Ticker Reports for October 9th
3 Momentum Trades for October With Ample Upside Ahead
Momentum trading involves buying rising stocks with the idea that they will continue rising. While reminiscent of the greater fools theory, momentum trading is more than buying high and selling high. Good momentum trades combine factors that help ensure the market is bullish and capable of continuing the uptrend with catalysts to drive the market even higher.
The stocks in this article do just that: they combine numerous variables, including fundamental quality, an outlook for growth, analysts and institutional support, and catalysts for additional upside. A starting place to find such stocks in the future? MarketBeat’s list of Most Upgraded Stocks and the Momentum Alerts feature.
Meta Platforms to Hit $660 in 2025
Meta Platforms (NASDAQ: META) has been a hot momentum trade for the last two years. The stock hit bottom in 2023, and the rebound was accelerated by the “year of efficiency” and then AI-enabled improvements in user, ad display, and revenue-per-ad metrics. The net result is a resurgence in growth, sustained in the high double-digits in 2024 expected to continue in 2025. Highlights from 2024 suggest the 2025 consensus estimates are low, providing a potential tailwind for the market in the form of outperformance and analyst upgrades to revenue and earnings targets.
Analysts support this market. The action in Q3 lifted the stock into the #1 position on MarketBeat’s list of Most Upgraded Stocks, with 35 positive revisions in the 90 days leading into October. The analysts rate the stock as a Moderate Buy and have aggressively increased their stock price targets.
The consensus target assumes fair value near the early October highs but has been up by nearly 100% in the last 12 months and is rising. The freshest targets include initiated coverage by Pivotal Research, which put the stock price at $780 compared to the $600 consensus figure. Because most targets issued since mid-summer are at or above the consensus, Meta will likely continue to move higher in calendar Q4.
The next visible catalyst for Meta Platforms is the FQ3 earnings report due at the end of the month. The analysts have set the bar high with revisions, but the consensus may still underestimate reality, expecting a sequential slowdown in YoY growth. Meta Platforms has outpaced top and bottom-line consensus forecasts for six consecutive quarters.
Palo Alto Networks: Growth, Cash Flow, Analysts, and Nancy Pelosi Support This Stock
Analysts’ activity lifted Palo Alto Networks (NASDAQ: PANW) into the 2nd position on the list of Most Upgraded Stocks in late summer. The activity includes numerous revisions and an initiated coverage, pegging the stock at Moderate Buy with a high likelihood of advancing above the consensus price target. The consensus implies fair value near the current levels, but the revisions trend leads to the high-end range with high conviction. More than 80% of the targets issued in calendar Q3 are above consensus, with most suggesting a minimum of 5% upside from the critical resistance target.
The reason analysts are bullish is the company results. Sentiment dimmed when the plaformization plan was announced, but the results since have been better than expected. They reveal underlying business strength and a faster-than-expected impact from the shift, expected to drive long-term growth and wider margins. The next visible catalyst is the FQ1 results due in mid-November. Analysts are raising the bar with revisions, but consensus underestimates business strength, expecting a sequential decline in revenue and earnings.
Oracle: The New Go-To Source for Enterprise Cloud Database
Oracle’s (NYSE: ORCL) multi-year to cloud-based software services kicked into high gear this year. The company has emerged as a leader in AI infrastructure and services, as evidenced by a deal with Amazon. The Amazon deal will embed Oracle’s enterprise-quality services into its cloud, making it the leading choice among the three dominant cloud hyperscalers.
Results in 2024 drive an analyst upgrade cycle, and the revisions are robust. The activity resulted in Oracle shooting up the rankings, breaking into the top ten with 6th position in early October. The consensus target lags the market but supports the price action due to the revision trend. The consensus is up 35% since October 2023, and revisions lead to the high-end range above $200, a 15% upside for investors. The next visible catalyst is the FQ2 results due in early December, although results from other critical AI players may also drive the market.
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Roblox Dips on Short Report—Here's Why It Could Bounce Back Fast
Every once in a while, a few stocks come under attack from short-selling firms or, essentially, by anyone that doesn’t align with that stock’s business or interests. It is tricky for retail investors to figure out whether short reports and attacks have any traction since they can often sound convincing enough to get people to sell – or even short – said stock.
Today, investors might be faced with the hard choice of whether to take a short report seriously for shares of the technology sector platform Roblox Co. (NYSE: RBLX), as they now are selling off by over 25% in the past week alone, or whether to consider this recent dip a potential buying opportunity to get the stock at a once-in-a-cycle valuation. To help investors decide which way to go, some of the key financials need to be analyzed for Roblox’s business.
There are those on Wall Street and market participants who seem to think that Roblox is actually fine, despite what this new short report might claim. However, all evidence needs to be looked over, starting with the accusations against Roblox, before investors dig through the financial metrics that might uncover the truth about the company’s situation today.
What This Firm Accuses Roblox Of: A Closer Look for Investors
Hindenburg Research, a short-selling firm famous for taking on short positions and writing bearish reports on companies it believes have a few weak points to exploit, has now written a piece on Roblox stock quoting that the firm has been lying to its investors about actual user numbers and profitability.
According to the report, Roblox fails to maintain safety and community standards for its audience, particularly underage users. While this may be the case, it is not a new trend in online platforms, a trend that essentially every player in the space is looking to work on and fix.
