Top Wall Street analysts say buy Nvidia and Workday

Recession risk is on investors’ minds, especially as the Federal Reserve remains committed to raising interest rates.

In these tough times, investors would be well advised to find stocks that are positioned to weather a possible economic downturn.

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To help you through the process, here are five stocks picked by top Wall Street professionals, according to TipRanks, a platform that ranks analysts based on past performance.

giant flea Nvidia (NVDA) has been under pressure due to the collapse of the PC gaming market. Revenue and profit fell in the fiscal fourth quarter from a year earlier, but the company managed to beat Wall Street expectations due to higher year-over-year data center revenue .

Investors applauded Nvidia’s first quarter revenue forecast and CEO Jensen Huang’s commentary on how the company is well positioned to benefit from increased interest in generative artificial intelligence (AI).

Jefferies analyst Mark Lipacis expects Nvidia’s data center revenue to reaccelerate year-over-year beyond the first quarter and grow 28% in 2023 and 30% in 2024, supported by higher AI spending. (See Nvidia stock chart on TipRanks)

Lipacis said, “Unlike INTC/AMD noting cloud inventory builds, NVDA discussed a positive H100 ramp (already crossing A100 in Q2 only post-launch), speeding up DC (data center) towers YY beyond C1Q23, and hinted at better visibility and more optimism for the year due to growing activity around AI infrastructure, LLMs (large language models) and software. ‘Generative AI.’

The analyst considers Nvidia a “top pick” following recent results and reiterated a buy rating. He raised the price target for NVDA shares to $300 from $275.

Lipacis is ranked #2 among more than 8,300 analysts on TipRanks. Its ratings were profitable 73% of the time, with each rating delivering an average return of 27.6%.

Ross Stores (ROST) delivered upbeat results for the fourth quarter of fiscal 2022 as the low-cost retailer’s value offerings continued to entice customers. However, the company issued a conservative guidance for fiscal year 2023 due to the impact of high inflation on its low-to-moderate income customers.

Following the results, Guggenheim analyst Robert Drbul, ranked 306^e among analysts at TipRanks, lowered its earnings per share estimate for the fiscal year 2023 for Ross Stores to reflect the impact of persistent macro headwinds.

Nonetheless, he expects Ross Stores’ profits to return to double-digit growth in fiscal 2023, driven by a higher operating margin, accelerated new store openings and the company’s share buyback program.

Drbul reiterated a buy rating for Ross Stores and a price target of $125, citing “the favorable environment for the business given a greater supply of branded products in the market, a stronger value proposition and a wider assortment from pandemic levels.”

Drbul provided profitable ratings 63% of the time, and its ratings generated an average return of 9.1%. (See Ross Stores Hedge Fund Trading Activity on TipRanks)

Next on our list is another consumer discretionary company – office marks (KTB), which owns the iconic Wrangler and Lee brands. Shares of the clothing company rallied on the day it posted strong fourth-quarter results and issued a strong outlook for 2023.

Williams Trading analyst Sam Poser noted that demand for Wrangler and Lee continues to improve, fueled by the company’s brand enhancement initiatives. Additionally, he thinks Kontoor’s outlook for fiscal 2023 “will likely turn out to be conservative.” He expects the company’s revenue growth in China to turn positive in the second quarter and accelerate sequentially thereafter.

Poser raised its earnings per share estimate for fiscal 2023 and 2024, reiterated its buy rating for Kontoor Brands and raised the price target from $53 to $60. (See Kontoor Brands insider trading activity on TipRanks)

“The combination of better-than-expected 4Q22 results, led by a 20% increase in U.S. DTC (direct-to-consumer) revenue, continued improvements in Wrangler & Lee brand positioning and reasonable guidance, point to continuous improvements in KTB’s customer contact capabilities and in its overall operations,” Poser said.

Ask is ranked 134^e among analysts tracked by TipRanks. Moreover, 55% of its ratings were successful, generating a return of 17.7% on average.

Fiserv (FISV), a payment and financial services technology solutions provider, is also on our list this week. Last month, the company announced its fourth quarter results and assured investors that it was well positioned to deliver its 38^e consecutive year of double-digit growth in adjusted earnings per share, supported by recent customer additions, strong recurring revenue and productivity efforts.

Tigress Financial analyst Ivan Feinseth noted that Fiserv continues to see strong business momentum, driven by the performance of its payment product portfolio and the strength of Clover, the point-of-sale and the company’s cloud-based business management. (See Fiserv’s financial statements on TipRanks)

“FISV’s diverse product portfolio and advanced technology put it at the forefront of the ongoing centuries-old transition to electronic payments and the growing use of connected devices to deliver payment processing services and access to financial data,” Feinseth said. The analyst reiterated a buy rating for FISV shares and raised the price target to $154 from $152.

Feinseth holds the 176^e position among more than 8,300 analysts tracked on the site. Additionally, 62% of his odds were profitable, with his odds yielding an average return of 12.3%.

Working day (WDAY), a provider of cloud-based financial and human resources applications, issued a subdued outlook for fiscal 2024, which overshadowed better-than-expected results for the fourth quarter of fiscal 2023.

Baird analyst Mark Marcon noted that Workday continues to gain market share in human capital management and financial management solutions in the enterprise space, although its pace of growth going forward is “slightly tempered by macro uncertainty”.

Marcon also noted that despite lengthened business sales cycles due to macroeconomic pressures, Workday gained seven new Fortune 500 customers and 11 new Global 2000 customers during the fiscal fourth quarter. The analyst said new co-CEO Carl Eschenbach is “quickly making a mark on WDAY” and the company is expected to reaccelerate subscription revenue growth to the 20% level once the macro backdrop normalizes.

“While our near-term expectations are more moderate, we believe the valuation relative to long-term potential remains attractive given WDAY’s high net revenue retention (over 100%), strong GAAP gross margins, high FCF (free cash flow) and strong growth potential given the migration of financial services to the cloud,” said Marcon.

The analyst lowered his price target for Workday stock slightly to $220 from $223 to reflect near-term pressures. He reiterated a buy rating, given the company’s long-term growth potential.

Marcon ranks 444^e on analysts tracked on TipRanks. His odds were profitable 60% of the time, generating an average return of 13.5%. (See opinions and sentiments of Workday bloggers on TipRanks)