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Goldman Sachs: Buy Carnival, Micron, Toast, and Pfizer stocks

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Written on Aug 12, 2024
Reading time 5 minutes
  • Most American stocks have dropped from their highest level this year.
  • Goldman Sachs is bullish that most of these stocks will bounce back.
  • Some of its big calls are companies like Toast, Pfizer, Micron, and Carnival.

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American stocks finished strong as the Dow Jones, Nasdaq 100, and S&P 500 indices pared back the losses made on Monday. The three indices rose to almost $40,000, $5,345, and $16,745, respectively. 

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This rebound happened as the fears of the unwinding of the Japanese yen carry trade faded and as investors predicted that the Federal Reserve will start cutting interest rates soon. Also, the recent earnings season has been highly successful, with the blended revenue growth of companies in the S&P 500 index being 10.8%. 

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Analysts at Goldman Sachs’ David Kostin believes that some stocks have become highly undervalued and could stage a comeback soon. Some of the names in its list are firms like Carnival Corporation, Micron Technology, Toast, Pfizer, and Williams-Sonoma. 

Carnival Corporation | CCL

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Carnival Corporation (CCL) stock price is having a difficult year even as the cruise line industry recovers. Its stock has dropped by over 20% while Royal Caribbean has jumped by over 20% this year. 

Carnival’s business is still booming as evidenced by its most recent results, which showed that its net income jumped by $500 million to $92 million. Its operating income jumped to over $560 million while the adjusted EBITDA stood at over $1.2 billion. 

Carnival has also received substantial bookings in the past few months, with recent data showing that it has record numbers for 2025 sailings. Next year’s bookings and prices are higher than those of the current high. 

Carnival also upgraded its forward guidance and expects its net yields for the year to be up by 10.25%. It is also accelerating its transformation as it seeks to sunset the P&O Cruises in Australia, a move that will add more ships to the Carnival Cruise Line fleet. 

Micron Technology | MU

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Goldman Sachs also believes that the Micron Technology stock price has more upside now that it has dropped by more than 40% from its highest point this year and is hovering at its lowest point since March last year. 

Micron’s performance mirrors that of other semiconductor companies like Nvidia, Intel, AMD, and Applied Materials (AMAT), which have all retreated recently as concerns about growth and softening AI demand continue.

The most recent Micron earnings showed that its revenue rose to $6.81 billion in the fiscal third quarter, higher than the $5.82 billion it made in the same period a year earlier. Its net profit rose to over $332 million. Micron expects that its revenue will be $7.6 billion in the current quarter.

Goldman Sachs believes that the stock will ultimately come back in the coming months now that demand for semiconductors is rising. 

Toat | TOAST

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Toast is one of the biggest fintech companies in the United States. It is a niche payment processor that provides its solutions to restaurants and hotels. It offers them a point-of-sale solution, a self-ordering kiosk, rota management solution, and gift cards. 

Toast offers its solution to thousands of restaurants in the US like BANG, Sweetgreen, Jamba, Barteca Restaurant Group. And Dos Toros Taqueria. 

Toast’s business has been in a strong growth trajectory in the past few years as its annual revenue has jumped from over $665 million to over $3.86 billion in 2023. Its revenue growth has continued this year as the company added 8,000 locations in the second quarter. 

Toast’s revenue rose to $1.24 billion in Q2 from $978 million in the same period a year earlier. It also moved from a $98 million loss to a profit of over $14 million. While the Toast stock price is down by over 15% from its highest point this year, Goldman Sachs believes that the company has more upside.

Pfizer | PFE

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Pfizer stock price has been under intense pressure in the past few years as it crashed from a record high of $54.73 in December 2021 to a low of $24.56 earlier this year.

This retreat happened as the company’s record revenues and profits during the pandemic faded. Its annual revenues rose from $41 billion in 2020 to over $81 billion and $100 billion in 2021 and 2022, respectively.

The figure then slumped to $58.4 billion last year. It has even made a $2.1 billion loss in the trailing twelve months. Pfizer also missed the trend in weight loss products, with its product imploding in 2023. It recently rejoined the weight loss sector and it is unclear whether it will succeed.

Therefore, the company has moved into a series of acquisitions hoping that they will help it do well. It spent over $43 billion in 2023 acquiring Seagen, a company focusing on antibodies for cancer treatments. 

Before that, Pfizer spent $5.2 billion buying Anacor Pharmaceuticals, $11.4 billion in Array BioPharma, $14 billion in Medivation, and $17 billion in Hospira. Despite its woes, Goldman Sachs expects the Pfizer stock price to bounce back ultimately.The other top stocks that Goldman Sachs is bullish on are the likes of Norwegian Cruise Line, Amazon, Travel + Leisure, Stanley Black & Decker, and Scotts Miracle-Gro.

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