On a more company-specific issue, Hindenburg suggests that Roblox has misguided Wall Street and shareholders regarding how much it has actually grown its user base, overstating these figures by as much as double-digit percentage points, causing a divergence in earnings.
Surely, there are ways for companies to engage in "creative accounting" and overstate their net income and, therefore, earnings per share (EPS) figures. However, if investors can look at any one figure to check a business’s true earning power, it is found in its cash flow statement.
Particularly in the cash from operations line item, which cannot be manipulated as easily as net income. More than that, free cash flow (operating cash flow minus capital expenditures) is often taken as the ultimate proxy for net income, and investors can look at the measure today for their reality check on Roblox stock.
Analysts Dismiss Short Report Claims: Why Roblox Stock May Still Be a Buy
Investors can look at the Roblox stock price action to lay the foundation for current sentiment. The fact that the stock rebounded just as quickly as it sold off tells investors that many participants came in to dismantle these false accusations.
More than that, Wall Street analysts have come in to reiterate their price targets on the stock just two days after the short report had been published. Those at Piper Sandler decided to reiterate their “Overweight” rating on Roblox, this time coupling that view with a $54 a share price target.
To prove these analysts right, Roblox stock would need to rally by as much as 30.7% from where it trades today, proving to investors that this short report might not have any factual significance for the company and its valuation. Here’s what analysts might have looked at to arrive at their decision.
Within Roblox’s latest quarterly earnings report, investors can check for the company’s operating cash flows. The same quarter last year reported operating cash flows of $28.4 million, whereas the most recent quarter reported up to $151.5 million for a significant boost.
Free cash flow came in at $111.8 million when adjusted for capital expenditures, meaning Roblox has serious earning power that could not have been fabricated if what Hindenburg claims was true. On the way down, the report did get a few bears, putting on some short positions.
Roblox stock’s short interest rose by 2.6% during the past month, which means those new short sellers might create more buying pressure on the stock’s recovery. They need to buy back the stock to close down their short positions at a loss. Investors can look to institutional buyers to get one last sounding board for potential new upside from here.
Those at CWM decided to boost their holdings in Roblox stock by 61.7% as of October 2024, bringing their net investment up to $3.3 million today. This might not 100% disprove the Hindenburg report, but the evidence does stack in favor of Roblox making it out alright from this situation.
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2 Reasons to Jump on Apple Stock Now and 1 Reason to Think Twice
Though it hasn’t been without its ups and downs, Apple Inc’s (NASDAQ: AAPL) stock has effectively been trading sideways since July. In fact, the tech titan’s shares closed Tuesday’s session at the same price they were just one week before they popped to their last all-time high. In the three months since then, they’ve fallen as much as 20% and rallied about the same.
Speaking from a technical perspective, at least, Apple’s shares haven’t been forming the most bullish pattern. Sure, they’ve managed a run of higher lows since August’s dip, but it’s the lack of higher highs that could give some investors pause for concern. Especially as it’s coming at a time when the Fed has signaled its intent to cut rates, and the likes of the benchmark S&P 500 index are back at highs and looking like they could be on the verge of a major breakout.
But it’s perhaps this apparent divergence that is creating a decent entry opportunity here. MarketBeat readers will be familiar with our past analysis of Apple stock and how it can often take a broader market move upwards to pull it from its lethargy. However, Apple tends to outpace most of its peers easily once it does.
As we head into the final few months of the year, it’s worth exploring the opportunities opening up in Apple. Here are two reasons to buy and one reason to avoid it.
One Reason to Buy: Fundamentals
There’s simply no getting away from the fact that as far as fundamental performance goes, Apple is a powerhouse. The company’s most recent earning report smashed analyst expectations for both headline numbers, with both EPS and revenue coming in at record levels for the June quarter.
Coupled with the fact that the company is still working through an eye-watering $110 billion share buyback program, it’s clear management feels there’s no sign of this solid performance abating.
Earlier this year, they also raised their dividend, which, along with a share buyback program, is one of the most bullish signals a company can give to the market.
A Second Reason to Buy: Bullish Analysts
No doubt, based on Apple's fundamental performance, there has been a consistent stream of analysts rating the stock a solid Buy in recent weeks.
Last month saw both Evercore ISI and Needham & Company do this, with price targets of $250 and $260, respectively.
This month, the teams at Oppenheimer, Citigroup, and Bank of America have already taken a similarly bullish stance with similar price targets.
Their reasoning is mostly the same, and they focus on what Bank of America analyst Wamsi Mohan called “continued strength in the App Store.”
One Reason to Avoid: iPhone Worries
For all the bullish performance, though, and optimistic analyst expectations, there are some concerns about the company’s iPhone numbers. Both J.P. Morgan and Jefferies have urged caution in the past week and suggested that the market’s expectations for Apple’s iPhone sales are “too high.”
Jefferies analyst Edison Lee argued that while Apple remains attractive over the long run due to its unique positioning as the “only hardware-software integrated player in the AI space,” its smartphone hardware needs work to fully take advantage of this.
It was a similar stance from J.P. Morgan’s Samik Chatterjee, who lowered his forecast for iPhone sales in the current quarter from 80 million to 76 million. He cited “more muted consumer demand” compared to previous models, but again, his longer-term outlook on the stock remains bullish. While there may be some near-term volatility as the iPhone story gets played out, Chatterjee reiterated his Overweight rating on Apple shares, along with his $265 price target.
Considering the stock closed at $225 on Tuesday night, the target upside is at least 20%.
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