Analysts say there are a handful of buying opportunities as earnings season continues, including a slew of big names. These stocks are well priced and have plenty of long-term upside, analysts said. CNBC Pro combed through the top Wall Street research to find stocks to buy ahead of earnings. They include Apple, SiriusXM , Chipotle, Microsoft and Bill.com . Bill.com “One of the few beats and raises left,” Deutsche Bank analyst Bryan Keane said of Bill.com’s earnings report coming up in early November. Even as shares are down 48% this year, the firm warned clients not to sleep on this buying opportunity. “The demand backdrop for BILL’s core services remains resilient as penetration levels of a massive TAM are still low and the company should actually benefit in the near term from macro concerns like inflation and rising rates,” he said. In fact, Keane said the company’s upside potential is so large, it hasn’t even begun to scratch the surface. The firm said it sees more small and mid-sized business penetration. Keane predicted further innovation from the company along with product expansion. The analyst lowered his price target on the stock to $200 per share from $240, but said it’s not a reflection of its long-term potential. Bill.com also has a partnership with Bank of America, which Keane said will help recruit more customers and grow revenue. “Despite the concerns around the health of the economy, we believe BILL will continue to deliver impressive growth rates and show strong profitability in 1Q23,” he wrote. Apple Evercore ISI analyst Amit Daryanani is doubling down on shares of Apple. The firm recently added a tactical buy on the stock ahead of the company’s fiscal fourth-quarter earnings report next week. “Apple looks well positioned to deliver better than consensus results for [September quarter],” he said. Meanwhile, even as concerns mount over reports of iPhone production cuts, Daryanani said those fears are overdone. In fact, the firm said it sees “potential upside” due to iPhone “share gains in China and the enterprise market.” Daryanani acknowledged some concern over how Apple would be affected by Advanced Micro Devices’ pre-announcement earlier this month , but said he’s standing by the stock. “The AMD negative pre indicates we could potentially see worse than expected iPad and Mac results, but this could largely be overlooked if iPhone results point to a stronger than expected iPhone 14 cycle,” he wrote. Foreign exchange headwinds are possible also, but Daryanani said Apple should be able to get some relief from suppliers to overcome it. Shares are down 17% this year and at these levels the stock is compelling, the firm said. Chipotle The burrito chain restaurant is the “best candidate for upwards revisions,” wrote Oppenheimer analyst Brian Bittner in his earnings preview note. Shares of the company are down 11.3% this year, but the stock has plenty of room to run, he said. “Our analysis suggests an attractive setup for SSS while consensus still overly discounts the equation for margins and EPS power through 2023,” he said. Unit growth is also increasing, and the firm’s analyst indicates Chipotle is well positioned in its food commodity setup. Costs on chicken and avocados are down, and that should strengthen Chipotle’s margin path, according to Bittner. “We also think a less bad food cost environment could drive less aggressive price increases, leading to better traffic and an improving investment narrative toward shares,” he added. The analyst, who also has a price target of $1,800 per share, said Chipotle’s stock is more defensive than investors seem to think. “We believe CMG represents a rarity as we hunt through our coverage for earnings upside,” Bittner said. The company is scheduled to report earnings on Oct. 25. Microsoft – Wells Fargo, Overweight rating “On the FQ1 print, we’re admittedly more cautious on the setup given a growing set of potential risks to headline results (worsening macro, strengthening $, tough comps), as well as the potential for a ripple effect from Azure capacity constraints, which some partners suggest have continued through summer. Despite the tougher setup, we continue to view MSFT favorably in the current environment given well-entrenched position across multiple end markets and differentiated ability to lean into vendor consolidation opportunities.” Apple – Evercore ISI, Outperform rating “Apple looks well positioned to deliver better than consensus results for Sept-qtr & perhaps also show modest upside on the Dec qtr guide depending on the assumptions they embed around FX % the extra week. … Unit sales may be closer to flat on a y/y basis, but there is potential for upside from continued share gains in China & the enterprise market. … AMD negative pre indicates we could potentially see worse than expected iPad and Mac results, but this could largely be overlooked if iPhone results point to a stronger than expected iPhone 14 cycle.” SiriusXM – Bank of America, Buy rating “Though inventory levels appear to have bottomed, concerns over demand are emerging due to rising interest rates, still high-inflation & the concomitant impacts to affordability as well as broader recession risks. … Nevertheless, we believe that SIRI remains well positioned in the expanding audio entertainment universe due to: 1) continued healthy churn, 2) strong variable margins which provides support during an inflationary environment and 3) healthy capital returns and ample share repurchases vs. SIRI’s limited float.” Bill.com Holdings – Deutsche Bank, Buy rating “The demand backdrop for BILL’s core services remains resilient as penetration levels of a massive TAM are still low and the company should actually benefit in the near term from macro concerns like inflation and rising rates. … Despite the concerns around the health of the economy, we believe BILL will continue to deliver impressive growth rates and show strong profitability in 1Q23.” Chipotle – Oppenheimer, Outperform rating “We believe CMG represents a rarity as we hunt through our coverage for earnings upside.. … Our analysis suggests an attractive setup for SSS (same-store sales) while consensus still overly discounts the equation for margins and EPS power through 2023. … We also think a less bad food cost environment could drive less aggressive price increases, leading to better traffic and an improving investment narrative toward shares.”
