analyst's activity is a little mixed as well but is ultimately supportive of the price action. The company received 10 shout-outs including 7 price target upgrades that have the consensus target moving higher in the 12-month comparison but trending flat in the 3 and 1-month comparison. Assuming the company can execute on the Q3 and Q4 plan, the consensus target should begin trending higher again. 

The Five Hottest Calls From The Q2 Earnings Season 

Cigna, Outperforming And Aggressive Dividend Growth 

Cigna and competitors like UnitedHealth Group (NYSE: UNH) not only outperformed in CQ2 but they did so by wide margins and were also able to raise their guidance for the year. The difference between these two companies, however, is that Cigna is the 3rd most upgraded stock for the reporting period while UnitedHealth Group (nor any other insurer) isn’t even in the top 25. The dividend here is attractive too although the yield is a bit low. The stock pays about 1.5% in yield but it comes with a positive outlook for aggressive growth. The payout is only 18% of the earnings and has increased more than 150% over the last 5 years. 

Paypal To Buy Back $15 Billion In Shares 

Paypal stock got a lift not only from the results and the analysts but a new $15 billion buyback allotment. The buyback is worth 13% of the market cap and is enough on its own to support price action. 15 of 42 analysts covering the stock issued 12 price target increases and 1 upgrade that have the sentiment and the price target firming. The price target is down in the 12, 3, and 1-month comparisons but is now at a more realistic level that suggests at least 35% of upside is available. 

FedEx To Outperform In Calendar Q3 

FedEx was one of the first to report in calendar Q2 and it not only beat the consensus but issued positive guidance that has the shares trending higher within a trading range. That range could be broken in the next month or so when the company reports for the calendar 3rd quarter and that is supported by the analysts' activity. FedEx is still the 5th most upwardly revised stock for the quarter, two months after it reported, and it comes with a rating of Moderate Buy and a price target nearly 40% above the current action. The catalyst in the Q3 results will be both revenue and earnings which should easily outpace the low bar set by the analysts. 

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