With just a little over a month remaining in 2023, investors are turning their attention to potential opportunities in 2024. Luckily, the equity strategy team at Morgan Stanley, led by Chief Investment Officer Mike Wilson, is already at work analyzing the market.
Despite near-term concerns, including lower earnings forecasts, weaker economic data, and a stock market rally driven primarily by seven mega-cap tech firms, Wilson expresses confidence in a medium-term earnings recovery. He sees a “richer opportunity set” beneath the surface of the market, suggesting a favorable environment for stock picking.
Morgan Stanley analysts have singled out three top picks for 2024, providing investors with potential insights. Let’s delve into these stocks, also considering the broader sentiment from other analysts using data from the TipRanks database.
- Delta Airlines (DAL)
Starting with one of the legacy carriers in the airline industry, Delta Airlines, Morgan Stanley analyst Ravi Shanker points out various factors supporting the company’s outlook. These include a strong brand, premium customer demand, controlled cost structures, and exposure to corporate and international tailwinds. Despite challenges such as rising fuel costs, Delta’s recent quarterly report beat expectations, showcasing resilience.
Shanker provides an optimistic outlook, stating, “Unless consumer demand for travel were to suddenly collapse, we believe the market should gravitate towards DAL’s compounding growth story.” He assigns an Overweight (Buy) rating to Delta’s shares with a target price of $77, implying a significant upside of 115% over the next 12 months.
The consensus among analysts is unanimously bullish, with 13 recent positive reviews, resulting in a Strong Buy rating. Delta’s current stock price of $35.84, coupled with an average price target of $55.23, suggests a potential one-year upside of nearly 54%.
- Keysight Technologies (KEYS)
Moving on to Keysight Technologies, a tech firm specializing in electronic test and measurement equipment, Morgan Stanley analyst Meta Marshall acknowledges the company’s resilience against market downturns. While facing a 20% decline in its stock price this year, Keysight’s fiscal 4Q23 results beat expectations, with sequential stability in orders across business segments.
Marshall sees this as an attractive entry point, designating Keysight as Morgan Stanley’s top pick. An Overweight (Buy) rating is assigned, with a $165 price target, indicating a potential 21% gain in the next 12 months.
The consensus rating, based on 7 Buys, 1 Hold, and 1 Sell, results in a Moderate Buy. The current stock price of $136.35, coupled with an average price target of $155.22, suggests a potential one-year upside of 14%.
- Natera (NTRA)
Concluding the list is Natera, a biotech firm specializing in cfDNA testing. Natera’s tests, focusing on minimally invasive DNA testing based on blood draws, have applications in oncology, women’s health, and organ health. The company’s recent earnings report for 3Q23 exceeded expectations, with revenue of $268.3 million, up 27% year-over-year.
Morgan Stanley analyst Tejas Savant highlights Natera’s robust testing volumes and potential for further growth in various testing platforms. Savant rates the stock as Overweight (Buy) with a $68 price target, suggesting a potential 23.5% upside in the next year.
The Strong Buy consensus rating, supported by 10 Buy ratings to 1 Hold, aligns with analysts’ positive sentiment. With a current stock price of $55.04 and an average price target of $70.40, the implied one-year upside is approximately 28%.
