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Buy these top stock picks coming out of earnings, Morgan Stanley says
Morgan Stanley recently called out a few overweight-rated stocks that could have room to run after quarterly earnings. Companies like Robinhood are firing on all cylinders and are worth buying now, the firm’s analysts said. Other stocks include Toast , Cummins and Seagate Technology. Cummins Analyst Angel Castillo is standing by shares of top pick Cummins following the company’s fourth-quarter earnings report. The industrial engine company is well positioned after “another better than expected quarter and guide,” the analyst said. Castillo also said that Cummins has an “ample runway for margin expansion and top line growth setting up another year of beat and raises.” Cummins’ engine segment and power generation outlook also have plenty of room for growth, the analyst added. “We think the guide was conservative and continue to see material upside from here,” Castillo said. Cummins’ shares are up 36% in the past year. Robinhood In February, Robinhood reported a solid earnings beat for the fourth quarter. Now, Morgan Stanley is doubling down on shares of trading platform. Analyst Michael Cyprys said he has “increased conviction in HOOD’s growth path ahead,” following the quarterly report. Further, he said, Robinhood “provided greater clarity around the 2025 product roadmap and strategic initiatives.” Cyprys also said that deregulation will lead to a bigger opportunity in crypto for the company. He sees a “catalyst-rich path as HOOD gains traction with new initiatives and launches new products.” Shares are up 210% over the past 12 months. Toast Morgan Stanley recently named the restaurant payment tech company a new top pick following its robust fourth-quarter earnings report on Feb. 19. “Consistent and strong execution against a broader opportunity yields a new, bigger, better bull case,” analyst Josh Baer wrote. In addition, the firm said Toast has a long runway for growth in a variety of areas, including international expansion. “There is enough evidence of Toast making early progress in newer growth markets to envision a Bull Case future where Toast replicates the success it has had in its core US SMB [small and mid-sized business] restaurant market,” he wrote. Shares are up about 70% in the past year. “With momentum well intact across growth vectors, a new bull case fully forms,” he said. Cummins “Another better than expected quarter and guide. Although the market will continue to debate the NA Truck cycle, we view the company’s outlook as conservative with ample runway for margin expansion and top line growth setting up another year of beat and raises. Reiterate OW and Top Pick. … We think the guide was conservative and continue to see material upside from here.” Robinhood “We have increased conviction in HOOD’s growth path ahead on the back of 4Q’s significant earnings beat and conference call that provided greater clarity around the 2025 product roadmap and strategic initiatives. … Catalyst-rich path as HOOD gains traction with new initiatives, and launches new products.” Toast “W/ momentum well intact across growth vectors, a new bull case fully forms. … Consistent and Strong Execution Against A Broader Opportunity Yields A New, Bigger, Better Bull Case. … There is enough evidence of Toast making early progress in newer growth markets to envision a Bull Case future where Toast replicates the success it has had in its core US SMB restaurant market…” Seagate “We reiterate STX as our IT Hardware Top Pick as we remain confident in the sustainability of the HDD [hard disk drive] cycle and structurally stronger gross margins, which supports both positive EPS revisions and a multiple re-rating. … Recent industry & supply chain checks give us confidence the HDD upcycle has longevity as demand continues to outstrip supply and cloud spending remains robust.”
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