This company had a hot initial public offering back in the spring, but that has cooled off and is offering a great entry point. Revolve Group Inc. (NYSE: RVLV) is an e-commerce fashion retailer focused on Millennial and Generation Z consumers. The company mainly markets and sells women’s designer apparel, footwear, accessories and beauty styles through two differentiated segments: Revolve and Forward. The company generates high relative average order values compared with peers, with close to 80% of its total net sales in the United States.
With the targeted demographics very used to shopping on the internet, the future looks very bright, and Jefferies said this in the research report:
We analyzed web traffic and social media data related to Revolve’s sites and find improving traffic and conversion for Revolve.com and strong initial traction at superdown. Strength in these metrics may suggest upside to our numbers for fiscal 2020, and with the stock close to lows (though still well above IPO price), we find the setup attractive. Traffic share to the review/confirm page has accelerated in the last 3 months, and superdown, Revolve’s lower-priced platform, has seen an increase in organic search share since the launch (from 27% in Mar to 45% in Aug) suggesting growing brand awareness.
The Jefferies price objective is a gigantic $65. The posted consensus estimate is much lower at $33, and the shares closed most recently at $22.84 apiece.
This has long been considered a buyout candidate, and it has traded sideways for almost a year.
Vertex Pharmaceuticals Inc. (NASDAQ: VRTX) engages in discovering, developing, manufacturing and commercializing small molecule drugs for patients with serious diseases in specialty markets. The company focuses on developing and commercializing therapies for the treatment of cystic fibrosis and hepatitis C.
Wall Street as a whole has remained very positive on the stock for years, and some have indicated that the company could have as much as $10 to $15 in potential earnings-per-share power going forward. The Jefferies analysts agree, are very positive and noted this in their coverage:
We see 3-6 early stage programs that reflect $1 billion-$5 billion in revenues all beginning to read out in in 2020 and we conduct a deep dive into Alpha-1 antitrypsin (AAT)which is one of the largest of the programs. Early data supporting increased AAT levels could read out in the first half of 2020, and Vertex has good pre-clinical data showing significant increases in corrected AAT protein folding.
Jefferies has set its price target at $195. The consensus target is $192.21, and the stock closed on Friday at $166.74.
These four incredible companies have solid earnings and a clear path higher for the fourth quarter and perhaps well into 2020. All these stocks hold a higher risk potential, so should they be added to accounts with commensurate risk tolerance.
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